2006 WL 2136260
Aug. 2, 2006
Summary of Opinion
Plaintiff JES Properties brought an action against USEF claiming that the regulations governing the placement or “A” and “AA” rated shows violated federal anti-trust laws. The regulations prohibit regognized shows of the two highest levels from being held on the same days within predetermined distances of each other. The court found that there are good reasons for this practice that involve the safety and well-being of the horses and held, among other things, that these regulations did not violate any anti-trust laws.
Text of Opinion
JES Properties, Inc. ("JES") and Michael W. Gallagher appeal from the District Court's entry of summary judgment in favor of United States Equestrian Federation ("USEF"); Thomas E. Struzzieri, Horse Shows in the Sun, Inc., and Rose View Stables, Ltd (collectively, "HITS"); Eugene R. Mische and Stadium Jumping, Inc. (collectively, "SJI"); and David E. Burton, Sr. David E. Burton, Jr., Burton and Sons, Inc., and Littlewood Fences, Inc. (collectively, the "Burtons") (HITS, SJI and the Burtons are referred to collectively as the "Promoter Defendants"). The District Court concluded that JES and Mr. Gallagher had failed to raise a triable issue of fact regarding their claim that the USEF and the Promoter Defendants violated Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. We affirm.
Since 1917, the United States Equestrian
Federation ("USEF") and its predecessor the USA Equestrian, Inc.
("USAE") have governed the sport of amateur equestrianism in the
The USEF consists of private individuals such
as professional and amateur rider-athletes, trainers, judges, horse owners and
officials; non-profit amateur sports organizations such as the North Florida
Hunter and Jumper Association, Inc.; and promoters who profit financially by
holding equestrian competitions. The USEF maintains a fifty-four member Board
of Directors to promulgate the rules of the sport. The Board of Directors of
the USEF contains ten members of the hunter/jumper community and no less than
twenty percent of the voting power is allocated to "active equestrian
athletes." An "active athlete" is one who is engaged in
equestrian competition or has represented the
The NGB rules sanction certain equestrian competitions called "recognized competitions," which provide particular benefits to riders and promoters. Recognized competitions allow riders to collect points from wins. Wins lead to invitations to more prestigious competitions. In addition, recognized competitions award a total prize money amount of $10,000 or more for the "jumper" section of the competition.
Recognized competitions that are considered "A" or "AA-rated" are the highest rated competitions. They award the most points and in theory attract the best riders. In order to represent the United States at an international level, including the Olympic Games, athletes must compete in USEF-sanctioned competitions and typically excel in the A or AA-rated competitions.
All recognized competitions are subject to General Rule 214.7 ("Mileage Rule"), which was promulgated in 1975 by USAE (known at that time as the American Horse Shows Association) and adopted by the USEF. [FN1] The Mileage Rule requires that any A-rated recognized competitions held on the same date must be held at least 250 miles away from each other. This is true for all but some Northeastern states, which are subject to a 125-mile radius distance for A-rated competitions. The required distance diminishes as the rating decreases. Unrated or local competitions on the same date can be held within fifty miles of each other. Under the Mileage Rule, an A-rated competition that was held on a certain date in the previous year receives priority. A promoter may nevertheless obtain USEF recognition if all "affected competition managements" agree in writing to permit the additional recognized competition. This written agreement is referred to as a "waiver." Stricter still for hunter/jumper competitions, the USEF requires a waiver for each year and an additional competition can never be closer than ten miles from an established one. However, a promoter may hold an A-rated competition elsewhere or on a different date without obtaining a waiver. Similarly, a promoter may hold B- or C-level competitions. The purpose of the Mileage Rule appears to be twofold. First, it aims to concentrate elite riders into fewer competitions in order to yield the most competitive international equestrian team possible. Second, the rule intends to promote equestrianism nationwide by forcing promoters to hold recognized competitions in more diverse locations.
JES and Mr. Gallagher are among
those USEF members who gain financially from promoting equestrian competitions.
The Promoter Defendants also hold competitions for profit. JES, Mr. Gallagher,
and the Promoter Defendants have conducted USEF sanctioned competitions
throughout the state of
In 1982, HITS and SJI granted each other waivers that have been renewed each subsequent year. The reciprocal agreement permitted each promoter to hold USEF sanctioned A-rated competitions within the 250 mile restriction.
JES and Mr. Gallagher filed a complaint challenging the Mileage Rule as a violation of the Sherman Antitrust Act. They also alleged that the Promoter Defendants committed antitrust violations by granting each other waivers while refusing to grant waivers to JES and Mr. Gallagher. The District Court entered summary judgment in favor of the USEF and the Promoter Defendants. It concluded that (1) each defendant was entitled to implied immunity from antitrust liability; (2) JES and Mr. Gallagher lacked antitrust standing; (3) JES and Mr. Gallagher failed to present evidence of concerted action; and (4) the Rule of Reason applied to the USEF's and the Promoter Defendants' actions, and their actions were not an unreasonable restraint of trade. JES and Mr. Gallagher timely appeal each of those conclusions. We conclude that the USEF and the Promoter Defendants are entitled to implied immunity. We address standing briefly, but we do not reach the other issues raised by JES and Mr. Gallagher.
