Black Bear Sports Group, Inc. v. Amateur Hockey Association of Illinois, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

BLACK BEAR SPORTS GROUP, INC )

and CENTER ICE ARENA, LLC, )

)

Plaintiffs, )

)

vs. ) Case No. 18 C 8364

)

AMATEUR HOCKEY ASSOCIATION OF )

ILLINOIS, INC., )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

Black Bear Sports Group, Inc. and its subsidiary Center Ice Arena, LLC sued the

Amateur Hockey Association of Illinois alleging violations of federal and state antitrust

law as well as a state-law claim for tortious interference with prospective business

relations. The Association has moved to dismiss for lack of standing and for failure to

state a claim upon which relief can be granted. For the reasons described below, the

Court grants the motion to dismiss.

Background

For the purposes of this motion, the Court presumes the truth of the facts alleged

in the plaintiffs' complaint. Black Bear and Center Ice, to which the Court will generally

refer collectively as Black Bear unless the distinction is relevant, operate ice rinks.

Black Bear operates ten rinks across the United States. Four of those rinks are in the

Chicago suburbs of Glen Ellyn, Woodridge, Lincolnwood, and Crestwood. Black Bear

purchased these four rinks between 2016 and 2018 as part of its strategy of acquiring

"undermanaged and underperforming" facilities and investing in capital improvements

and professional management in order to create successful businesses. Compl., dkt.

no. 1, ¶ 37. Black Bear also manages youth and junior hockey teams. Specifically, it

manages teams affiliated with facilities it operates in New Jersey, Ohio, and Maryland.

Black Bear's profit model relies on ice rental income from amateur hockey and figure

skating, admission fees for public skating at its facilities, and amateur hockey club

participation fees.

A brief primer on the structure of youth hockey is necessary. As a matter of

federal statute, amateur sports in which the United States competes internationally are

subject to a hierarchical regulatory scheme. See Amateur Sports Act, 36 U.S.C.

§§ 220501, 220503. Amateur hockey is regulated by USA Hockey, Inc., which in turn

sanctions state and regional affiliates. Since 1975 the Amateur Hockey Association of

Illinois has been the affiliate regulator of amateur hockey in the state of Illinois.

The Association organizes amateur hockey by age and skill level. "Youth

hockey" includes individuals under the age of 18. Youth players and teams are

categorized on three tiers: Tier I teams are made up of the highest-skilled players and

travel throughout the United States and Canada to compete with other elite teams; Tier

II is intended for competitive but somewhat less skilled players who want to engage in

regional competition; and Tier III is made up of beginners and recreational teams.

According to the complaint, Tier II teams affiliated with the Association compete in either

the Northern Illinois Hockey League or the Central States Developmental Hockey

League, with the latter reserved for the most skilled Tier II players.

All youth hockey teams in Illinois are required to affiliate with the Association.

Likewise, all participating teams are required to follow the Association's by-laws and

rules and regulations. Those teams or players who do not comply with the Association's

regulations or who participate in games with teams that are not registered with the

Association or another USA Hockey-sanctioned governing body may face discipline,

including loss of eligibility to participate in Association-sponsored tournaments, loss of

insurance coverage, and revocation of membership.

Youth hockey is booming in Illinois. Nationally, participation has increased by

nearly nine percent since 2013. The growth rate in Illinois has more than doubled that

number, with a more than eighteen percent surge in participation during the same

period. There are nearly fifty Tier II hockey clubs in what the plaintiffs describe as the

"Northern Illinois region," each of which has between ten and thirty teams.1 Each of

these youth hockey clubs has a facility designated as its "home ice."

Black Bear wants the Association to grant it a charter to sponsor a Tier II club

that would have its home ice at its Center Ice facility in Glen Ellyn, Illinois. Black Bear's

rinks in Woodridge, Lincolnwood, and Crestwood already host Association-affiliated

clubs.2 But its Center Ice facility is underused. The facility has robust learn-to-skate

and learn-to-play hockey programs. It does not, however, have a youth hockey club

that calls the facility home. Black Bear says that it has "approached [the Association]

about obtaining approval for a new Tier II club." Compl., dkt. no. 1, ¶ 53. But,

1 The plaintiffs also allege certain facts regarding participation levels in Tier I teams.

Those allegations are not directly relevant to this motion because, as discussed below,

Black Bear hopes to get a charter to organize a Tier II club.

