Appendix — National Football League v. Oakland Raiders, Ltd.

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84-418 Fite >

No. 84- SEP 14 1984

ALEXANDER L. STEVvag

In the Supreme Coukt axe |

OF THE

United States

OcroBER TERM, 1984

OaKLAND-ALAMEDA County Co.iseuM, INc.,

Petittoner,

VS.

OAKLAND Raters, Ltp., and

Los AnceELEs MemoriaL CoLisEUM CoMMISSION,

Respondents.

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

*Epwin A. Hearey, JR.

TimotHy J. Murpuy

Crossy, Hearry, Roacu & May

Professional Corporation

1939 Harrison Street

Oakland, California 94612

(415) 834-4820

Attorneys for Oakland-

Alameda County

Coliseum, Inc., Petitioner

September, 1984

*Counsel of Record

BOWNE OF SAN FRANCISCO, INC. © 190 NINTH ST. © S.F., CA 94103 © (415) 864-2300

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INDEX

Appendix A—Opinion of the Court of Appeals..........

Appendix B—Opinion of the District Court Direct-

ing Verdict on Single Entity Issue......

Appendix C—Order of the District Court Denying

Motion for Change of Venue................

Appendix D—Order of the Court of Appeals Denying

Petition for Writ of Mandamus on

5 NEESER SAE ENT Seen en aN

Appendix E—F inal Decree of the District Court En-

tering Permanent Injunction................

Appendix F—Order of the Court of Appeals Denying

Petition for Rehearing............................

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APPENDIX A

Rnited States Count of Appeals

NINTH CIRCUIT

Nos. 82-5572 to 82-5574, 82-5664, 82-5665,

83-5714, 83-5732 and 83-5938

Argued and Submitted April 7, 1983

Decided Feb. 28, 1984

Los ANGELES MEMORIAL COLISEUM COMMISSION,

Plaintiff-Appellee,

v.

NATIONAL FOOTBALL LEAGUE,

an unincorporated association, et al.,

Defendants/ Cross-Defendants

Appellants/ Cross-Appellees.

Before:

ANDERSON AND NELSON,

Circuit Judges,

and WILLIAMS,

District Judge.*

Appeals from the United States District Court for the

Central District of California.

J. BLAINE ANDERSON, Circuit Judge:

These appeals involve the hotly contested move by the

Oakland Raiders, Ltd. professional football team from Oak-

land, California, to Los Angeles, California. We review only

the liability portion of the bifurcated trial; the damage phase

was concluded in May 1983 and is on a separate appeal. After

a thorough review of the record and the law, we affirm.

* The Honorable Spencer M. Williams, United States District Judge for

the Northern District of California, sitting by designation.

2a

I. FACTS

In 1978, the owner of the Los Angeles Rams, the late

Carroll “osenbloom, decided to locate his team in a new

stadium, the “Big A,” in Anaheim, California. That left the Los

Angeles Coliseum without a major tenant. Officials of the

Coliseum then began the search for a new National Football

League occupant. They inquired of the League Commissioner,

Pete Rozelle, whether an expansion franchise might be located

there but were told that at the time it was not possible. They

also negotiated with existing teams in the hope that one might

leave its home and move to Los Angeles.

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The L.A. Coliseum ran into a major obstacle in its attempts

to convince a team to move. That obstacle was Rule 4.3 of

Article [IV of the NFL Consiitution. In 1978, Rule 4.3 required

unanimous approval of all the 28 teams of the League when-

ever a team (or in the parlance of the League, a “franchise” )

seeks to relocate in the home territory of another team. Home

territory is defined in Rule 4.1 as

the city in which [a] club is located and for which

it holds a franchise and plays its home games, and

includes the surrounding territory to the extent of

75 miles in every direction from the exterior corpo-

rate limits of such city....

In this case, the L.A. Coliseum was still in the home termnitory of

the Rams.

The Coliseum viewed Rule 4.3 as an unlawful restraint of

trade in violation of § | of the Sherman Act, 15 U.S.C. § 1, and

brought this action in September of 1978. The district court

concluded, however, that no present justiciable controversy

existed because no NFL team had committed to moving to Los

Angeles. 468 F.Supp. 154 (C.D.Cal.1979).

The NFL nevertheless saw the Coliseum’s suit as a

sufficient threat to warrant amending Rule 4.3. In late 1978,

the Executive Committee of the NFL, which is comprised of a

voting member of each of the 28 teams, met and changed the

3a

rule to require only three-quarters approval by the members of

the League for a move into another team’s home territory.'

Soon thereafter, Al Davis, managing general partner of the

Oakland Raiders franchise, stepped into view. His lease with

the Oakland Coliseum had expired in 1978. He believed the

facility needed substantial improvement and he was unable to

persuade the Oakland officials to agree to his terms. He instead

turned to the Los Angeles Coliseum.

Davis and the L.A. Coliseum officials began to discuss the

possibility of relocating the Raiders to Los Angeles in 1979. In

January, 1980, the L.A. Coliseum believed an agreement with

Davis was imminent and reactivated its lawsuit against the

NFL, seeking a preliminary injunction to enjoin the League

from preventing the Raiders’ move. The district court granted

the injunction, 484 F.Supp. 1274 (1980), but this court re-

versed, finding that an adequate probability of irreparable

injury had not been shown. 634 F.i.d 1197 (1980).

On March I, 1980, Al Davis and the Coliseum signed a

““memorandum of agreement” outlining the terms of the Raid-

er’s relocation in Los Angeles. At an NFL meeting on March 3,

1980, Davis announced his intentions. In response, the League

brought a contract action in state court, obtaining an injunction

preventing the move. In the meantime, the City of Oakland

brought its much-publicized eminent domain action against the

‘ Rule 4.3 originally read:

Any transfer of an existing franchise to a location within the home

territory of any other club shall only be effective if approved by a

unanimous vote: any other transfer shall only be effective if ap-

proved by the affirmative vote of not less than three-fourths or 20,

whichever is greater, of the member clubs of the League.

After its 1978 amendment, Rule 4.3 states:

The League shall have exclusive control of the exhibition of football

games by member clubs within the home terntory of each member.

No member club shall have the right to transfer its franchise or

playing site to a different city, either within or outside its home

territory, without prior approval by the affirmative vote of three-

fourths of the existing member clubs of the League.

4a

Raiders in its effort to keep the team in its onginal home. The

NFL contract action was stayed pending the outcome of this

litigation, but the eminent domain action is still being prose-

cuted in the California courts.

Over Davis’ objection that Rule 4.3 is illegal under the

antitrust laws, the NFL teams voted on March 10, 1980, 22-0

against the move, with five teams abstaining. That vote did not

meet the new Rule 4.3’s requirement of three-quarters approv-

al.

The Los Angeles Memorial Coliseum Commission then

renewed its action against the NFL and cach member club.

The Oakland-Alameda County Coliseum, Inc., was permitted

to intervene. The Oakland Raiders cross-claimed against the

NFL and is currently aligned as a party plainuff.

The action was first tried in 1981, but resulted in a hung

jury and mistrial. A second trial was conducted, with strict

constraints on trial time. The court was asked to determine if

the NFL was a “single business entity” and as such incapable

of combining or conspiring in restraint of trade. Referring to

the reasoning in its opinion written for the first trial, 519

F.Supp. 581, 585 (1981), the court concluded the League was

not a “single entity.” Vol. 12 Clerk’s Record # 931.

The district court denied the NFL’s motions for change of

venue, but did employ a detailed voir dire of the jury pool and

of the jurors eventually empaneled. The tnal was bifurcated so

the jury could first determine liability. In the liability portion,

counsel were limited to 40 hours of trial time per side in an

effort to narrow the matters presented.

The trial was conducted and witnesses called, including

owners of various NFL member teams and the League Com-

missioner, Pete Rozelle. The jury was instructed on the

antitrust liability issues and sent out May 6, 1982. On May 7,

1982, the jury returned a verdict in favor of the Los Angeles

Memonial Coliseum Commission and the Oakland Raiders on

the antitrust claim and for the Raiders on their claim of breach

of the implied promise of good faith and fair dealing. The

court then continued the case to September 20, 1982, to begin

the damages trial.

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On June 14, 1982, the court issued its judgment on the

liability issues, permanently enjoining the NFL and its member

clubs from interfering with the transfer of the Oakland Raiders’

NFL franchise from the Oakland Coliseum to the Los Angeles

Memonial Coliseum. The court determined, in addition, that

there was “no just reason for delay in entering this final

judgment on plaintiff's and cross-claimant’s claim for deciara-

tory and equitable relief, and . . . expressly direct{ed] this final

judgment be entered.” Vol. 16 Clerk’s Record #2090. The

NFL and its original clubs immediately appealed the per-

manent injunction (No. 82-5572); the origina! clubs of the

American Football League also appealed (No. 82-5573), as

did the Los Angeles Rams Football Co. ( No. 82-5574) and the .

Oakland-Alameda County Coliseum (No. 82-5664). The

Oakland Raiders cross-appealed challenging six orders entered

by the court in 1981 and 1982 (Nos. 82-5665 and 83-5398).

The NFL and Oakland Coliseum have also appealed the failure

of the district court to grant their post-trial motions. (Nos. 83-

5714 and 83-5732).

The damages trial was completed in May 1983 with the

jury returning a verdict awarding the Raiders $11.55 million

and the Los Angeles Coliseum $4.86 million. These awards

were trebled by the district court pursuant to 15 U.S.C. § 15.

The NFL and the other defendants have appealed. (Nos. 83-

$907, 83-5908 and 83-5909). This panel will hear and decide

the damage appeals. But, because these appeals were ex-

pedited, the damage appeals will be decided in a later opinion

after briefing, possible argument, and submission.?

2Qnce in this court, the parties have continued their practice of

affirmative lawyering and have filed multiple motions. The motions that have

not been resolved up until this point are here discussed.

First, the NFL has moved this court for permission to supplement the

record on the question of the effect of the stipulation entered into by the

parties concerning relevant market. We grant the motion and will discuss the

effect of the stipulation with the merits section, infra.

Second, the Raiders agreed to drop its cross-appeal if the judgment of

antitrust liability and injunction is affirmed. As we are affirming that

(footnote continues)

6a

Il. SHERMAN ACT $1

The jury found that Rule 4.3 violates § 1 of the Sherman

Act, 15 U.S.C. § 1. Section | literally prohibits every agree-

ment, conspiracy, or other concerted activity in restraint of

trade. Since Congress could not have intended that courts

invalidate “every” such agreement, see United States v. Joint

Traffic Assn., 171 U.S. 505, 19 S.Ct. 25, 43 L.Ed. 259 (1898),

most restraints are analyzed under the so-called “rule of

reason.” Standard Oil of New Jersey v. United States, 221 U.S.

1, 31 S.Ct. 502, 55 L.Ed. 619 (1911). The rule of reason

requires the factfinder to decide whether under all the circum-

stances of the case the agreement imposes an unreasonable

restraint on competition. Arizona v. Maricopa County Medical

Society, 457 U.S. 332, 343, 102 S.Ct. 2465, 2472, 73 L.Ed. 48,

58 (1982).

Standard Oil, however, reconciled the earlier categorical

prohibition with its own rule of reason by declaring that some

restraints remain inherently unreasonable. 221 U.S. at 64-65,

31 S.Ct. at 517. When judicial experience with a particular

kind of restraint enables a court to predict with certainty that

the rule of reason will condemn that restraint, the court will

hold that the restraint is per se unlawful. See United States v.

Topco Associates, Jac., 405 U.S. 596, 92 S.Ct. 1126, 31 L.Ed.2d

515 (1972). Im other cases where judges lack the experi

understanding of an industry’s market structure and behavior to

have such certainty, the court will consider facts peculiar to the

industry, the nature of the restraint and its effect to determine

(footnote continued)

judgment, we dismiss the Raiders’ cross-appeals, Nos. 82-5665 and 83-5938.

It is unnecessary to address the NFL's and Oakland Coliseum's motions on

this subject.

Finally, the Raiders have moved to dismiss the NFL's and Oakland

Coliseum’s appeals from the district court's denial of their Fed.R.Civ.P. 60( b)

motions. This motion is granted. The district court lacked jurisdiction to

consider this motion: its denial of the motion is not an appealable order.

Smith v. Lujan, $88 F.2d 1304, 1307 (9th Cir.1979}. Also, the district court

indicated no desire to entertain the motions if this court remanded this case

back to it. Jd The appeals in Nos. 83-5714 and 83-5732 are dismissed.