JES and Mr. Gallagher argue that
the District Court erred in its
determination that they lacked antitrust standing. Whether a plaintiff has
standing to prosecute an antitrust claim is a question of law. Todorov v.
DCH Healthcare Auth., 921 F.2d 1438, 1448 (11th Cir.1991). "Standing
in an antitrust case involves more than the 'case or controversy' requirement
that drives constitutional standing."
Because we conclude that the USEF and the Promoter Defendants are immune from antitrust liability, we need not determine whether JES and Mr. Gallagher have standing. Levine v. Central Fla. Med. Affiliates, Inc., 72 F.3d 1538, 1545 (11th Cir.1996). In Levine, this Court noted:
When a court concludes that no [antitrust] violation has occurred, it has no occasion to consider standing .... An increasing number of courts, unfortunately, deny standing when they really mean that no violation has occurred. In particular, the antitrust injury element of standing demands that the plaintiff's alleged injury result from the threat to competition that underlies the alleged violation. A court seeing no threat to competition in a rule-of-reason case may then deny that the plaintiff has suffered antitrust injury and dismiss the suit for lack of standing. Such a ruling would be erroneous, for the absence of any threat to competition means that no violation has occurred and that even suit by the government--which enjoys automatic standing--must be dismissed.
We see no difference between the
example offered in Levine--a court seeing no threat to competition in a
rule-of-reason case--and our conclusion in this case that the USEF and the
Promoter Defendants are immune from antitrust liability because the ASA
impliedly repeals the antitrust laws to the extent the USEF was acting pursuant
to authority conveyed by the ASA. A defendant is entitled to implied immunity
when its actions are necessary for the effective operation of a law enacted by
Congress. See infra, Part IB; Silver v.
JES and Mr. Gallagher next argue
that the District Court erred in concluding that the ASA impliedly repeals the
antitrust laws, thus giving the USEF and the Promoter Defendants immunity from
antitrust liability. A district court's decision to grant summary judgment is
reviewed de novo. Holloman v. Mail-Well Corp., 443 F.3d 832, 836 (11th
Cir.2006). Summary judgment is appropriate if the moving party demonstrates
that there are no genuine issues of material fact and the moving party is
entitled to judgment as a matter of law.
In Silver, the Supreme Court held that
under certain circumstances, a defendant is immune from antitrust liability
because his or her actions are permitted by overriding federal law. Silver, 373
In this case, the USEF and the Promoter
Defendants argue that the ASA impliedly repeals the antitrust laws. The ASA was
enacted "to correct the disorganization and serious factional disputes
that seemed to plague amateur sports in the
The NBG must satisfy a number of requirements, including the ability to "demonstrate[ ] that it is autonomous in the governance of its sport, in that it independently determines and controls all matters central to such governance, does not delegate such determination and control, and is free from outside restraint."
Behagen v. Amateur Basketball Ass'n of the United States, 884 F.2d 524, 528 (10th Cir.1989) (quoting 36 U.S.C. § 391(b)(4)).
The ASA provides:
(a) Authority--For the sport that it governs, a national governing body may--
(1) represent the
(2) establish national goals and encourage attainment of those goals;
(3) serve as the
coordinating body for amateur athletic activity in the
(6) recommend to the [USOC]
individuals and teams to represent the
36 U.S.C. § 220523.
For the sport that it governs, a national governing body shall--
(1) develop interest and
participation throughout the
(2) minimize, through coordination with other amateur sports organizations, conflicts in the scheduling of all practices and competitions[.]
36 U.S.C. § 220524 (emphasis added). "The [ASA] provides for ongoing review of the NGB by the USOC in order to ensure compliance with the [ASA]." Behagen, 884 F.2d at 528.
The USEF is the NGB for equestrian sports in
In Behagen, the Tenth Circuit
considered whether the ASA impliedly repealed the antitrust laws.
Mr. Behagen alleged that the refusal to permit
him to play constituted a violation of § 1 of the Sherman Antitrust Act.
The court held that
the antitrust issue should not have gone to the jury. The defendants' actions in this case were clearly within the scope of activity directed by Congress, and were necessary to implement Congress' intent with regard to the governance of amateur athletics. We therefore hold that the defendants' allegedly violative actions here are exempt from the coverage of the federal antitrust laws.
