United States Football League v. National Football League
842 F.2d 1335 (1988)
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Rule of Law:
An antitrust plaintiff cannot recover substantial damages for an injury caused by a defendant's monopolistic conduct if the plaintiff fails to prove that the defendant's unlawful acts, rather than the plaintiff's own business decisions and mismanagement, were the cause of the injury.
Facts:
- The National Football League (NFL) was the dominant professional football league in the United States, operating primarily in the fall.
- In 1982, the United States Football League (USFL) was founded as a competing professional football league scheduled to play its games in the spring.
- The USFL secured national television contracts for its spring seasons with ABC and ESPN.
- The USFL's initial business plan included strict salary guidelines for its teams, but owners quickly abandoned these controls, leading to massive financial losses.
- Led by certain influential owners, the USFL adopted a new strategy aimed at forcing a merger with the NFL by moving its playing season to the fall to compete directly.
- In preparation for this fall season, several USFL franchises relocated from major television markets (like Chicago and Philadelphia) to smaller cities or potential NFL expansion sites (like Baltimore and Orlando).
- This relocation strategy, combined with franchise instability and financial difficulties, significantly diminished the USFL's value as a television product.
- During this period, the NFL engaged in some anti-competitive tactics, including creating a supplemental draft of USFL players, increasing team roster sizes, and attempting to co-opt USFL owners with offers of future NFL franchises.
Procedural Posture:
- The United States Football League (USFL) and several of its member clubs sued the National Football League (NFL), its commissioner, and its member clubs in the U.S. District Court for the Southern District of New York.
- The USFL alleged that the NFL violated Sections 1 and 2 of the Sherman Antitrust Act.
- After a 48-day trial, a jury found that the NFL had willfully acquired and maintained monopoly power in the market for major-league professional football in the United States, and that this monopoly had caused injury to the USFL.
- The jury awarded the USFL nominal damages of only $1.00.
- The jury rejected all of the USFL's other claims, including its central television-related claims that the NFL monopolized a television submarket and that its network contracts were an unreasonable restraint of trade.
- The USFL filed post-trial motions for judgment notwithstanding the verdict on its television claims, for a new trial on damages, and for injunctive relief, all of which the district court denied.
- The USFL (as plaintiffs-appellants) appealed the district court's judgment to the U.S. Court of Appeals for the Second Circuit, and the NFL (as defendants-appellees) filed a cross-appeal.
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Issue:
Does a professional sports league with a lawfully-obtained monopoly violate antitrust laws through its television contracts and other competitive tactics when a rival league fails to prove that its injuries were caused by those actions rather than its own self-destructive business strategies?
Opinions:
Majority - Winter, J.
No. A sports league with a lawful monopoly does not violate antitrust laws through its business practices if a competitor's failure is primarily caused by the competitor's own flawed business strategies. There was ample evidence for the jury to conclude that the USFL's failure was not caused by the NFL's actions, but rather by the USFL's own mismanagement and self-destructive decisions. The court affirmed the jury's verdict, finding that the USFL had failed to prove that the NFL's conduct, rather than the USFL's own choices, caused its damages. The Sports Broadcasting Act of 1961 does not limit a league to a single television network, making the NFL's contracts with ABC, CBS, and NBC lawful. The jury reasonably rejected the USFL's claim that the NFL's television contracts created an insurmountable 'dilution effect,' finding instead that the USFL became an unattractive product for networks due to its abandonment of major markets, financial instability, and the adoption of a risky merger strategy. Therefore, while the jury found the NFL was a monopolist that engaged in some predatory acts, the resulting injury was valued at only $1 because the USFL failed to disentangle damages caused by the NFL's conduct from damages it caused itself.
Analysis:
This decision underscores the critical importance of the causation element in private antitrust litigation. It establishes that even if a plaintiff proves a defendant holds monopoly power and has engaged in anticompetitive acts, recovery is precluded if the plaintiff's injuries are found to be self-inflicted. The case serves as a powerful precedent that a defendant can rebut a damages claim by introducing evidence of the plaintiff's own business misjudgments. It also affirmed the broad antitrust immunity granted to sports leagues' pooled television rights under the Sports Broadcasting Act, clarifying that contracts with multiple networks are not, by themselves, illegal.