NOAA 1 Bom. seal te

7a

whether that restraint promotes or restrains competition. See

Chicago Board of Trade v. United States, 246 U.S. 231, 238, 38

S.Ct. 242, 243. 62 L.Ed. 683, 687 (1918).

In the present case, the district judge found that the unique

nature of the business of professional football made application

of a per se rule inappropriate. 468 F.Supp. 154, 164-168

(1979). The court therefore instructed the jury that it was to

decide whether Rule 4.3 was an unreasonable restraint of trade.

The parties do not contest the appropriateness of this basic

reasonableness inquiry. The NFL, however, raises two argu-

ments against the lower court’s judgment finding section |

liability. First, the NFL contends that it is a single entity

incapable of conspiring to restrain trade under section |.

Second, it insists that Rule 4.3 is not an unreasonable restraint

of trade under section |.

A. Single Entity

The NFL contends the league structure is in essence a

single entity, akin to a partnership or joint venture, precluding

application of Sherman Act section. | which prevents .only

contracts, combinations or conspiracies in restraint of trade.

The Los Angeles Coliseum and Raiders reject this position and

assert the League is composed of 28 separate legal entities

which act independently.

The district court directed a verdict for plaintiffs on this

issue and as a preliminary matter the NFL states the jury

should have been allowed to decide the question. A directed

verdict may be granted pursuant to Fed.R.Civ.P. 50(a) when,

viewing the evidence in a light most favorable to the nonmov-

ing party, the testimony and all the inferences that the jury

could justifiably draw therefrom are insufficient to support any

other finding. Independent Iron Works, Inc. v. United States

Steel Corp., 322 F.2d 656,661 (9th Cir.), cert. denied, 375 U.S.

922, 84 S.Ct. 267, 11 L.Ed.2d 165 (1963). When there is no

substantial evidence to support a claim, i.e., only one conclusion

can be drawn, the court must direct a verdict, even in an

antitrust case. Cleary v. Nat'l Distillers and Chemical Corp., 505

F.2d 695, 696 (9th Cir.1974). Our review is de nove. Santa

8a

Clara Valley Distributing Co. v. Pabst Brewing Co., 556 F.2d

942, 944 (9th Cir.1977).

It is true, as the NFL contends, that the nature of an entity

and its ability to combine or conspire in violation of § | is a fact

question. Murray v. Toyota Motor Distributors, Inc., 664 F.2d

1377, 1379 (9th Cir.), cert. denied, 457 U.S. 1106, 102 S.Ct.

2905, 73 L.Ed.2d 1314 (1982). It would be reversible error,

then, to take the issue from the jury if reasonable minds could

differ as to its resolution. Jd. Here, however, the material facts

are undisputed. How the NFL is organized and the nature and

extent of cooperation among the member clubs is a matter of

record; the NFL Constitution and Bylaws contain the agree-

ment. Based on the undisputed facts and the law on this

subject, the district court correctly decided this issue.

The district court cited three reasons for rejecting the

NFL’s theory. Initially, the court recognized the logical

extension of this argument was to make the League incapable

of violating Sherman Act §1 in every other subject restric-

tion—yet courts have held the League violated § 1 in other

areas. 519 F.Supp. at 583. Secondly, other organizations have

been found to violate § | though their product was “iust as

unitary ... and requires the same kind of cooperation from the

organization’s members.” Jd. Finally, the district court consid-

ered the argument to be based upon the false premise that the

individual NFL “clubs are not separate business entities whose

products have an independent value.” 519 F.Supp. at 584. We

agree with this reasoning.

NFL rules have been found to violate § | in other contexts. .

Most recently, the Second Circuit analyzed the NFL’s rule

preventing its member-owners from having ownership interests

in other professional sports clubs. North American Soccer

League v. National Football League, 670 F.2d 1249, 1257-1259

(2d Cir.), cert. denied, 459 U.S. 1074, 103 S.Ct. 499, 74

L.Ed.2d 639 (1982). It recognized the cooperation necessary

among league members, even characterizing the NFL as a joint

venture, but nonetheless applied rule of reason analysis and

found the cross-ownership rule violated § 1. Other courts have

held the League rules governing player contracts violate § | of

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9a

the Sherman Act. Smith v. Pro Football, Inc., 593 F.2d 1173

(D.C.Cir.1978); Mackey v. NFL, F.2d 606 (8th Cir.1976);

Kapp v. NFL, 390 F.Supp. 73 (N.D.Cal.1974), appeal vacated,

586 F.2d 644 (9th Cir.1978), cert. denied, 441 U.S. 907, 99

S.Ct. 1996, 60 L.Ed.2d 375 (1979). As noted by the Second

Circuit in Soccer League, a finding of single entity status would

immunize the NFL from § | scrutiny:

To tolerate such a loophole would permit league

members to escape antitrust responsibility for any

restraint entered into by them that would benefit

their league or enhance their ability to compete

even though the benefit would be outweighed by

its anticompetitive effects. Moreover, the restraint

might be one adopted more for the protection of

individual league members from competition than

to help the league.

670 F.2d at 1257.

Cases applying the single entity or joint venture theory in

other business areas also contradict the NFL's argument. As

stated by the Supreme Court:

Nor do we find any support in reason or authority

for the proposition that agreements between legal-

ly separate persons and companies to suppress

competition among themselves and others can be

justified by labelling the project a “joint venture.”

Perhaps every agreement and combination in re-

straint of trade could be so labeled.

Timken Roller Bearing Co. v. United States, 341 U.S. 593, 598,

71 S.Ct. 971, 974, 95 L.Ed. 1199, 1206 (1951). Timken

involved an allegation of territorial division among three

companies that shared partial common ownership. In Perma

Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134,

141-142, 88 S.Ct. 1981, 1985-1986, 20 L.Ed.2d 982, 992

(1968), the Court reiterated that common ownership will not

suffice to preclude the application of § 1. While these cases and

others have been the subject of some criticism, see, e.g., M.

10a

Handler and T. Smart, The Present Status of the Intracorporate

Conspiracy Doctrine, 3 Cardozo Law Review 23 (1981), they

remain the law. In recognition that a broad application of

Timken and Perma Life could subvert legitimate procompeti-

tive business associations, this circuit has found the threshold

requirement of concerted activity missing among “multiple

corporations operated as a single entity” when “corporate

policies are set by one individual or by a parent corporation.”

General Business Systems v. North American Philips Corp., 699

F.2d 965, 980 ( 9th Cir.1983); see Thomsen v. Western Co., 680

F.2d 1263, 1266 ( 9th Cir.), cert. denied, 459 U.S. 991, 103 S.Ct.

348, 74 I Ed.2d 387 (1982); Las Vegas Sun, Inc. v. Summa

Corp., 610 F.2d 614, 617 (9th Cir.1979), cert. denied, 447 U.S.

906, 100 S.Ct. 2988, 64 L.Ed.2d 855 (1980). The facts make it

clear the NFL does not fit within this exception. While the

NFL clubs have certain common purposes, they do not operate

as a single entity. NFL policies are not set by one individual or

parent corporation, but by the separate teams acting jointly.

It is true the NFL clubs must cooperate to a large extent in

their endeavor in producing a “product”—the NFL season

culminating in the Super Bowl. The necessity that otherwise

independent businesses cooperate has not, however, sufficed to

preclude scrutiny under § | of the Sherman Act. In Associated

Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013

(1945), the Supreme Court rejected the assertion that the AP

was immune from section | because it was a necessary coopera-

tive of independent newspapers which produced a product its

individual members could not. Jd. at 26, 65 S.Ct. at 1427, 89

L.Ed. at 2034 ( Frankfurter, J., concurring). More recently, the

Court found the cooperation required among ostensible com-

petitors in arranging blanket licensing of copyrighted songs

precluded only a finding of per se illegality; instead, rule of

reason analysis was the proper method to determine the legality

of the arrangement. Broadcast Music, Inc. v. Columbia Broad-

cast System, Inc., 441 U.S. 1, 99 S.Ct. 1551, 60 L.Ed.2d 1

lla

(1979);3 see also Silver v. New York Stock Exchange, 378 U.S.

341, 83 S.Ct. 1246, 10 L.Ed.2d 389 (1963).

The case of United States v. Sealy, Inc., 388 U.S. 350, 87

S.Ct. 1847, 18 L.Ed.2d 1238 (1967), is closely on point. Sealy

licensed manufacturers to sell bedding products under the Sealy

name and allocated territories to the licensees. The facts

showed, however, that this arrangement was not vertical but

horizontal; the 30 licensees, owning all of the stock of Sealy,

controlled all its operations. 388 U.S. at 352-353, 87 S.Ct. at

1849-1850, 18 L.Ed.2d at 1242. Describing the Sealy organiza-

tion as a joint venture, the Court nonetheless found it a per se

violation of the Sherman Act. See also United States v. Topco

Associates, Inc., 405 U.S. 596, 609, 92 S.Ct. 1126, 1134, 31

L.Ed.2d 515, 526 (1972) (Court finding a per se violation on

facts similar to Sealy).

The NFL structure is very similar to that in Sealy. The

League itself is only in very limited respects an identity separate

from the individual teams. It is an unincorporated, not-for-

profit, “association.” It has a New York office run by the

Commissioner, Pete Rozelle, who makes day-to-day decisions

regarding League operations. Its primary functions are in the

areas of scheduling, resolving disputes among players and

franchises, supervising Officials, discipline and public relations.

The decision involved here on territorial divisions is made by

the NFL Executive Committee which is comprised of a repre-

sentative of each club. Even though the individual clubs often

act for the common good of the NFL, we must not lose sight of

the purpose of the NFL as stated in Article I of its constitution,

3On remand in Broadess Music the Second Circuit did not conclude, as

the NFL claims, that rule of reason analysis was unnecessary. It found only

that it was unnecessary to balance the pro and anticompetitive effects of the

blanket licensing arrangement because no anticompetitive effects were prov-

en. Columbia Broadcasting System, Inc. vy. American Society of Composers,

620 F.2d 930, 934-935 (2d Cir.1980), cert. denied, 450 U.S. 970. 101 S.Ct

1491, 67 L.Ed.2d 621 (1981). As will be discussed below, that reasoning

squares with this circuit’s view that a showing of anticompetitive effect is a

threshold rule of reason consideration. See Cascade Cabinet Co. v. Western

Cabinet & Millwork, Inc., 710 F.2d 1366, 1373 (9th Cir.1983).

12a

which is to “promote and foster the primary business of League

members.” Although the business interests of League mem-

bers will often coincide with those of the NFL as an entity in

itself, that commonality of interest exists in every cartel. As in

Sealy, we must look behind the label proffered by the defen-

dants to determine the substance of the entity in question. 388

U.S. at 353, 87 S.Ct. at 1850, 18 L.Ed.2d at 1242.

Our inquiry discloses an association of teams sufficiently

independent and competitive with one another to warrant rule

of reason scrutiny under § | of the Sherman Act. The NFL

clubs are, in the words of the district court, “separate business

entities whose products have an independent value.” 519

F.Supp. at 584. The member clubs are all independently

owned. Most are corporations, some are partnerships, and

apparently a few are sole proprietorships. Although a large

portion of League revenue, approximately 90%, is divided

equally among the teams, profits and losses are not shared, a

feature common to partnerships or other “single entities.” In

fact, profits vary widely despite the sharing of revenue. The

disparity in profits can be attributed to independent manage-

ment policies regarding coaches, players, management person-

nel, ticket prices, concessions, luxury box seats, as well as

franchise location, all of which contribute to fan support and

other income sources.

In addition to being independent business entities, the

NFL clubs do compete with one another off the field as well as

on to acquire players, coaches, and management personnel. In

certain areas of the country where two teams operate in close

proximity, there is also competition for fan support, loca!

television and local radio revenues, and media space.

These attributes operate to make each team an entity in

large part distinct from the NFL. It is true that cooperation is

necessary to produce a football game. However, as the district

court concluded, this does not mean, “that each club can

produce football games only as an NFL member.” 519

F.Supp. at 584. This is especially evident in light of the

emergence of the United States Football League.

13a

For the foregoing reasons, we affirm the district court’s

rejection of the NFL’s single entity defense. Of course, the

singular nature of the NFL will need to be accounted for in

discussing the reasonableness of the restriction on team move-

ment, but it is not enough to preclude § | scrutiny. The NFL’s

related argument that Rule 4.3 is valid as a restraint ancillary to.

a joint venture agreement will be discussed in the rule of reason

analysis that follows. Contrary to the NFL’s apparent belief,

the ancillary restraint doctrine is not independent of the rule of

reason. National Society of Professional Engineers v. United

States, 435 U.S. 679 at 689, 98 S.Ct. 1355, 1364, 55 L.Ed.2d

637 at 648; see R. Bork, The Rule of Reason and the Per Se

Concept: Price Fixing and Market Division, 74 Yale L.J. 775,

796-801 (1965).