2 Importantly, Black Bear does not sponsor these three teams but rather simply provides

them its ice rink facilities.

according to Black Bear, the Association has moved to dash its hopes by "enact[ing]

rules and . . . taking other actions to prevent [it] from entry into the relevant market." Id.

¶ 58. Specifically, it says that the Association "has told Black Bear that a Tier II club at

Center Ice of DuPage is unnecessary and that there are already enough teams in the

relevant market." Id. ¶ 59. Black Bear also alleges that someone—it does not say

who—"told [Black Bear] that it cannot start a new Tier II club because it is a for-profit

enterprise and [Association] rules require sponsors to be charitable organizations." Id.

¶ 61. According to Black Bear, these allegations, combined with the Association's

reluctance to provide Black Bear with a copy of the application for a Tier II club charter,

id. ¶ 65, amount to a predetermination by the Association that it will not grant a charter

to Black Bear.

But Black Bear does not allege that its application has been rejected or even that

it has actually applied for a Tier II club charter. Nor does Black Bear allege that the

Association or relevant decisionmakers have told it, in so many words, that such an

application would be rejected. Rather, Black Bear points to three "requirements"

outlined in a publicly available Association document that it says preclude it from getting

a charter. First, it points to the Association's requirement that member "club[s] must not

be associated with a 'for-profit' organization . . . in accordance with [Association] Rules

and Regulations Article 19[] and [the] USA Hockey Affiliate Agreement." Tier 2

Application Requirements, Ex. 2 to Compl., dkt. no. 1-2, ¶ 7. Black Bear also alleges

that the Association's requirements that applicants identify any other youth hockey

programs that granting a new charter application would affect, id. ¶ 13, and list any

players and programs with which they were affiliated in the five years preceding their

application, id. ¶¶ 5-6, "demonstrate" that that any attempt by Black Bear to get a Tier II

club charter is hopeless, Compl. ¶¶ 67, 68. In Black Bear's view, these regulations

preclude any application it might submit from succeeding, harm competition in the

relevant market, and cause it injury.

Black Bear also alleges it has been injured by another rule recently adopted by

the Association. Specifically, Black Bear says that it arranged for the Association-

affiliated Tier II club that uses its Lincolnwood rink as its home ice to retain the Center

Ice facility in Glen Ellyn as "additional ice," for which the team would have paid Black

Bear rental fees. But, Black Bear alleges, "upon learning that the [team] intended to use

the Center Ice Facility, [the Association] promulgated a new by-law (1.2.5) that prevents

a Tier II team from using ice facilities more than fifteen miles from its home rink."3 Id.

¶ 72. In Black Bear's view, this rule further demonstrates the Association's intent to

maintain its monopoly power and to injure Black Bear.

Black Bear filed a four-court complaint. Count 1 alleges monopolization under

section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2; count 2 alleges a violation of the

corresponding state law provision, 740 Ill. Comp. Stat. 10/3(3); and count 3 alleges

Illinois common-law tortious interference with prospective business relations. Count 4

purports to plead a separate request for injunctive relief based on the first two counts.

The Association has filed a motion to dismiss Black Bear's complaint.

Discussion

To survive a motion to dismiss under Federal Rules of Civil Procedure 12(b)(1)

3 Black Bear's citation is not quite correct. It is not by-law 1.2.5 but rather paragraph

1.2.5 of the Association's rules and regulations that sets out the relevant additional ice

limitation.

and 12(b)(6), a plaintiff's complaint "must contain sufficient factual matter, accepted as

true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). For a

claim to be plausible on its face, the plaintiff must "plead[] factual content that allows the

court to draw the reasonable inference that the defendant is liable for the misconduct

alleged." Id. It must provide more than "labels and conclusions or a formulaic recitation

of the elements of a cause of action . . . ." Id. (internal quotation marks omitted). The

Court is "not obliged to accept as true legal conclusions or unsupported conclusions of

fact." St. John's United Church of Christ v. City of Chicago, 502 F.3d 66, 633 (7th Cir.

