United States Football League v. National Football League
842 F.2d 1335 (1988)
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Rule of Law:
An antitrust plaintiff, even after proving the defendant is a monopolist, cannot recover substantial damages without proving that the defendant's unlawful conduct, rather than the plaintiff's own business decisions and mismanagement, was a substantial cause of its injury. Additionally, the Sports Broadcasting Act of 1961 does not limit a professional sports league to a single pooled-rights television contract with one network.
Facts:
- The United States Football League (USFL) was founded in 1982 by David Dixon as a professional league that would play its games in the spring.
- The USFL secured initial television contracts with ABC and ESPN and began its first season in March 1983 with twelve teams.
- From its first season, the USFL suffered massive financial losses, largely because its teams failed to adhere to the league's original salary guidelines and cost controls.
- Influential owners, including Donald Trump of the New Jersey Generals, began advocating for a new strategy: move the USFL to a fall schedule to compete directly with the National Football League (NFL) and force a merger.
- In August 1984, despite having renewal offers for spring television contracts from both ABC and ESPN, the USFL owners voted to move to a fall schedule beginning in 1986.
- In furtherance of the merger strategy, several USFL franchises relocated from major television markets (such as Chicago, Detroit, and Philadelphia) to smaller cities considered potential NFL expansion sites (like Baltimore and Orlando).
- This strategy of franchise relocation and the announced move to the fall eroded fan loyalty, created instability, and significantly diminished the USFL's value as a television product.
- The USFL played a final 'lame-duck' spring season in 1985 before abandoning its planned 1986 fall season following the outcome of this litigation.
Procedural Posture:
- The United States Football League (USFL) sued the National Football League (NFL) in the U.S. District Court for the Southern District of New York, alleging violations of Sections 1 and 2 of the Sherman Antitrust Act.
- Following a 48-day trial, a jury found that the NFL had willfully maintained monopoly power in the market of major-league professional football in the United States.
- The jury also found that the NFL's monopolization had caused injury to the USFL.
- Despite these findings, the jury awarded the USFL only $1.00 in nominal damages.
- The jury rejected all of the USFL's other claims, including its central arguments that the NFL had monopolized a television submarket and that its network contracts constituted an unreasonable restraint of trade.
- The trial court denied the USFL's post-trial motions for judgment notwithstanding the verdict, a new trial on damages, and for broad injunctive relief.
- The USFL, as appellant, appealed the judgment to the U.S. Court of Appeals for the Second Circuit.
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Issue:
In an antitrust case, must a plaintiff prove that its financial losses were substantially caused by the defendant's unlawful monopolistic conduct, rather than by the plaintiff's own business decisions, in order to recover more than nominal damages?
Opinions:
Majority - Winter, Circuit Judge
Yes. An antitrust plaintiff must prove that its injuries were substantially caused by the defendant's unlawful conduct, not by its own business failings, to recover more than nominal damages. The court affirmed the jury's verdict, finding that the USFL's failure was a result of its own flawed business strategy, not the NFL's proven anticompetitive acts. The evidence overwhelmingly supported the conclusion that the USFL's 'impatient and self-destructive conduct,' particularly its merger-driven decision to abandon spring play and major television markets, was the cause of its demise. Furthermore, the court held that the Sports Broadcasting Act of 1961, by its plain language and legislative history, permits a sports league to have pooled-rights television contracts with multiple networks, so the NFL's contracts with ABC, CBS, and NBC were not inherently illegal. The jury's rejection of the USFL's television-related claims was supported by evidence that the USFL had become an unattractive product and that the networks made independent business judgments not to broadcast its games in the fall. Therefore, the jury was justified in awarding only nominal damages because the USFL failed to disentangle the losses caused by its own mismanagement from any losses caused by the NFL's limited anticompetitive conduct.
Analysis:
This decision is a landmark in sports and antitrust law, reinforcing that proof of monopoly status is insufficient for a plaintiff to recover damages. It establishes that a plaintiff must definitively prove causation—that the defendant's illegal conduct, not the plaintiff's own strategic errors, was the substantial cause of injury. The ruling allows defendants to introduce extensive evidence of a plaintiff's business failures to rebut causation, raising the bar for would-be competitors suing established leagues. By affirming the legality of the NFL's multi-network television contracts under the Sports Broadcasting Act, the court solidified the league's powerful broadcasting structure and diminished the viability of future antitrust challenges based on television 'tie-ups.'