B. Rule of Reason

In Chicago Board of Trade v. United States, 246 U.S. 281,

288, 88 S.Ct. 242, 244, 62 L.Ed. 683, 687 (1918), Justice

4One district court case has reached the opposite conclusion in a

somewhat similar context. In San Francisco Seals, Lid. v. National Hockey

League, 379 F.Supp. 965 (C.D.Cal.1974), the court upheld the NHL’s right

to preclude the Seals’ proposed move to Vancouver. The court found both

that the NHL is a single entity incapable of conspiring in violation of § | of

the Sherman Act and that the denial of the move had no anticompetitive

effect. A recent law review article argues that the court in Seals correctly

decided the single entity issue. M. Grauer, Recognition of the National

Football League as a Single Entity under Section 1 of the Sherman Act:

Implications of the Consumer Welfare Model, 82 Mich.L.Rev. | (1983).

Although Seals and this article offer persuasive reasons for recognizing the

NFL as a single entity, we do not find these reasons so compelling that

existing precedent can be ignored or that we should grant this association of

28 independent businesses blanket immunity from attack under § | of the

Sherman Act. The unitary nature of the NFL can be accounted for by

analyzing the competitive harms and benefits of Rule 4.3 under the rule of

reason, without impinging on Congress’ authority to decide whether a specific

industry deserves an exemption from the antitrust laws. See Jefferson County

Pharmaceuticals v. Abbott Laboratories, US. 103 S.Ct.

1011, 1016-17, 74 L.Ed.2d 882, 890-91 (1983); see also United States v.

Cooper Corp., 312 U.S. 600, 606, 61 S.Ct. 742, 744, 85 L.Ed. 1071, 61 S.Ct

742 (1941).

l4a

Brandeis announced what has become the classic approach

used in rule of reason analysis:

The true test of legality is whether the restraint

imposed is such as merely regulates and perhaps

thereby promotes competition, or whether it is

such as may suppress or even destroy competition.

To determine that question the court must ordi-

narily consider the facts peculiar to the business to

which the restraint is applied; its condition before

and after the restraint was imposed; the nature of

the restraint and its effect, actual or probable. The

history of the restraint, the evil believed to exist,

the reason for adopting the particular remedy, the

purpose or end sought to be attained, are ail

relevant facts. This is not because a good intention

will save an otherwise objectionable regulation, or

the reverse; but because knowledge of intent may

help the court to interpret facts and to predict

consequences.

As elaborated upon by this circuit: “Rule of reason analysis

calls for a ‘thorough investigation of the industry at issue and a

balancing of the arrangement’s positive and negative effects on

competition.”” Cascade Cabinet, 710 F.2d at 1373 (quoting

Northrop Corp v. McDonnell Douglas Corp., 705 F.2d 1030,

1050 (9th Cir.1983)}. This balancing process is not applied,

however, until after the plaintiff has shown the challenged

conduct restrains competition. Cascade Cabinet, 710 F.2d at

1373. To establish a cause of action, plaintiff must prove these

elements: “(1) An agreement among two or more persons or

distinct business entities; (2) Which is intended to harm or

unreasonably restrain competition; (3) And which actually

causes injury to competition.” Kaplan v. Burroughs Corp., 611

F.2d 286, 290 (9th Cir.1979), cert. denied, 447 U.S. 924, 100

S.Ct. 3016, 65 L.Ed.2d 1116 (1980); accord Reid Brothers

Logging Co. v. Ketchikan Pulp Co., 699 F.2d 1292, 1296 (9th

Cir. 1983).

Our rejection of the NFL’s single entity defense implicitly

recognized the existence of the first element—the 28 member

1Sa

clubs have entered an agreement in the form of the NFL

Constitution and Bylaws. As will be developed in more detail,

we have no doubt the plaintiffs also met their burden of proving

the existence of the second element. Rule 4.3 is on its face an

agreement to control, if not prevent, competition among the

NFL teams through territorial divisions. The third element is

more troublesome. It is in this context that we discuss the

NFL’s ancillary restraint argument. Also, a showing of injury

to competition requires “[p]roof that the defendant’s activities

had an impact upon‘competition in a relevant market,” Kaplan,

611 F.2d at 291, proof that “is an absolutely essential element

of a rule of reason case.” Id; see Aydin Corp. v. Loral Corp.,

718 F.2d 897, 901 (9th Cir.1983).

Other courts have applied rule of reason analysis to

determine the legality of concerted action undertaken by the

NFL and for the most part have found such action illegal. £.g.,

North American Soccer League, 670 F.2d 1249; Smith v. Pro

Football, Inc., 598 F.2d 1178 (D.C.Cir.1978); Mackey v. Na-

tional Football Leayue, 543 F.2d 606 (8th Cir.1976), cert.

dismissed, 434 U.S. 801, 98 S.Ct. 28, 54 L.Ed.2d 59 (1977).

The instant case is the first of this type in this circuit, however,

and the first in which a member club has questioned the legality

of NFL rules.

In a quite general sense, the case presents the competing

considerations of whether a group of businessmen can enforce

an agreement with one of their co-contractors to the detriment

of that co-contractor’s right to do business where he pleases.

More specifically, this lawsuit requires us to engage in the

difficult task of analyzing the negative and positive effects of a

business practice in an industry which does not readily fit into

the antitrust context. Section 1 of the Sherman Act was

designed to prevent agreements among competitors which

eliminate or reduce competition and thereby harm consumers.

Yet, as we discussed in the context of the single entity issue, the

NFL teams are not true competitors, nor can they be.

The NFL’s structure has both horizontal and vertical

attributes. See, e.g., Continental TV, Inc. v. GTE Sylvania, Inc.,

433 U.S. 36, 97 S.Ct. 2549, $3 L.Ed.2d 568 (1977). On the one

l6a

hand, it can be viewed simply as an organization of 28

competitors, an example of a simple horizontal arrangement.

On the other, and to the extent the NFL can be considered an

entity separate from the team owners, a vertical relationship is

disclosed. In this sense the owners are distributors of the NFL

product, each with its own territorial division. In this context it

is clear that the owners have a legitimate interest in protecting

the integrity of the League itself. Collective action in areas such

as League divisions, scheduling and rules must be allowed, as

should other activity that aids in producing the most market-

able product attainable. Nevertheless, legitimate collective

action should not be construed to allow the owners to extract

excess profits. In such a situation the owners would be acting as

a classic cartel. Agreements among competitors, i.e., cartels, to

fix prices or divide market territories are presumed illegal under

§ | because they give competitors the ability to charge unrea-

sonable and arbitrary prices instead of setting prices by virtue

of free market forces. See United States v. Trenton Potteries

Co., 273 U.S. 392, 397, 47 S.Ct. 377, 379, 71 L.Ed. 700, 705

(1927); United States v. Topco Associates, 405 U.S. at 611, 92

S.Ct. at 1135, 31 L.Ed.2d at 527-528.

On its face, Rule 4.3 divides markets among the 28 teams,

a practice presumed illegal, but, as we have noted, the unique

structure of the NFL precludes application of the per se rule.

North American Soccer League, 670 F.2d at 1258-1259; see

Cascade Cabinet Co. v. Western Cabinet & Millwork, Inc., 710

F.2d 1366, 1370-1373 (9th Cir.1983). Instead, we must

examine Rule 4.3 v. Western whether it reasonably serves the

legitimate collective concerns of the owners or instead permits

them to reap excess profits at the expense of the consuming

public.

1. Relevant Market

The NFL contends it is entitled to judgment because

plaintiffs failed to prove an adverse impact on competition in a

relevant market. The NFL’s claim that it is entitled to

judgment notwithstanding the verdict is governed by the same

standards as a motion for directed verdict, discussed above.

The court is not permitted to account for witness credibility,

17a

weigh the evidence or reach a different result it finds more

reasonable as long as, viewing the evidence in a light most

favorable to the nonmoving party, the jury’s verdict is sup-

ported by substantial evidence. William Inglis & Sons Baking

Co. v. ITT Continental Baking Co., 668 F.2d 1014, 1026 (9th

Cir.1981), cert. denied, 459 U.S. 825, 103 S.Ct. 58, 74 L.Ed. 61

(1982).

The relevant market provides the basis on which to

balance competitive harms and benefits of the restraint at issue.

See Kaplan, 611 F.2d at 291; see also Lektro-Vend Corp. v.

Vendo Co., 660 F.2d 255, 268-269 (7th Cir.1981), cert. denied,

455 U.S. 921, 102 S.Ct. 1277, 71 L.Ed.2d 461 (1982). Such

evidence is essential in a section | case. See Continental TV,

Inc., 433 U.S. at 53 n. 21, 97 S.Ct. at 2559 n. 21, 53 L.Ed.2d at

582, n. 21 (“an antitrust policy divorced from market consid-

erations would lack any objective benchmarks”).

In the present case, the parties entered a stipulation

regarding relevant market evidence because the time allowed

for witnesses in the second trial was restricted by the trial court.

The stipulation provided that no experts would be called to

testify on the subject. Instead, the transcripts and exhibits used

by the economic experts were deemed incorporated in the

record and admitted in evidence at the retrial, allowing counsel

to argue market issues as if the experts had testified before the

jury. Our review shows, however, that neither the transcripts

nor the exhibits were placed before the jury. We are surprised

that in a trial of this magnitude these able attorneys would

neglect such important evidence. Upon a careful review of the

record, however, we find that testimony of others was sufficient

to cover the subject where necessary, and to guide the jury’s

finding that Rule 4.3 is an unreasonable restraint of trade.

In the antitrust context, the relevant market has two

components: the product market and the geographic market.

Product market definition involves the

process of describing those groups of producers

which, because of the similarity of their products,

have the ability—actual or potential—to take

18a

significant amounts of business away from each

other. A market definition must look at all rele-

vant sources of supply, either actual rivals or eager

potential entrants to the market.

Kaplan, 611 F.2d at 292 (quoting SmithKline Corp. v. Eli Lilly

& Co., 575 F.2d 1056, 1063 (3d Cir.), cert. denied, 439 U.S.

88, 99 S.Ct. 123, 58 L.Ed.2d 134 (1978)). Two related tests

are used in arriving at the product market: first, reasonable

interchangeability for the same or similar uses; and second,

cross-elastcity of demand, an economic term describing the

responsiveness of sales of one product to price changes in

another. Jd. at 291; see S. J. von Kalinowski, Antitrust Laws

and Trade Regulations. § 8.02[2] (1983). Similar consid-

erations determine the relevant geographic market, which

describes the “economically significant” area of effective com-

petition in which the relevant products are traded. Kaplan, 611

F.2d at 292 (quoting Brown Shoe Co. v. United States, 370 U.S.

294, 82 S.Ct. 1502, 8 L.Ed.2d 510 ( 1962)).

The claims of the Raiders and the L.A. Coliseum, respec-

tively, present somewhat different market considerations. The

Raiders attempted to prove the relevant market consists of

NFL football (the product market) in the Southern California

area (the geographic market). The NFL argues it competes

with all forms of entertainment within the United States, not

just Southern California. The L.A. Coliseum claims the

relevant market is stadia offering their facilities to NFL teams

(the product market) in the United States (the geographic

market). The NFL agrees with this geographic market, but

argues the product market involves cities competing for all

forms of stadium entertainment, including NFL football teams.

That NFL football has limited substitutes from a consumer

standpoint is seen from evidence that the Oakland Coliseum

sold out for 10 consecutive years despite having some of the

highest ticket prices in the League. A similar conclusion can be

drawn from the extraordinary number of television view-

ers—over 100 million people—that watched the 1982 Super

Bowl, the ultimate NFL product. NFL football’s importance to

the television networks is evidenced by the approximately $2

19a

billion they agreed to pay the League for the nght to televise

the games from 1982-1986. This contract reflects the networks’

anticipation that the high number of television viewers who had

watched NFL football in the past would continue to do so in

the future.

To some extent, the NFL itself narrowly defined the

relevant market by emphasizing that NFL football is a unique

product which can be produced only through the joint efforts of

the 28 teams. Don Shula, coach of the Miami Dolphins,

underscored this point when he stated that NFL football has a

different set of fans than college football.