2007) (internal quotation marks omitted).

Typically, a court's assessment of a motion to dismiss must be made on the

complaint alone. See Rosenblum v. Travelbyus.com Ltd., 299 F.3d 657, 661 (7th Cir.

2002). But where, as in this case, significant documents are referenced in the

complaint and attached by the defendant to its motion to dismiss, those documents are

considered to be incorporated into the pleadings and a court may consider them. See

id.; see also Orgone Capital III, LLC v. Daubenspeck, 912 F.3d 1039, 1044 (7th Cir.

2019) ("We may also . . . consider documents incorporated by reference in the

pleadings."); Reed v. Palmer, 906 F.3d 540, 548 (7th Cir. 2018) ("A motion under Rule

12(b)(6) can be based only on the complaint itself, documents attached to the

complaint, documents that are critical to the complaint and referred to in it, and

information that is subject to proper judicial notice."). And, indeed, "[t]he court is not

bound to accept the pleader's allegations as to the effect of the [documents], but can

independently examine [them] and form its own conclusions as to the proper

construction and meaning to be given the material.” Rosenblum, 299 F.3d at 661. In

this case, the Association's by-laws, rules and regulations, and "Tier 2 Application

Requirements" document—all of which were attached as exhibits to the complaint or the

motion or both—are appropriately before the Court to the extent that they "are critical to

the complaint and referred to in it." Reed, 905 F.3d at 548.

The Association's motion to dismiss rests principally on its contention that Article

III standing is lacking. "The jurisdiction of federal courts is limited by Article III of the

Constitution to 'Cases' and 'Controversies.'" Freedom from Religion Found., Inc. v.

Lew, 773 F.3d 815, 819 (7th Cir. 2014) (quoting U.S. Const. art. III, § 2.). The Supreme

Court has explained that "the irreducible constitutional minimum of standing consists of

three elements." Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). "The plaintiff

must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged

conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial

decision." Id. At the pleading stage, the plaintiff "must clearly allege facts

demonstrating" each element. Id. (internal quotation marks and alteration omitted).

The Association disputes whether Black Bear has suffered an injury in fact. "To

establish injury in fact, a plaintiff must show that he or she suffered 'an invasion of a

legally protected interest' that is 'concrete and particularized and 'actual or imminent, not

conjectural or hypothetical.'" Id. at 1548 (quoting Lujan v. Defenders of Wildlife, 504

U.S. 555, 560 (1992)). "When an injury is threatened in the future, the risk of harm must

be substantial and more than speculative." Otrompke v. Hill, 592 F. App'x 495, 498 (7th

Cir. 2014); see also Susan B. Anthony List v. Driehaus, 573 U.S. 149, 158 (2014);

Freedom from Religion Found., 773 F.3d at 821-22, 824-25.

Black Bear alleges two types of injury. First, it alleges that it has effectively been

denied a Tier II club charter by the Association due to the Association's purported

requirement that clubs be non-profit organizations. The Court will refer to this as the

alleged exclusion injury. Second, Black Bear alleges that it has been injured by the

Association's adoption of the additional ice rule in early 2018. The Court addresses

each in turn.

A. Exclusion injury

Black Bear's first and primary argument rests on its alleged exclusion by the

Association from youth hockey. Specifically, it alleges that the Association has adopted

policies that effectively shut the door to any application Black Bear might make for a

youth hockey club charter. Black Bear dedicates most of its argument to the

Association's purported requirement that youth hockey "club[s] must not be associated

with a 'for-profit' organization." Tier 2 Application Requirements, Ex. 2 to Compl., dkt.

no. 1-2, ¶ 7. Black Bear, as a for-profit company, says that this exclusion effectively

bars it from receiving a charter—and, indeed, that it so clearly precludes it that any

application would be futile and thus unnecessary to establish an injury that is sufficiently

concrete and imminent to satisfy Article III's standing requirements.