The question whether the ASA impliedly repeals
antitrust laws was again considered in Eleven Line, Inc. v. North Texas
State Soccer Ass'n, Inc., 213 F.3d 198 (5th Cir.2000). In Eleven Line, the owner of an indoor soccer facility brought suit against the North Texas
State Soccer Association ("NTSSA"), alleging it violated the
antitrust laws in enacting a rule that forbade its members from playing at any
non-NTSSA sanctioned facility.
Although the facts of this case do not support an implied exemption from the antitrust laws, an implied exemption would be appropriate in many other situations. For example, if the national state associations all over the country had a similar rule, one could infer that the rule was necessary to the management of the sport.
As Behagan and Eleven Line demonstrate, when properly exercised, the "monolithic control" a NGB has over its particular support may
excuse actions that would otherwise violate antitrust laws. Therefore, the
question for this Court is whether the application of the antitrust laws to the
facts of this case would "unduly interfere" with the
"operation" of the ASA. Gordon, 422
Congress has specifically required NGB's to
minimize conflicts in the scheduling of competitions and to "develop
interest and participation throughout the
JES and Mr. Gallagher argue that the USEF and the Promoter Defendants should not enjoy implied immunity because the Mileage Rule is not "necessary" for the USEF to perform its functions under the ASA. They focus on language in Behagen: "defendants' actions in this case were clearly within the scope of activity directed by Congress, and were necessary to implement Congress' intent with regard to the governance of amateur athletics." Behagen, 884 F.2d at 527 (emphasis added). JES and Mr. Gallagher contend that if the USEF and equestrian sports can function without the Mileage Rule, the USEF and the Promoter Defendants are not entitled to immunity.
JES's and Mr. Gallagher's
arguments regarding why the Mileage Rule is not necessary focus on whether the
rule is an effective or wise way of implementing the power given the USEF to
minimize conflicts in scheduling and develop interest in equestrian sports
JES's and Mr. Gallagher's reading of Behagen is inconsistent with Supreme Court authority. In Gordon, the Supreme
Court considered a challenge to commission rates fixed by the New York Stock
Exchange ("NYSE"). Gordon, 422
On the one hand, there is a factual question as to whether fixed commission rates are actually necessary to the operation of the exchanges as contemplated under the Securities Exchange Act. On the other hand, there is a legal question as to whether allowance of an antitrust suit would conflict with the operation of the regulatory scheme which specifically authorized the SEC to oversee the fixing of commission rates. The factual question is not before us in this case. Rather, we are concerned with whether antitrust immunity, as a matter of law, must be implied in order to permit the Exchange Act to function as envisioned by Congress. The issue of the wisdom of fixed rates becomes relevant only when it is determined that there is no antitrust immunity.
Additionally, JES's and Mr.
Gallagher's understanding of what makes a rule "necessary" according
to Behagen is too restrictive. In Behagen, the court did not
consider whether the particular eligibility rule was necessary or
otherwise examine the wisdom of the rule. It simply concluded that promulgating
eligibility rules was necessary in order for the NGB to carry out its role as
defined by the ASA. See generally Behagen, 884 F.2d 524-30. Similarly,
in Eleven Line, the court concluded that the NTSSA rule was not
necessary. Eleven Line, 213 F.3d at 204-05. However, the court then
listed a whole host of rationales that may have justified the NTSSA rule. It
did not delve into an analysis of whether the rule would be wise or
indispensable under any of those circumstances.
This Court will not substitute its own
judgment for that of the USEF regarding the optimum way to fulfill its
obligations. Cf. Brookins v. Int'l Motor Contest Ass'n, 219 F.3d 849,
853 (8th Cir.2000) (stating that regarding antitrust challenges to rules defining
professional sports activities, authorities
have been given considerable discretion to achieve their sporting objectives,
absent any demonstrated market foreclosure). If this Court were to apply the
test that JES and Mr. Gallagher suggest-determining whether the Mileage Rule is
necessary--it would threaten the national uniformity Congress envisioned in
enacting the ASA. San Francisco Arts & Athletics, Inc., 483
JES and Mr. Gallagher also argue that this Court should apply a multi-factor test enunciated by the Second Circuit in Billing v. Credit Suisse First Boston Ltd., 426 F.3d 130 (2d Cir.2005) to the question whether the ASA impliedly repeals the antitrust laws. In Billing, the court held that when a "potential specific conflict" exists between a regulatory rule and antitrust laws courts
will apply immunity if [they] determine that Congress contemplated the specific conflict and intended for the antitrust laws to be repealed. That determination is informed by considering (1) congressional intent as reflected in legislative history and a statute's structure; (2) the possibility for conflicting mandates; (3) the possibility that application of the antitrust laws would moot a regulatory provision; (4) the history of agency regulation of the anticompetitive conduct; and (5) any other evidence indicating that the statute implies a repeal.