The evidence from which the jury could have found a

narrow pro football product market was balanced, however,

with other evidence which tended to show the NFL competes in

the first instance with other professional sports, especially those

with seasons that overlap with the NFL’s. On a broader level,

witnesses such as Pete Rozelle and Georgia Frontierre (owner

of the L.A. Rams) testified that NFL football competes with

other television offerings for network business, as well as other

local entertainment for attendance at the games.

In terms of the relevant geographic market, witnesses

testified, in particular Al Davis, that NFL teams compete with

one another off the field for fan support in those areas where

teams operate in close proximity such as New York City-New

Jersey, Washington, D.C.-Baltimore, and formerly San

Francisco-Oakland. Davis, of course, had firsthand knowledge

of this when his team was located in Oakland. Also, the San

Francisco Forty-Niners and the New York Giants were paid

$18 million because of the potential for harm from competing

with the Oakland Raiders and the New York Jets, respectively,

once those teams joined the NFL as a result of the merger with

the American Football League. Al Davis also testified at length

regarding the potential for competition for fan support between

the Raiders and the Los Angeles Rams once his team relocated

in Los Angeles.

Testimony also adequately described the parameters of the

stadia market. On one level, stadia do compete with, one

20a

another for the tenancy of NFL teams. Such competition is

shown by the Rams’ move to Anaheim. Carroll Rosenbloom

was offered what he considered to be a more lucrative situation

at the Big A Stadium, so he left the L.A. Coliseum. In turn, the

L.A. Coliseum sought to lure existing NFL teams to Los

Angeles. Competition between the L.A. Coliseum and the

Oakland Coliseum for the tenancy of the Raiders resulted.

It is true, as the NFL argues, that competition among

stadia for the tenancy of professional football teams in present-

ly limited. It is limited, however, because of the operation of

Rule 4.3. Prior to this lawsuit, most teams were allowed to

relocate only within their home territory. That is why Carroll

Rosenbloom could move his team to Anaheim. This is not to

say the potential for competition did not previously exist. There

was evidence to the effect that the NFL in the past remained

expressly noncommitted on the question of team movement.

This was done to give owners a bargaining edge when they

were renegotiating leases with their respective stadia. The

owner could threaten a move if the lease terms were not made

more favorable.

The NFL claims that it is places, not particular stadia, that

compete for NFL teams. This is true to a point because the

NFL grants franchises to locales ( generally a city and a 75 mile

radius extending from its boundary). It is the individual stadia,

however, which are most directly impacted by the restrictions

on team movement. A stadium is a distinct economic entity and

a territory is not.

It is also undoubtedly true, as the NFL contends, that

stadia attempt to contract with a variety of forms of entertain-

ment for exhibition in their facilities. In the case of the L.A.

Coliseum, this includes college football, concerts, motorcycle

races and the like. An NFL football team, however, is an

especially desirable tenant. The L.A. Coliseum, for example,

had received the highest rent from the Rams when they played

there. We find that this evidence taken as a whole provided the

jury with an adequate basis on which to judge the reason-

ableness of Rule 4.3 both as it affected competition among

NFL teams and among stadia.

2la

We conclude with one additional observation. In the

context of this case in particular, we believe that market

evidence, while important, should not become an end in itself.

Here the exceptional nature of the industry makes precise

market definition especially difficult. To a large extent the

market is determined by how one defines the entity: Is the NFL

a single entity or partnership which creates a product that

competes with other entertainment products for the consumer

(e.g., television and fans) dollar? Or is it 28 individual entities

which compete with one another both on and off the field for

the support of the consumers of the more narrow football

product? Of course, the NFL has attributes of both examples

and a variety of evidence was presented on both views. In fact,

because of the exceptional structure of the League, it was not

necessary for the jury to accept absolutely either the NFL’s or

the plaintiff's market definitions. Instead, the critical question is

whether the jury could have determined that Rule 4.3 reason-

ably served the NFL's interest in producing and promoting its

product, i.e., competing in the entertainment market, or wheth-

er Rule 4.3 harmed competition among the 28 teams to such an

extent that any benefits to the League as a whole were

outweighed. As we find below, there was ample evidence for

the jury to reach the latter conclusion.

2. The History and Purpose of Rule 4.3

The NFL has awarded franchises exclusive territories since

the 1930’s. In the early days of professional football, numerous

franchises failed and many changed location in the hope of

achieving economic success. League members saw exclusive

territories as a means to aid stability, ensuring the owner who

was attempting to establish an NFL team in a particular city

that another would not move into the same area, potentially

ruining them both. :

Rule 4.3 is the result of that concern. Prior to its

amendment in 1978, it required unanimous League approval

for a move into another team’s home territory. That, of course,

gave each owner an exclusive territory and he could vote

against a move into his territory solely because he was afraid

the competition might reduce his revenue. Notably, however,

22a

the League constitution required only three-quarters approval

for all other moves. The 1978 amendment removed the

double-standard, and currently three-quarters approval is re-

quired for all moves.

That the purpose of Rule 4.3 was to restrain competition

among the 28 teams may seem obvious and it is not surprising

the NFL admitted as much at trial. It instead argues that Rule

4.3 serves a variety of legitimate League needs, including

ensuring franchise stability. We must keep in mind, however,

that the Supreme Court has long rejected the notion that

“ruinous competition” can be a defense to a restraint of trade.

United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 221, 60

S.Ct. 811, 848, 84 L.Ed. 1129, 1167 (1940). Conversely,

anticompetitive purpose alone is not enough to condemn Rule

4.3. See Chicago Board of Trade, 246 U.S. at 238, 38 S.Ct. at

244, 62 L.Ed. at 687. The rule must actually harm competition,

and that harm must be evaluated in light of the procompetitive

benefits the rule might foster. See Kaplan, 611 F.2d at 291.

3. Ancillary Restraints and the Reasonableness of Rule 4.3

The NFL’s primary argument is that it is entitled to

judgment notwithstanding the verdict because under the facts

and the law, Rule 4.3 is reasonable under the doctrine of

ancillary restraints. The NFL’s argument is inventive and

perhaps it will breathe new life into this little used area of

antitrust law, but we reject it for the following reasons.

The common-law ancillary restraint doctrine was, in effect,

incorporated into Sherman Act section | analysis by Justice Taft

in United States v. Addyston Pipe & Steel Co., 85 F.271 (6th

Cir.1898), aff'd as modified, 175 U.S. 211, 20 S.Ct. 96, 44 L.Ed.

136 (1899). R. Bork, The Rule of Reason, supra at 799-800.

Most often discussed in the area of covenants not to compete,

the doctrine teaches that some agreements which restrain

competition may be valid if they are “subordinate and collat-

eral to another legitimate transaction and necessary to make

that transaction effective.” Jd. at 797-798: see Addyston Pipe,

85 F. at 281-82; Lektro-Vend, 660 F.2d at 265.

23a

Generally, the effect of a finding of ancillarity is to

“remove the per se label from restraints otherwise falling within

that category.” R. Bork, Ancillary Restraints and the Sherman

Act, 15 Antitrust L.J. 211, 212 (1959). We assume, with no

reason to doubt, that the agreement creating the NFL is valid

and the territorial divisions therein are ancillary to its main

purpose of producing NFL football. The ancillary restraint

must then be tested under the rule of reason, id., the relevance

of ancillanty being it “increases the probability that the re-

straint will be found reasonable.” Aydin Corp. v. Loral Corp.,

718 F.2d 897, 901 (9th Cir.1983). As we have already noted,

the rule of reason inquiry requires us to consider the harms and

benefits to competition caused by the restraint and whether the

putative benefits can be achieved by less restrictive means.

The competitive harms of Rule 4.3 are plain. Exclusive

territories insulate each team from competition within the NFL

market, in essence allowing them to set monopoly prices to the

detriment of the consuming public. The rule also effectively

foreclosed free competition among stadia such as the Los

Angeles Coliseum that wish to secure NFL tenants. See Smith

v. Pro Football, Inc., 593 F.2d at 1185. The harm from Rule

4.3 is especially acute in this case because it prevents a move by

a team into another existing team’s market. If the transfer is

upheld, direct competition between the Rams and Raiders

would presumably ensue to the benefit of all who consume the

NFL product in the Los Angeles area.

The NFL agrues, however, that territorial allocations are

inherent in an agreement among joint venturers to produce a

product. This inherent nature, the NFL asserts, flows from the

need to protect each joint venturer in the “legitimate fruits of

the contract, or to protect him from the dangers of an unjust use

of those fruits by the other party.” Addyston Pipe & Steel, 85 F.

at 282. We agree that the nature of NFL football requires some

territorial restrictions in order both to encourage participation

in the venture and to secure each venturer the legitimate fruits

of that participation.

Rule 4.3 aids the League, the NFL claims, in determining

its overall geographical scope, regional balance and coverage of

24a

major and minor markets. Exclusive territories aid new fran-

chises in achieving financial stability, which protects the large

“initial investment an owner must make to start up a football

team. Stability arguably helps ensure no one team has an

undue advantage on the field. Territories foster fan loyalty

which in turn promotes traditional rivalries between teams,

each contributing to attendance at games and television view-

ing.

Joint marketing decisions are surely legitimate because of

the importance of television. Title 15, U.S.C. § 1291 grants the

NFL an exemption from antitrust liability, if any, that might

arise out of its collective negotiation of television rights with the

networks. To effectuate this right, the League must be allowed

to have some control over the placement of teams to ensure

NFL football is popular in a diverse group of markets.

Last, there is some legitimacy to the NFL’s argument that

it has an interest in preventing transfers from areas before local

governments, which have made a substantial investment in

stadia and other facilities, can recover their expenditures. In

such a situation, local confidence in the NFL is eroded, possibly

resulting in a decline in interest. All these factors considered,

we nevertheless are not persuaded the jury should have con-

cluded that Rule 4.3 is a reasonable restraint of trade. The

same goals can be achieved in a variety of ways which are less

harmful to competition.

As noted by Justice Rehnquist, a factor in determining the

reasonableness of an ancillary restraint is the “possibility of less

restrictive alternatives” which coul serve the same purpose.

See Justice Rehnquist’s dissent from the denial of certiorari in

North American Soccer League, 459 U.S. 1074, __., 103 S.Ct.

499, 502, 74 L.Ed.2d 639, 641 (1982); Lektro-Vend, 660 F.2d

at 265. This is a pertinent factor in all rule of reason cases. See

Betaseed, Inc. v. U & I Inc., 681 F.2d 1203, 1228-30 (9th

Cir.1982); Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d

263, 303 (2d Cir.1979), cert. denied, 444 U.S. 1093, 100 S.Ct.

1061, 62 I_.Ed.2d 783 (1980). Here, the district court correctly

instructed the jury to take into account the existence of less

restrictive alternatives when determining the reasonableness of

25a

Rule 4.3’s territorial restraint. 32 T.R.2d at 7218; see Betaseed,

Inc., 681 F.2d 1203 at 1228; Berkey Photo, 603 F.2d at 803.

Because there was substantial evidence going to the existence of

such alternatives, we find that the jury could have reasonably

concluded that the NFL should have designed its “ancillary

restraint” in a manner that served its needs but did not so.

foreclose competition.

The NFL argues that the requirement of Rule 4.3 that

three-quarters of the owners approve a franchise move is

reasonable because it deters unwise team transfers. While the

rule does indeed protect an owner’s investment in a football

franchise, no standards or durational limits are incorporated

into the voting requirement to make sure that concern is

satisfied. Nor are factors such as fan loyalty and team nivalnes

necessarily considered.

The NFL claims that its marketing and other objectives

are indirectly accounted for in the voting process because the

team owners vote to maximize their profits. Since the owners

are guided by the desire to increase profits, they will necessarily

make reasonable decisions, the NFL asserts, on such issues of

whether the new location can support two teams, whether

marketing needs will be adversely affected, etc. Under the

present Rule 4.3,.however, an owner need muster only seven

friendly votes to prevent three-quarters approval for the sole

reason of preventing another team from entering its market,

regardless of whether the market could sustain two franchises.

A basic premise of the Sherman Act is that regulation of private

profit is best left to the marketplace rather than private

agreement. See United States v. Trenton Potteries, 273 U.S.

392, 47 S.Ct. 377, 71 L.Ed. 700 (1927). The present case is in

fact a good example of how the market itself will deter unwise

moves, since a team will not lightly give up an established base

of support to confront another team in its home market.

