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Right Field Rooftops, LLC v. Chicago Cubs Baseball Club, LLC

Court of Appeals for the Seventh Circuit
2017 WL 3805856, 870 F3d 682, 2017 U.S. App. LEXIS 16847 (2017)
ELI5:

Rule of Law:

The 'baseball exemption' to federal antitrust laws immunizes the business of professional baseball from Sherman Act liability, covering all conduct integral to the public exhibition of games. Additionally, contract provisions permitting government-approved expansions are strictly enforced according to their plain language, even if such expansions frustrate the counterparty's business interests.


Facts:

  • Plaintiffs own rooftop businesses across the street from Wrigley Field that sell tickets to spectators to view Cubs games.
  • In 2004, following prior litigation, the parties entered a License Agreement where the Rooftops paid the Cubs 17% of gross revenues in exchange for the Cubs promising not to erect windscreens or barriers to obstruct views.
  • The Agreement contained a specific exception stating that 'Any expansion of Wrigley Field approved by governmental authorities shall not be a violation' of the contract.
  • In 2013, the City of Chicago approved the Cubs' renovation plan, which included the installation of a massive video board in right field.
  • During this period, Cubs owner Thomas Ricketts publicly compared the Rooftops to a neighbor looking through a window to watch someone else's television and charging others to sit in the yard to watch.
  • The Cubs began construction in 2014, and the new video board effectively blocked the views from the Plaintiff's rooftops.
  • Plaintiffs claimed the Cubs attempted to monopolize the market and used the threat of blocked views to force a sale of the rooftop businesses at below-market rates.

Procedural Posture:

  • Plaintiffs sued Defendants in the United States District Court for the Northern District of Illinois.
  • Plaintiffs moved for a temporary restraining order and a preliminary injunction.
  • The District Court denied both the motion for a temporary restraining order and the motion for a preliminary injunction.
  • Defendants moved to dismiss the complaint for failure to state a claim under Rule 12(b)(6).
  • The District Court granted the motion to dismiss with prejudice.
  • Plaintiffs moved to alter or amend the judgment under Rule 59(e) and to amend the complaint under Rule 15(a).
  • The District Court denied the post-judgment motions.
  • Plaintiffs appealed to the United States Court of Appeals for the Seventh Circuit.

Locked

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Issue:

Does the federal antitrust exemption for the 'business of baseball' protect a team's stadium expansion and dealings with neighboring businesses, and does a contract allowing 'any expansion' approved by the government permit the installation of a view-obstructing video board despite a general ban on barriers?


Opinions:

Majority - Judge Bauer

Yes, the antitrust exemption applies, and no, the contract was not breached. Regarding the antitrust claims, the court held that the Supreme Court's decision in Federal Baseball (1922) and subsequent cases established a broad exemption for the 'business of giving exhibitions of baseball.' The Cubs' conduct—including stadium expansion, ticket pricing, and negotiations with neighboring competitors—is central to the business of providing public baseball games for profit and is not 'attenuated' from it. Regarding the contract, the court found the language unambiguous. While Section 6.6 prohibits windscreens, it expressly exempts 'any expansion' approved by the government. Since the City approved the video board, it falls within the carve-out. Finally, regarding disparagement, Ricketts' comments were deemed rhetorical hyperbole and opinion, not the 'untrue or misleading' statements of fact required to prove disparagement under Illinois law.



Analysis:

This decision reinforces the durability and breadth of the 'baseball exemption' to antitrust laws within the Seventh Circuit. By applying the exemption to disputes involving real estate and neighboring commercial entities, the court signaled that the 'business of baseball' extends significantly beyond player contracts and league rules. Contractually, the case serves as a strict warning regarding risk allocation; the court refused to look past the plain text of the 'any expansion' clause to infer a limitation to 'bleacher expansion' only, despite the section header. This highlights that specific carve-outs for government-approved actions can effectively nullify broader protective covenants in commercial leases and licenses.

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