Because this allegation rests on the interpretation of key documents, the Court

undertakes an independent assessment of those documents. See Rosenblum, 299

F.3d at 661. The clearest flaw in the interpretation underlying Black Bear's argument is

that it seeks to read the short informational sheet the Association provides prospective

applicants in isolation. Critically, however, the document incorporates Association

"Rules and Regulations Article 19[] and [the] USA Hockey Affiliate Agreement." Tier 2

Application Requirements, Ex. 2 to Compl., dkt. no. 1-2, ¶ 7. One relevant portion of

Article 19 indeed states that "[e]xcept as set out in the [Association] By-Laws, Rules and

Regulations, each Affiliate shall have a corporate structure and at all times maintain a

tax exempt status under Section 501(c)(3) of the Internal Revenue Code . . . ."

Association Rules & Regs., Ex. 2 to Mot. to Dismiss, dkt. no. 20-3, § 19.7.2. But Article

19 then sets out exceptions to this general rule for (1) affiliates associated with for-profit

learn-to-skate programs or "house league affiliates" and (2) affiliates that operate a for-

profit rink owned by the affiliate. Id. § 19.7.3. Black Bear, as described above, operates

multiple for-profit ice rinks and learn-to-skate programs, including at the Center Ice

facility where it hopes to organize a new Tier II youth club. Without determining whether

these exceptions are necessarily applicable in this situation, the Court observes that

they create significant uncertainty about whether the non-profit rule actually would bar

Black Bear's application for a club charter.

In addition to Article 19's exceptions, the defendant also points out that the

relevant by-law governing applications for Tier II club charters gives the reviewing

Association committee nearly boundless discretion. Specifically, by-law 8.3.4 sets out

that, when faced with a request for Tier II membership, "[t]he Tier II Committee may

deny the request, postpone consideration of the request, grant probationary status as a

Tier II Member Association, grant full status as a Tier II Member Association, or take

any other action that it determines to be in the best interest of hockey in Illinois."

Association By-Laws, Ex. 1 to Mot. to Dismiss, dkt. no. 20-2, § 8.3.4. This broad

discretion suggests that neither the non-profit rule nor the other application

"requirements" alleged by Black Bear—that the applicant must identify clubs that would

be affected by the grant of a new club charter and list any athletes and programs with

which it has previously affiliated—might not doom its application.

Taken together, these provisions of the governing documents render Black

Bear's allegations of injury too speculative to confer Article III standing. Cf. Otrompke,

592 F. App'x at 498 (concluding standing was lacking where a plaintiff sought to

challenge bar admission criteria but failed to apply for membership). As noted

previously, Black Bear has not alleged that the Association or relevant decisionmakers

have unequivocally stated that the Association would reject an application by Black

Bear for a Tier II club charter. It has alleged, in relevant part, only that the "Association

has told Black Bear that a Tier II club at Center Ice of DuPage is unnecessary," Compl.,

dkt. no. 1, ¶ 59, and that someone "told [Black Bear] that it cannot start a new Tier II

club because it is a for-profit enterprise," id. ¶ 61. Even taking these allegations as true,

it is not reasonable to infer—particularly in light of the questions raised by the controlling

rules and by-laws—that it is a foregone conclusion that an application would be denied.

Black Bear's alleged injury is thus too conjectural to support the injury-in-fact

requirement for constitutional standing.