The NFL’s professed interest in ensuring that cities and

other local governments secure a return on their investment in

stadia is undercut in two ways. First, the local governments

26a

ought to be able to protect their investment through the leases

they negotiate with the teams for the use of their stadia.

Second, the NFL’s interest on this point may not be as

important as it would have us believe because the League has

in the past allowed teams to threaten a transfer to another

location in order to give the team leverage in lease negotiations.

Finally, the NFL made no showing that the transfer of the

Raiders to Los Angeles would have any harmful effect on the

League. Los Angeles is a market large enough for the

successful operation of two teams, there would be no scheduling

difficulties, facilities at the L.A. Coliseum are more than

adequate, and no loss of future television revenue was foreseen.

Also, the NFL offered no evidence that its interest in maintain-

ing regional balance would be adversely affected by a move of

a northern California team to southern California.

It is true, as the NFL claims, that the antitrust laws are

primarily concerned with the promotion of interbrand com-

petition. Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S.

36, 51, 97 S.Ct. 2549, 2558, 53 L.Ed.2d 568, 581. n. 19 (1977).

To the extent the NFL is a product which competes with other

forms of entertainment, including other sports, its rules govern-

ing territorial division can be said to promote interbrand

competition. Under this analysis, the territorial allocations

most directly suppress intrabrand, that is, NFL team versus

NFL team, competition. A more direct impact on intrabrand

competition does not mean, however, the restraint is reason-

able. The finder of fact must still balance the gain to interbrand

competition against the loss of intrabrand competition. See id,

at 51-56, 97 S.Ct. at 2558-2560. Here, the jury could have

found that the rules restricting team movement do not suffi-

ciently promote interbrand competition to justify the negative

impact on intrabrand competition.

To withstand antitrust scrutiny, restrictions on team move-

ment should be more closely tailored to serve the needs

inherent in producing the NFL “product” and competing with

other forms of entertainment. An express recognition and

consideration of those objective factors espoused by the NFL as

important, such as population, economic projections, facilities,

27a

. fegional balance, etc., would be well advised. See L. Kurlant-

zick, Thoughts on Professional Sports and the Antitrust Laws, 15

Conn. L.R. 183, 206 (1983). Fan loyalty and location contin-

uity could also be considered. Jd. at 206-207. AJ Davis in fact

testified that in 1978 he proposed that the League adopt a set of

objective guidelines to govern team relocation rather than

continuing to utilize a subjective voting procedure.

Some sort of procedural mechanism to ensure consid-

eration of all the above factors may also be necessary, including

an opportunity for the team proposing the move to present its

case. Id; see Silver v. New York Stock Exchange 373 US. 341,

83 S.Ct. 1246, 10 L.Ed.2d 389 (1963) ‘without procedural

safeguards, the collective act of the Exchange in disconnecting

the wire service to a broker constituted a boycott, per se illegal

under $ 1); cf. Deesen v. Professional Golfers Ass’n, 358 F.2d

165 (9th Cir.), cert. denied, 385 U.S. 846, 87 S.Ct. 72, 17

L.Ed.2d 76 (1966) (where PGA had reasonable rules govern-

ing eligiblity of players for tournaments, there was not a § |

violation). In the present case, for example, testimony in-

dicated that some owners, as well as Commissioner Rozelle,

dislike Al Davis and consider him a maverick. Their vote

against the Raiders’ move could have been motivated by

animosity rather than business judgment.

Substantial evidence existed for the jury to find the re-

straint imposed by Ruie 4.3 was not reasonably necessary to the

production and sale of the NFL product. Therefore, the NFL is

not entitled to judgment notwithstanding the verdict.

Ill. JURY INSTRUCTIONS

The NFL also claims it is entitled to a new trial because of

error in the jury instructions. In particular, the NFL argues that

the instructions lacked the specificity required in a complex

lawsuit such as this, that certain of its legal theories should have

been presented to the jury, and that the instructions failed to

articulate all the requirements of the law for finding an

unlawful restraint of trade. The L.A. Coliseum and the Raiders

28a

respond by stating that the instructions as given were entirely

adequate and the NFL simply attempted to have the jury

charged with a partisan and erroneous view of the law.

As required by Fed.R.Civ.P. 51, the NFL submitted

proposed instructions and made timely objections when certain

of its proposals were rejected. The question, then, is whether,

viewing the jury instructions as a whole, the trial judge gave

adequate instructions on each element of the case to insure that

the jury fully understood the issues. Ragsdell v. Southern

Pacific Transportation Co., 688 F.2d 1281, 1282 (9th

Cir.1982); Van Cleef v. Aeroflex Corp., 657 F.2d 1094, 1099

(9th Cir.1981). A court is not required to use the exact words

proposed by a party, incorporate every proposition of law

suggested by counsel or amplify an instruction if the instructions

as given allowed the jury to determine intelligently the issues

presented. Jd; Investment Service Co. v. Allied Equities Corp.,

519 F.2d 508, 511 (9th Cir.1975). Well-tailored and specific

instructions may be necessary, however, in complex antitrust

cases “where...abstract legal principles are not self-

explanatory to a lay jury, and the facts to which they must be

applied are complex.” Lessig v. Tidewater Oil Co., 327 F.2d

459, 466 n. 13 (9th Cir.), cert. denied, 377 U.S. 993, 84 S.Ct.

1920, 12 L.Ed.2d 1046 (1964). Also, a party is entitled to have

theories supported by the evidence presented to the jury. Reno-

West Coast Distribution Co., Inc. vy. Mead Corp., 613 F.2d 722,

725-726 ( 9th Cir. ), cert. denied, 444 U.S. 927, 100 S.Ct. 267, 62

L.Ed.2d 138 (1979). The theory, of course, must have legal as

well as factual support; if what is proposed is incorrect the court

is not required to recast it in order to ensure the party’s exact

theory is before the jury, so long as the instructions describe the

applicable law. See id.

The NFL first contends the instructions failed to emphasize

the unique nature of the business of producing NFL football, a

business, it argues, most aptly characterized as a joint venture.

The trial court’s rule of reason instruction, however, told the

jury it should consi ¢r the “nature of” and “facts peculiar to”

the industry and that “one factor you may consider is the

degree of mutual cooperation inherent among the member

29a

clubs of a professional sports league and the extent to which

professional sports leagues differ from ordinary kinds of busi-

nesses.” 32 T.R.2d at 7216-7218. While not framed in the

terms and detail requested by the NFL, this instruction did

apprise the jury of the unique nature of NFL football. The trial

court was not obliged to specifically instruct the jury on the

NFL’s theory that the restraint involved here is ancillary to a

valid joint venture agreement. The Supreme Court has recog-

nized that the “Rule of Reason...has been regarded as a

standard for testing the enforceability of covenants in restraint

of trade which are ancillary to a legitimate transaction.”

National Society of Professional Engineers v. United States, 435

‘US. 679, 689, 98 S.Ct. 1355, 1364, 55 L.Ed.2d 637, 648

(1978). The NFL’s theory is subsumed within the rule of

reason. As the district court emphasized, the NFL had every

opportunity to present its view of the legality of Rule 4.3 to the

jury. 32 T.R.2d at 7195, 7223. The NFL did just that in its

| closing argument. E.g., 33 T.R.2d at 7491-7495.

The NFL next argues the district court improperly rejected

its instruction on causation. It is true the court did not instruct

the jury on this element of proving when an injured party is

entitled to treble damages under § 4 of the Clayton Act. See

Brunswick v. Pueblo Bowl-O-Mat, 429 U.S. 477, 489, 97 S.Ct.

690, 697, 50 L.Ed.2d 701, 712 (1977); see also Kapp v.

National Football League, 586 F.2d 644, 648 (9th Cir.1978),

cert. denied, 441 U.S. 907, 99 S.Ct. 1996, 60 L.Ed.2d 375

(1979). In this bifurcated triai, however, the jury and the court

were not faced with the question of the propriety of an award of

damages, but with the question whether Rule 4.3 violated the

antitrust laws and therefore could not be used to preclude the

Raiders’ move south. Pueblo Bowl-O-Mat, 429 U.S. at 491, 97

S.Ct. at 698, 50 L.Ed.2d at 713. Whether the jury received

proper instructions in this area is best left for the appeal of the

damage portion of the trial.

The NFL also argues it was unduly prejudiced by the

instruce“ns because they focused on issues of competition

among the NFL teams (intrabrand competition) rather than

competition between the NFL “product” and other forms of

30a

entertainment (interbrand competition). As the NFL asserts, it

is the suppression of interbrand competition that primarily

concerns the antitrust laws. The trial court instructed the jury

on the NFL’s relevant market claim that it competes with all

forms of entertainment. 32 T.R.2d at 7212-7215. In light of

this instruction, the jury was not constrained to ascertain the

reasonableness of Rule 4.3 solely in view of the internal NFL

market.

There also was no error in the failure of the district court to

charge the jury that it could balance the loss of competition in

the San Francisco Bay Area against that to be gained in the Los

Angeles area. The extent of the loss and gain to competition in

these locations was a fact question that could be argued to the

jury.

The NFL next argues that the tral court should have

charged the jury that it could consider the procompetitive

significance of public service and similar benefits, if any, that

inure to Rule 4.3. We again find no error. As stated in

National Society of Professional Engineers:

the purpose of [either per se or rule of reason]

analysis is to form a judgment about the com-

petitive significance of the restraint; it is not to

decide whether a policy favoring competition is in

the public interest, or in the interest of the mem-

bers of the industry. Subject to exceptions defined

by statute, that policy decision has been made by

the Congress.

435 U.S. at 692, 98 S.Ct. at 1365, 55 L.Ed.2d at 650. The judge

instructed the jury that it should consider only procompetitive

benefits of Rule 4.3. 32 T.R.2d at 7216. The NFL was

permitted to argue that Rule 4.3 has procompetitive effects

related to serving the public. No more is necessary.

The NFL’s other assignments of error in the instructions

are without merit. In sum, we are not persuaded that any lack

of specificity misled the jury.

ee

3la

IV. VENUE

Oakland Coliseum, intervenor joined by the NFL, argues

that the trial court abused its discretion by denying a change of

venue motion made pursuant to 28 US.C. § 1404(a). In

relevant portion, § 1404(a) allows a district court to change

venue “in the interest of justice.” Oakland Coliseum claims

justice would have best been served by moving the case because

it was impossible to secure an impartial jury in the Central

District of California due to pretrial publicity and the economic

interest of the prospective jurors in the outcome of the lawsuit.

Prior to voir dire, the district court made a thoughtful and

thorough analysis of Oakland’s contentions in its memorandum

and order denying the change of venue motion. 89 F.R.D. 497

(1981).

We will find an abuse of discretion warranting reversal

only if Oakland Coliseum shows “that the setting of the trial

was inherently prejudicial or that the jury selection process

permits an inference of actual prejudice.” Murphy v. Florida,

421 U.S. 794, 803, 95 S.Ct. 2031, 2037, 44 L.Ed.2d 589, 597

(1975); see Smith v. Phillips, 455 U.S. 209, 215-217, 102 S.Ct.

940, 944-945, 71 L.Ed.2d 78, 85-86 (1982); Chandler v.

Florida, 449 U.S. 560, 581-582, 101 S.Ct. 802, 813, 66 L.Ed.2d

740, 756 (1981); United States v. Bailleaux, 685 F.2d 1105,

1109 (9th Cir.1982); United States v. Brown, $40 F.2d 364, 379

(Sth Cir.1976). Neither the pretrial publicity nor the alleged

financial interest of the jurors compels such a finding.

We assume, with some basis, that the Raiders’ proposed

move and this lawsuit generated a large amount of publicity in

the Los Angeles area. That in itself, however, is insufficient to

compel a finding that the defendants were denied an impartial

jury. Dobbert v. Florida, 432 U.S. 282, 302-303, 97 S.Ct. 2290,

3202-3203, 53 L.Ed.2d 344, 361-362 (1977); Murphy v.

Florida, 421 U.S. at 800-802, 95 S.Ct. at 2036-2037, 44 L.Ed.2d

at 595-596. Only in those situations which are “utterly cor-

rupted by press coverage” will we indulge in a presumption of

actual prejudice on the part of any or all of the jurors. Murphy,

421 U.S. at 798, 95 S.Ct..at 2035, 44 L.Ed.2d at 594. No such

32a

showing has been made out here. The trial court used a very

thorough voir dire process to ensure the jury panel members

were not influenced by the publicity prior to trial, including

administering a 48-page questionnaire prepared by the NFL to

all prospective jurors, giving each side ten peremptory chal-

lenges instead of the normal three, and dismissing jurors for

cause if even the slightest doubt of prejudice was raised.

During the trial, the court admonished the jurors each day to

refrain from exposure to any type of media coverage of the

trial. In fact, one juror was excused because he admitted

reading an unscreened newspaper, even though he adamantly

denied reading anything but the Ann Landers column, the

comics and the “Family Weekly” section. 23 T.R.2d at 4705-

4706, 4920. In view of the trial court’s thorough cautionary

actions, we cannot say either that he abused his discretion in

denying a change of venue or that defendants received an

unfair trial because of the publicity.

Failing to show anything beyond the slightest speculation

that publicity infected the fairness of the trial, Oakland Coli-

seum turns to the argument that the jurors had a financial

interest in the outcome of the lawsuit which biased their

decision. This contention is premised on the economic interest

through lower taxes and business generation that residents of

the Central District of California purportedly would have in the

Raiders’ presence in the L.A. Coliseum. The argument also

seeks support in Supreme Court precedent such as Withrow v.

Larkin, 421 U.S. 35, 95 S.Ct. 1456, 48 L.Ed.2d 712 (1975), and

Tumey v. Ohio, 273 U.S. 510, 47 S.Ct. 437, 71 L.Ed. 749

(1927), which stand for the proposition “that the probability of

actual bias on the part of the judge or decisionmaker is too high

... [when] the adjudicator has a pecuniary interest in the

outcome.” Withrow, 421 U.S. at 47, 95 S.Ct. at 1464, 48

L.Ed.2d at 728. Those cases do not mean, however, that an

immeasurable and seemingly insignificant economic benefit to a

taxpayer suffices to disqualify her or him as a juror. Virginia

Electric & Power Co. v. Sun Shipbuilding & Dry Dock Co., 389

F.Supp. 568, $71 (E.D.Va.1975); cf United States v. Brown

540 F.2d 864. 379 (8th Cir.1976) (there was no basis to strike

i aniecaierenieinmemeniiaaiiaaaalaaaaita

33a

jurors for cause merely on showing they resided in St. Louis and

indictment alleged a scheme to defraud the city and its

citizens ).

Here, in fact, four of the eight jurors resided outside Los

Angeles County. All the jurors were questioned during voir

dire on their potential for any financially motivated bias and

the judge was satisfied with the jurors’ responses to his ques-

tions. Apparently recognizing the defects in its arguments,

Oakland also alleges that the questioning and arguments of

plaintiffs’ counsel at trial were sufficient to convince the jurors

to lay aside their sworn duties and decide the case on zhe basis

of “hometown” interests. We decline to engage in such

speculation about the mental processes of the individual jurors.

The other arguments made by Oakland on this issue, such

as the one claiming it was denied a representative jury because

the jury had no football fans, lack merit. Parties are not

entitled to jurors of a particular bent or persuasion. They are

entitled only to jurors as fair and impartial as all human

circumstances and an evenhanded selection process permits.

Nor do we believe the “cumulative” effect of the publicity,

economic interests and the like show a sufficient likelihood of

actual bias. Without more, we are compelled to affirm the

denial of the change of venue motion and conclude that the

defendants received a fair trial by an impartial jury.

Vv. CONCLUSION

The NFL is an unique business organization to which it is

difficult to apply antitrust rules which were developed in the

context of arrangements between actual competitors. This does

not mean that the trial court and jury were incapable of

meeting the task, however. The lower court correctly applied

and described the law. The reasonableness of a restraint is a

“paradigm fact question,” Betaseed, Inc. v. U and I Inc., 681

F.2d 1203, 1228 (9th Cir.1982), and our review of the record

convinces us the jury had adequate evidence to answer that

question.

34a

We believe antitrust principles are sufficiently flexible to

account for the NFL’s structure. To the extent the NFL finds

the law inadequate, it must look to Congress for relief.

The judgment finding the NFL liable to the Los Angeles

Coliseum and the Raiders, and enjoining the NFL from

preventing the Raiders from relocating in Los Angeles is

AFFIRMED.

SPENCER WILLIAMS, District Judge, Sitting by Desig-

nation, concurring in part, dissenting in part.

INTRODUCTION:

I respectfully dissent from the majority’s opinion, insofar

as it affirms the district judge’s directed verdict that the N.F.L.

was not a single entity as a matter of law.

The dispositive issue before this Court is whether the

N.F.L.’s invocation of Rule 4.3 to block the Raiders’ move to

Los Angeles violates the letter and spirit of § | of the Sherman

Act, 15 U.S.C. § 1. I conclude that the N.F.L. is, as a matter of

law, a single entity insofar as this aspect of its operations is

concerned and not subject to the strictures of Sherman Act § |.

These appeals arise from the controversial relocation of the

Raiders National Football League franchise (“Raiders”) from

Oakland, California to Los Angeles, California. Although

many subsidiary procedural issues are posed on appeal, the

case stands or falls on whether the trial judge properly con-

cluded that the N.F.L. was not a “single entity”, thereby

exposing it to liability for Rule 4.3 under the Sherman Acct, § 1.

FACTS:

Our consideration of the issue whether or not Rule 4.3 of

Article [TV of the N.F.L. Constitution violates federal antitrust

laws must turn on the relationship of Rule 4.3 to the structure of

the league. For this reason, it is appropriate to briefly examine

the history and nature of the N.F.L. as a business association,

before addressing the issues raised on this appeal.

35a

A. The Relevant History of the N'.7.L.

The N.F.L. was established early in this century as an

unincorporated business association, the members of which

were member franchise clubs dispersed throughout the United

States. All but one of its members are privately owned and

operated and although members of the N.F.L. compete on the

playing field, they act jointly in many aspects of their enterpnise,

as the term “league” implies.

The N.F.L.’s Constitution and By-Laws wield almost

plenary control over member clubs’ activities; the N.F.L. acts as

the legislative entity which sets rules for, and schedules contests

between member clubs, and regulates many other aspects of the

operation of the professional football industry, (e¢.g., an annual

draft of eligible college athletes), including the territonal

restriction on franchise relocation found in Rule 4.3.

Of particular importance to our analysis is the fact that the

N.F.L. Constitution provides for coordination of business activ-

ities and revenue sharing to an overwhelming degree. For

example, the money derived from lucrative national broad-

casting contracts is shared among league members according to

agreed upon formulae, and this revenue makes up a large part

of the revenue of each team. As to gate receipts for regularly

scheduled contests between member clubs, there is a pre-

arranged equation splitting gate admissions between the

“home” and “visiting” clubs. Thus, each team relies, to a

significant degree, on revenue jointly generated.’ It is not

surprising that, concomitant with this virtual “partnership”

arrangement, of which the abovementioned revenue sharing is

most significant, other operating decisions which would nor-

mally be made by the owners of a single franchise are

subordinated to specified consent of the other clubs. For

example, establishment of a new franchise is submitted for

approval to all N.F.L. owners before any expansion is per-

mitted. Agreements among owners regarding who shall have

‘ Indecd, no team could generate any revenue without drawing down

upon the goodwill and reputation of the N.F.L. in the largest sense, or upon

the status of any one scheduled opponent in an immediate sense, so that, in

effect, all team revenue is jointly produced.

36a

the nght to employ certain athletes occur every year at an

annual “draft” of available players.

At issue here is one aspect of the relationship among the

member clubs of the N.F.L. as to when a member franchise

club may be relocated to a city other than its original home. It

is quite relevant to disposition of this instant suit that those

challenging the legality of Rule 4.3 are the Raiders, presently a

member club, and the L.A. Coliseum, a stadium seeking an

N.F.L. tenant.

B. The History of the Present Action.

I agree in large part with the majority’s review of the facts

leading up to the two trials below. However, I would empha-

size the troubling effect that the stipulation on the presentation

of evidence in the second trial had upon the sufficiency of the

evidence on relevant markets that was actually placed before

the jury.2

C. The Various Appeals Pending before this Court.

In addition to the appeal to which the majority and I turn

our primary attention, several other motions are pending before

this Court. It is these items, and the questions that these cross-

appeals raise, that I now address.

Once in this Court, the parties have continued to file

multiple, and somewhat conflicting, appeals. The motions that

have not been resolved by the majority are largely different

procedural means to accomplish the same ends; I discuss the

more significant below.

First, the N.F.L. has moved this Court for permission to

supplement the record on the question of the effect of the

stipulation entered into by the parties concerning the evidence

introduced at the second trial on the relevant market. I find the

majority’s treatment of this matter interesting, inasmuch as it

suggests that the issue of relevant market is no longer one for

the jury; we admit to similar surprise that the very evidence that

2See Majority Opinion at 1392-1394, and my discussion infra of the

inconsistency left unanswered by the majority’s treatment

37a

the parties thought at a minimum should have been placed

before the jury was, in fact, never so placed in the second trial.

Regardless of how the majority wishes to restate the manner in

which relevant market is to be proven in this Circuit, its

approach is to recharacterize the case as was tried, and suggest

by inference that the plaintiff may discharge its burden of-

establishing the relevant product and geographic markets by a

theoretical argument to the court, rather than by presenting

evidence to a jury; this lynchpin of its “rule of reasonableness”

cannot pass as innocuously by long-standing precedent as the

majority would have it. Since I feel that it was error to submit

Rule 4.3 to the jury in this context, I would not so strain the

case as was tried the second time around to conform it to some

new, and as yet undefined, rule of law.

Second, the Raiders cross-appeal from the district judge’s

rulings: (1) determining, on summary judgment, that N.F.L.

Rule 4.3 was effectively amended on October 5, 1978; (2) that,

as a matter of law, no contract was created between the Raiders

and the N.F.L., on October 5, 1978; and, (3) that a directed

verdict on behalf of Rozelle, Frontiere and Klein was appropri-

ate, would presumably be withdrawn, under the majority’s

disposition; I would affirm the trial court's handling of all three

matters.

Finally, as for the N.F.L.’s motion for remand of the

injunctive judgment entered on June 14, 1982, with instructions

to the court for a new trial, I find the matters raised by the

motion in the alternative to the N.F.L.’s notice of appeal,

especially the allegations surrounding the plaintiffs’ suppression

of a key document, the “Hardy notes,” distressing. I note that

the majority’s opinion does not deal with this issue.

DISCUSSION:

The district court found there were no disputed issues of

material fact on the question of whether the N.F.L. was a single

entity under the Sherman Act § |, insofar as its enforcement of

Rule 4.3 was concerned, and directed a verdict for appellees

concluding that it was not. Upon this finding, Rule 4.3 was

38a

submitted to the jury’s scrutiny under the Rule of Reason

analysis of the Sherman Act, § 1.

Under established Ninth Circuit law, resolution of whether

the N.F.L. had the capacity to violate Section | of the Sherman

Act by conspiring inter se must be committed to the jury, if

there exists “sufficient evidence in the record to permit a jury to

find” that the N.F.L. was not a single entity, but “not ...

sufficient (evidence) to preclude the jury from finding other-

wise.” Murray v. Toyota Motor Distributors, Inc., 664 F.2d

1377, 1379 (9th Cir.1982) (per curiam).

In Murray v. Toyota Motor Distributors, Inc., supra, the

Ninth Circuit held that the “single entity” question must not be

taken from the jury where the evidence would permit a finding

that the defendants are part of a single economic unit. As the

majority in this case states: ‘“(i)t would be reversible error,

then, to take the issue from the jury if reasonable minds could

differ as to its resolution”. Jd. I read the majority’s opinion to

find such an opportunity for “reasonable minds” to differ, even

if the evidence that whether “the N.F.L. has attributes of a

partnership or joint venture (wa)s not “compelling”, since it

should have been submitted to the jury once there was simple

“persuasive” evidence on either side. C.f., Majority Opinion at

1387.

I agree however with the district court that there were no

material issues of disputed fact as to whether the N.F.L. was a

single entity, and that the matter was ripe for disposition as a

matter of law by the court. I also apply the settled rule of

appellate review, that such decisions by the trial court are

subject to de novo review by this Court. Cf, General Business

Systems v. North American Phillips Corp., 699 F.2d 965, 980-81

(9th Cir.1983). But, the majority and I differ substantially in

the conclusions to be drawn from such undisputed evidence.