The bottom line is that, on the present allegations, Black Bear cannot proceed

with this lawsuit without having actually applied for a Tier II club charter. But, contrary

to the Association's contention, Black Bear likely would not need to exhaust the appeals

provided for in the Association's rules if it did apply and was rejected. See generally

Association Rules & Regs., Ex. 2 to Mot. to Dismiss, dkt. no. 20-3, art. 10. (describing

appeals procedures). The language of the rule that sets out the appeals process is

precatory; it states that "[a]ppeals of any [Association] Committee decision . . . may be

made" to the Association board of directors. Id. (emphasis added). Nor does it appear

that Black Bear would have to pursue the arbitration process outlined in the

Association's by-laws. The by-law on dispute resolution applies only to "person[s] and

entit[ies] within the jurisdiction of [the Association] . . . by virtue of their membership,

affiliation or participation, at any time, in an [Association] program or sponsored event."

Association By-Laws, Ex. 2 to Mot. to Dismiss, dkt. no. 20-2, § 14.0.2. If the

Association were to deny Black Bear's application for a Tier II club charter—as Black

Bear contends is inevitable—then Black Bear likely would not be within the

Association's jurisdiction as defined by its own arbitration by-law. The defendant's

arguments about mandatory appeals and arbitration therefore appear, at least at this

stage, to lack merit.

B. Additional ice injury

Black Bear's other alleged injury arises from the additional ice rule. Specifically,

Black Bear alleges that it has lost rental fees it otherwise would have garnered from

renting its Center Ice facility in Glen Ellyn as additional ice for a team that has its home

ice at Black Bear's Lincolnwood facility. It alleges that this loss was caused by the

Association's adoption in early 2018 of a rule that, in Black Bear's characterization,

"prevents a Tier II team from using ice facilities more than fifteen miles from its home

rink." Compl., dkt. no. 1, ¶ 72. Black Bear alleges that the adoption of this rule

"demonstrates [the Association]'s intent to main its monopoly power and to injure Black

Bear." Id. ¶ 73.

Again, however, the Court is not obliged to take Black Bear's interpretation of the

Association by-law at face value. See Rosenblum, 299 F.3d at 661. And in fact Black

Bear's characterization of the additional ice rule is significantly incomplete. Contrary to

Black Bear's allegation, the rule does not categorically "prevent" Tier II teams from

using additional ice at facilities more than fifteen miles from their home rink. Rather, it

states that rinks within fifteen miles may be used without any prior approval but "[r]inks

outside the designated area must be approved by the" relevant Association committee.

Association Rules & Regs., Ex. 2 to Mot. to Dismiss, dkt. no. 20-3, § 1.2.5.

As with the exclusion injury discussed above, Black Bear has alleged neither that

it applied for approval of its additional ice arrangement nor that such an application was

rejected. Nor does it allege that the Association or any relevant decisionmaker has

even so much as suggested that such an application would be rejected or would be a

waste of time.4 Even assuming that Black Bear's allegations regarding this injury

provide more than the sort of "labels and conclusions" regularly deemed insufficient to

survive a motion to dismiss for failure to state a claim, see Twombly, 550 U.S. at 570,

the additional ice allegation runs afoul of the injury-in-fact requirement for many of same

reasons as the exclusion injury, see Otrompke, 592 F. App'x at 498. That is, taking

Black Bear's allegations as true, it has not "clearly allege[d] facts demonstrating" that it

suffered an injury in fact from the Association's adoption of the additional ice rule.

Spokeo, 136 S. Ct. at 1547.

4 The Court also notes that Black Bear has apparently not attempted to allege, as the

Seventh Circuit has suggested may be sufficient, that the additional ice rule imposes an

"additional burden" unique to particular group of plaintiffs sufficient to satisfy the injury-

in-fact requirement. See Freedom from Religion Found., 773 F.3d at 825. That said, it

is not clear to the Court that such an allegation would be sufficient to confer standing

under that and subsequent cases. See id.; see also Spokeo, 136 S. Ct. at 1548 (noting

that concreteness is a separate requirement distinct from particularity and that the latter

does not satisfy the former).

Conclusion

For the foregoing reasons, the Court grants the defendant's motion to dismiss

[dkt. no. 18] and directs the Clerk to enter judgment dismissing the case for lack of

standing. The status hearing and ruling set for May 14, 2019 is vacated.

MATTHEW F. KENNELLY

United States District Judge

Date: May 9, 2019

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