The only realistic manner in which to define what con-

stitutes a single entity for antitrust review is to focus upon the

purpose the definition is to serve. “Single entity” taken in a

functional sense begins and ends with an analysis of formal

39a

organizational and operational aspects of an enterprise, recon-

ciled with the realities of the economic competition in the

marketplace. If the aim of the Sherman Act § 1 is consumer-

dictated supply, unfretted by conspiracy between competing

producers,—and, I submit that it is—extreme caution is war-

ranted in defining precisely what competitive units exist in the

marketplace. It is equally as important to permit collaboration

and concerted action among branches of a single economic

entity in the marketplace with impunity from the Sherman Act

§ 1, as it is to police conspiracies between economic competitive

entities. Nonetheless, all economic units remain susceptible to

challenge under the antitrust laws from those external entities

injured by acts violative of § 1, or competitive entities injured as

result of monopoly, or attempted monopoly, in an industry

under Sherman Act § 2 tenets.

Resolving whether the N.F.L. is a single entity requires

consideration of many factors, including formalistic aspects of

operations such as ownership, overlapping directorates, joint

marketing or manufacturing, legal identity, corporate law

autonomy, and substantive aspects such as de facto autonomy

of member clubs, chains of command over policy decisions,

public perception and economic interdependency rendering

otherwise independent member clubs subordinate to the in-

tegrated whole. When the entities in question are to be

evaluated under the antitrust laws, the crucial criterion is

whether the formally distinct member clubs compete in any

economically meaningful sense in the marketplace. See General

Business Systems, supra at 980-81.

The majority’s attempt to reconcile its decision with that of

General Business Systems, supra, is misleading and inaccurate.

The text of the majority’s opinion implies that corporate

policies must be unitary for a business organization to be found

a single entity. In General Business Systems, supra, at 980-81,

the Circuit concluded that in any case in which the relationship

between the two or more formal entities did “not fall clearly at

either of these extremes”; i.e., “where corporate policies are set

by one individual or a parent corporation” or where “jointly

owned corporations that compete in the marketplace, hold

40a

themselves out to the public as competing organizations, and

set policy independently ...” (id. at 980), the case must be

sent to the jury. This admonition was disregarded in this

case—a paradigm case testing the functional “single entity”

concept.

The district court placed an unwarranted emphasis upon

the formalistic aspects of the relationship of the N.F.L. and the

member clubs, ignoring the subtle, but yet more significant

interdependency of the member clubs and the indivisibility of

the clubs with the N.F.L. 519 F.Supp. 581, 582-83. For

example, the district court makes much of two such formal

organizational characteristics: separate incorporation and man-

agement. Jd. But, when viewed from the mundane perspective

of daily operations, emphasis upon these legal formalisms

obscures the reality of life in the N.F.L. Only the athletic

strategems are autonomous—albeit tightly constrained by

league guidelines on eligibility, medical and physical condition

and exploitation of player talent. The N.F.L. cannot truly be

separated from its member clubs, which are simultaneously

franchisees and franchisors. The Raiders did not, and do not

now, seek to compete with the other clubs in any sense other

than in their win/loss standings; they do not challenge the

plethora of other ancillary regulations attendant to the league

structure, including the draft, regulation and scheduling of

meetings between teams, and the system of pooled and shared

revenues among the clubs because they wish to remain within

its beneficial ambit.

As the majority opinion correctly points out:

this lawsuit requires us to engage in the difficult

task of analyzing the negative and positive effects

of a business practice in an industry which does not

readily fit into the antitrust context. Section | of

the Sherman Act was designed to prevent agree-

ments among competitors which eliminate or re-

duce competition and thereby harm consumers.

Yet,..., the N.F.L. teams are mot true com-

petitors, nor can they be.

4ia

Majority opinion, at 1391, emphasis added. Yet, the majority’s

analysis falters in a similar manner. It is the commonality of, or

necessary cooperation in, the means of. production, not the

formal structure of the ownership of the N.F.L. infrastructure

which should be determinative of the classification of this

enterprise.

The profound interdependency of the N.F.L. and member

clubs in the daily operation and strategic marketing of profes-

sional football belies the district court’s conclusion that each

member club is an individual and economically meaningful

competitor. The dispositive factor in determining whether the

member clubs are capable of conspiring to restrain com-

petition—the sine qua non of the Sherman Act § 1—by reason

of Rule 4.3, is the extent, if any, of their competition in an

economic sense. Virtually every court to consider this question

has concluded that N.F.L. member clubs do not compete with

each other in the economic sense. See North American Soccer

League v. N.F.L., 670 F.2d 1249, 1251 (2d Cir.1982); Smith v.

Pro Football, Inc., 593 F.2d 1173, 1179 (D.C.Cir.1978);

Mackey v. N.F.L., 543 F.2d 606, 619 (8th Cir. 1976); Mid-South

Grizzlies v. N.F.L., 350 F.Supp. 558, 562 (E.D.Pa.1982); U.S.

v. N.F_L., 116 F.Supp. 319, 323-324 (E.D.Pa.1953).

As the district court in Mid-South Grizzlies acknowledged,

although

(a)ll but one team are privately owned and oper-

ated . . . and ‘compete’ with one another on the

playing field and for the top players, they act

jointly in many aspects of their enterprise as the

term league necessarily implies.

Mid-South Grizzlies, supra at 562. In adopting this view to

reject a potential entrant’s challenge to his exclusion from

N.F.L. participation, the court in Mid-South Grizzlies recog-

nized that the creation of many joint products, only the most

tangible of which is the professional football season, as byprod-

ucts of the intangible “goodwill” are directly attributable to the

present league/member club structure. Id. at 568. I agree with

the other courts which, when presented with similar questions

42a

arising in professional hockey and basketball, realized that it is

nonsensical to emphasize intrinsic worth of a franchise in a

vacuum, when the value of the franchises are part and parcel of

the quality and conformity insured by league regulation of the

placement, ownership, and coordination of all on and off the

field interaction of member clubs. See San Francisco Seals,

Lid. v. National Hockey League, 379 F.Supp. 966, 969-971

(C.D.Cal.1974) (the N.H.L., although subject to full scope of

the antitrust laws, is “one single business enterprise, competing

against other similarly organized professional leagues”); Levin

v. National Basketball Association, 885 F.Supp. 149, 150, 152

(S.D.N.Y.1974) (“While it is true that the anutrust laws apply

to a professional athletic league, and that joint action by

members of a league can have antitrust implications this is not

such a caze.”’).

The majority’s holding places the Ninth Circuit’s ruling in

conflict with every other circuit to consider this issue. As the

majority points out, but misapplies, the Second Circuit found

the N.F.L. to be an “unincorporated joint venture”. N.A.S.L.

v. N.F.L., supra at 1257, (2d Cir.), cert. denied, USS. '

103 S.Ct. 499, 74 L.Ed.2d 639 (1982). The Fifth Circuit, in an

obscure but quite scholarly opinion, analyzed the North Ameri-

can Soccer League to be like the N.F.L.; i.e., a “joint employer”

for labor relations purposes, upon an examination of its

“N.F.L.-like” characteristics. N.A.S.L. v. N.L.RB., 613 F.2d

1379, 1382 (Sth Cir.1980). The Third Circuit, after reviewing

the substantial history of “single entity” litigation in the profes-

sional sports leagues, endorsed the D.C. Circuit’s conclusion

that the N.F.L. was a “single entity” for purposes of Sherman

Act § 1, and thus not subject to “invocation of a per se rule”

against “group boycotts”, because: (1) “the N.F.L. clubs that

had combined were not competitors in any economic sense” and

“no team was ‘interested in driving another team out of

business’; and, (2) the N.F.L. clubs had not combined ‘to

exclude competitors or potential competitors from their level of

the market.’ Larry V. Muko, Inc. v. Southwestern P.A., etc.,

670 F.2d 421, 429, n. 11 (3d Cir.1982), citing Smith v. Pro

Football, Inc., 593 F.2d 1173, 1178 (D.C.Cir.1978). (emphasis

in original). (Other citations omitted).

43a

What these courts have all recognized, and what ultimately

persuades me, is that functionally distinct units that cannot

produce separate, individual goods or services absent coordina-

tion are inextricably bound in an economic sense, and must

adopt certain intra-league instrumentalities to regulate the

whole’s “downstream output”. In the case of the member

clubs, this “downstream output” is professional football, and

the organ of regulation is the unincorporated, not-for-profit,

association commonly known as the N.F.L. There is virtually

no practical distinction between the League, administered by

the appointed Commissioner, per se and the member clubs; the

N.F.L. represents to all clubs, including the Raiders, the least-

costly and most efficient manner of reaching day-to-day deci-

sions regarding the production of their main, and collectively

produced product.

Although the N.F.L. determines matters of scheduling,

resolving player disciplinary matters and inter-club disputes,

supervising officials and public relations, as well as other

routine matters, critical league decisions, such as the matter of

franchise location, are submitted to an Executive Committee

comprised of a representative of each club. There can be no

instance of the Executive Committee acting in other than the

collective interests of the member clubs, since by definition, that

body’s decisions are the consensus of N.F.L. members. There is

no distinct interest of the N.F.L., since it exists solely to

coordinate the members’ participation in the joint production of

professional football.

By riveting its attention upon the “single entity” issue, as a

sort of talismanic affirmative defense to the appellees’ charges

here, the district court overlooked the dispositive inquiry of

whether Rule 4.3, as an instrument of the N.F.L. member

clubs, violated the Sherman Act § 1, by restricting any econom-

ically independent entities from supplying goods and services

related to professional football to the individual clubs. I use

“upstream flow” as shorthand for products and services like

players and coaches, television services, potential investors and

the myriad of other integrated industries; member clubs do

have independent and economically significant indentities apart

from the collective N.F.L. for the limited purposes of their

ada

extra-league dealings with those upstream suppliers. See

Weistart & Lowell, Law of Sports, § 5.11 (1978), 687, 692 esp.

n. 86. Thus, § | can and should protect the competitive aspects

of player drafts, disallow cross-ownership bans and exclusive

television and equipment contracts, by insuring that any one

club’s interaction outside the confines of intra-league regulation

of production of the sport is unfettered by the working of any

intraleague rule.

This is the cr.ucal distinction between cases which in-

validate various intraleague rules, and those which uphold

them. That member clubs compete for investors and the

services of talented players is underscored by the fact that,

although aggregate revenues are shared among all member

clubs, there is no intra-league regulation upon the form of

investment by a member club’s financial backers, the dividend

policy, or operating expenses and expenditures of any member

for player services. League regulations comport with economic

reality in this sense; courts have merely applied a similar

philosophy to other aspects of the professional leagues’ oper-

ations, including, inter alia, club-player relationships. See, e.g.,

Smith, supra (N.F.L. player draft held to violate § 1, even

though N.F.L. teams not “economic” competitors, because it

“forces each seller of football services to deal with one, and

only one buyer, robbing the seller, as in any monopsonistic

market, of any real bargaining power.”); Mackey, supra, (only

relevant market in which to evaluate “Rozelle Rule” was that

“for players’ services”); Denver Rockets v. All-Pro Manage-

ment, Inc., 325 F.Supp. 1049, 1061 (C.D.Cal.1971) (harm

resulting from restriction on non-collegiate players’ recruiting

was these players’ exc'usion from market in which they sought

to compete by reason of the monopoly power exerted by the

N.B.A.); accord, Linseman v. World Hockey Association, 439

F.Supp. 1315, 1322 (D.Conn.1977); Kapp v. National Football

League, 390 F.Supp. 73, 81-82 (N.D.Cal.1974), appeal va-

cated, 586 F.2d 644 (9th Cir.1978), cert. denied, 441 U.S. 907,

99 S.Ct. 1996, 60 L.Ed.2d 375 (1979) (“(a)} conceivable effect

of th(e “ransom” or “Rozeile” rule) would be to perpetually

restrain a player from pursuing his occupation among the clubs

45a

of a league that holds a virtual monopoly of professional

footbali employment in the United States”, which “goes far

beyond any possible need for fair protection... and imposes

upon the player-employers or the purposes of the N.F.L. such

undue hardship as to be an unreasonable restraint . . lg fe

North American Soccer League, et al. v. N.F.L., et al, supra,

(N.F.L. ban on cross-ownership of professional football and

soccer league clubs violative of Sherman Act § 1).

The paradox to which I return, as the root of why the

N.F.L., as well as other sports leagues, must be regarded as a

“single entity” is that the keener the on-field competition

becomes, the more successful their off-the-field, and ultimately

legally relevant, collaboration. The formal entities, including

the member clubs—including the Raiders—which the district

court ruled to be competitors cannot compete, because the only

product or service which is in their separate interests to produce

can only result as a fruit of their joint efforts. This systemic

cooperation trickles down to all members of the league, regard-

less of their on-the-field record, at least to the extent of the

shared revenues. As at least one district court has previously

recognized, despite some limited independently earned profit

from “team paraphernalia” and “local broadcast revenues”,

(a) franchise’s popularity is inextricably bound up

with the quality of its competition on the playing

field and the resulting excitement and sense of

team loyalty.

Mid-South Grizzlies, supra, at 568. The ability to accrue

separately accounted and disbursed profit, of which the district

court made much, “is an indirect benefit of being a member of

the league”. Jd.

A ruling that the N.F.L. cannot enforce Rule 4.3 is

effectively ruling that it may not enforce any collective decision

of its member clubs over the dissent of a club member,

although this is precisely what each owner has contractually

bargained for in joining the enterprise. Without power to reach

collective decisions, the N.F.L. structure becomes superfluous,

and professional sports, without a cost-effective policing mecha-

46a

nism such as the league, will dissolve in the face of uncon-

trollable free-riding and loss of economies of scale. Broadcast

Music, Inc. v. Columbia Broadcast Systems, Inc., 441 U.S. 1, 99

S.Ct. 1551, 60 L.Ed.2d 1 (1979).

Not only did the district court underrate the business

scenario in which the member teams cooperate far more than

they compete in the legally irrelevant on-field sense, but its

directed verdict on the single entity issue ignored two significant

aspects of the N.F.L.’s organization. First, the N.F.L. member

clubs pool their revenues to a degree unique even among

sporting leagues. By focusing upon the separate calculation of

profits and loss by members, the district court elevated form

over substance. Profit, as currently understood in the account-

ing profession, is a term of art, and as such is inherently

subjective, often manipulated by equity interests to serve legally

irrelevant business motives. The relevant consideration, as the

N.F.L. has recognized by implementation of its shared revenue

concept, is total infusion of consumer dollars into the sport, and

some predictable and centrally administered allocation of those

jointly earned revenues among member clubs. After that

purpose, the members adopt the only workable model for

earning and distributing the revenues from sale of non-

severable and indistinct product—professional football. See

generally, Quirk, An Economic Analyisis of Team Movements in

Professional Sports, 38 Law & Contemporary Probiems 42

(1973).

The product distributed by the member clubs is not

analogous to ball bearings ( Timken Roller Bearing Co. v. U.S.,

341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199 (1951)), mattresses

(U.S. v. Sealy, Inc., 388 U.S. 350, 87 S.Ct. 1847, 18 L.Ed.2d

1238 (1967)), or groceries ( U.S. v. Topco Associates, 405 U.S.

596, 598, 92 S.Ct. 1126, 1128, 31 L.Ed.2d S15 (1972)),

because stripped of the N.F.L. rules, participation in a regu-

lated draft, orderly schedules and league standings, profes-

sional football is indistinguishable from sand lot follies. This

inescapable fact of interdependence distinguishes the N.F.L.

franchisees and professional football from other industries

comprised of “separate business entities whose products have

47a

independent value” (519 F.Supp. at 584) banded together in

de facto cartels. Cf, Broadcast Music Inc., supra; Associated

Press et al. v. United States, 326 U.S. 1, 18, 65 S.Ct. 1416, 1423,

89 L.Ed. 2013 (1945) (Douglas, J., in concurring, notes that it

is unclear whether the AP system would violate Sherman Act

$1).

There was no evidence before the district court establishing

that a member club of the N.F.L. could, or would seek to,

defect to the U.S.F.L., thereby transferring its assets in quest of

greater exploitation. Only such a showing, or an alternative

theory, supported by evidence in the record could illustrate that

any particular member club had an intrinsic value shorn of its

affiliation with the N.F.L., and thus could support the district

court’s result. We find no such evidence in the record. CS.

Associated Press, supra (newspapers which sought to affiliate

did not share revenues, and each produced separate and

distinct products with intrinsic value). There is no evidence

that any of the member clubs’ investors would have committed

time or capital investment without the existing league structure.

Without the league, professional football becomes a pursuit no

more substantial than a group of finely-tuned athletes traveling

haphazardly about, in seurch of playing competition. Accord,

Perma Life Muffiers, Inc. v. International Parts Corp., 392 U.S.

134, 88 S.Ct. 1981, 20 L.Ed.2d 982 (1968).

Not only is it legally irrelevant that a second professional

league has sprung up, since the U.S.F.L. did not exist at the

time of trial, but since the two leagues’ schedules do not

overlap, one should not hyvothesize as to any competitive

relationship between the two, or the effect such inter-league

competition would portend for the validity of intra-league

regulation. Thus, while I find issues of supposed competitive

relations between the N.F.L. and U.S.F.L., or between existing

and any new franchisees, intellectually interesting, I also dis-

miss any legal conclusions based upon these entities as specula-

tive.

Holding that the N.F.L. is not a single entity, but rather an

aggregation of economic competitors, is tantamount to ruling

48a

that the N.F.L. structure is itself per se invalid under the

Sherman Act § 1; this will spell the end of sporting leagues as

are currently used in football, hockey, golf, soccer, basketball

and countless other associations in industries with similar

endemic characteristics. See Board of Regents of the University

of Oklahoma v. N.C.A.A., 707 F.2d 1147 (10th Cir.1983) cert.

granted, US. , 104 S.Ct. 272, 78 L.Ed.2d 253 (1983).

To elevate formal corporate characteristics of ongoing

economic entities above the substance of what purpose and

function the structure serves, and what product(s) emerge from

the process would not only destroy the N.F.L., professional

sports leagues, and the goodwill that results from continuity in

national allocation of the sport throughout the country, but

would create a rule of law casting all franchise/wholesale

distribution relationships into inescapable doubt.

Rather than avoid creating an “exemption” from the

Sherman Act for professional sporting leagues, failing to ac-

count for the substantial and unique characteristics extant in

professional sports by refusing the N.F.L. review as a single

entity creates turmoil and dissolves the analytic framework

within which courts scrutinize agreements under Sherman Act

§ 1. It is unrealistic and inaccurate to lump intra-N.F.L. rules in

with agreements binding separate economic entities which

produce independent products and accrue independent reve-

nues. See Mid-South Grizzlies, supra; Levin, supra. Rule 4.3 is

no more a restraint on trade in professional football for

Sherman Act § | purposes, than is an intra-corporate directive

regulating the location or operation of its headquarters, fran-

chise, or branch of a multi-outlet business. See, e.g., Continen-

tal T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 97 S.Ct. 2549,

$3 L.Ed.2d 568 (1977).

No “antitrust exemption” for the N.F.L. would be created

by holding that it is a single economic entity for purposes of

regulating franchise location. Section 2 of the Sherman Act,

prohibiting monopolies and attempts to monopolize, remains

fully applicable to all N.F.L. intra-league rules and activities.

See Mid-South Grizzlies, supra; cf., Bowman v. N.F.L., 402

49a

F.Supp. 754 (D.Minn.1975) (challenge brought by former

W.F.L. players to N.F.L. teams as an illegal boycott and

unjustified exercise of monopoly power); Philadelphia World

Hockey Club, Inc. v. Philadelphia Hockey Club, Inc., 35}

F.Supp. 462 (E.D.Pa.1972) (Sherman Act § 2 applied to bar

hockey reserve clause ).

Many present N.F.L. practices, including Rule 4.3, are

highly suspect under the Sherman Act § 2 prohibitions, because

notwithstanding the form or substance of the N.F.L.’s style of

organization and operation, some practices appear calculated to

create barriers to entry for would-be rival leagues in profitable

geographical markets. In short, Sherman Act § 2 is the proper

curb upon the N.F.L.’s successful exploitation of its intra-firm

economies of scale and competitive advantages. Radovich v.

N.F.L. 352 U.S. 445, 453-54, 77 S.Ct. 390, 394-95, 1 L.Ed.2d

456 (1957) and particularly American Football League v.

N.F.L., 323 F.2d 124, 131 (4th Cir.1963) suggest the possibility

of true economic competitors challenging the effect of intra-

league rules upon nascent competition under § 2 of the Sher-

man Act.

The Raiders do not have standing to challenge Rule 4.3

under § 2; as part and parcel of the entity they knowingly

joined in 1967, they may have a cause of action in contract

against the rest of the N.F.L. for failure of their expectations

arising from their membership, but cannot challenge intra-

league regulations, as could would-be “upstream” suppliers or

hopeful candidates for franchises like the Mid-South Grizzlies

or the San Francisco Seals. See San Francisco Seals v. National

Hockey League, 379 F.Supp. 966, 971-72 (C.D.Cal.1974). The

Coliseum may be able to mount a successful challenge to Rule

4.3 upon a § 2 theory, but that issue is not presently before this

Court.

As always, § 1 remains a viable theory under which those

“upstream” aspects of member clubs’ operations—those activi-

ties which . .e N.F.L. and previous courts acknowledge the

individual members as economically distinct entities—could be

challenged. An oft-tried, and frequently successful example of

50a

this theory has been the player draft litigation; the distinction

between instances in which the N.F.L. acts as a collective

monitor of intra-league affairs, and those in which it intercedes

at the behest of a member club for anti-competitive advantage

over “upstream” bargaining entities outside the N.F.L.

The purposes for which the N.F.L. should be viewed as a

single entity, impervious to § 1 attack, must be functionally

defined as those instances in which member clubs must coordi-

nate intra-league policy and practice if the joint product is to

result. See, Broadcast Music Inc., supra; GTE Sylvania, supra.

Prohibiting the N.F.L. from attempting to exploit a monopolis-

tic position in the industry, or from cloaking concerted anti-

competitive pressure upon extrinsic “upstream” suppliers in the

guise of “league” restrictions, does not require that we strike

ancillary terms of the franchise agreements between member

clubs as anti-competitive. A principled approach requires that

we distinguish one situation from the other, and protect both

competitive markets for football players and television cov-

erage, as well as the integrity of terms Al Davis agreed to as

salient aspects of his arms’ length negotiations with the other

member clubs. Davis has received no more or less than he has

bargained for, as a franchisee of the N.F.L.

To hold the N.F.L. a single entity for purposes of intra-

league regulation of relocation of existing franchises, thereby

cutting off Sherman Act § | liability in this instance, is fully

consistent with the prior cases that address the validity of

league regulation of member clubs. In such cases, the leagues’

power has consistently been upheld. See, e.g., A.F.L. v. N.F.L.,

supra; Mid-South Grizzlies, supra; San Francisco Seals, supra;

and Levin, supra.

I concur in the majority’s opinion, insofar as it affirms the

trial judge’s denial of the appellants’ motion for a change in

venue. However, I would note the inappropmiateness of

applying the substantial body of case law dealing with racial

bias in criminal venire to an instance where the strongest

objections to the venue revolved around a highly attentuated

financial or civic interest bestowed upon the jury by its deliber-

ations concluding in favor of the L.A. Coliseum and Raiders. I

i

a

Sla

would commend the trial judge for his extraordinary care in

screening out prospective jurors who showed even a hint of

bias, in maintaining an orderly proceeding despite the high

degree of press coverage and histrionic advocacy by he parties,

and in assuring deliberations in an informed and unemotive

manner. As a result of his painstaking care, I find that the

appellants received the verdict of six fair and untainted jurors.

CONCLUSION:

Because the district court incorrectly determined that the

N.F.L. member clubs are not engaged in a single enterprise for

purposes of determining the location and marketing of profes-

sional football games between members, the jury verdict on the

lawfulness of Rule 4.3 must not stand. Rule 4.3 cannot, as a

matter of law, violate § | of the Sherman Act. The Judgment of

the district court should be reversed and judgment entered for

the N.F.L. and its codefendants.

APPENDIX B

UNITED StaTeEs District Court

C. D. CALIFORNIA

No. 78-3523-HP —July 24, 1981

Los ANGELES MEMORIAL COLISEUM COMMISSION,

Plaintiff,

v.

NATIONAL FOOTBALL | EAGUE,

an unincorporated association, et al.,

Defendants.

OAKLAND RalDers, LTD.,

Cross-Claimant,

v.

NATIONAL FOOTBALL LEAGUE,

an unincorporated association, et al.,

Cross-Defendants.

Memorandum and Order granting directed verdict for

plaintiff and cross-complainant on single entity issue

PREGERSON, Circuit Judge:

This matter is before the court on crossmotions filed,

pursuant to Fed.R.Civ.P. 50(a), by the plaintiff Los Angeles

Memorial Coliseum Commission, the cross-claimant Oakland

Raiders, and the NFL defendants, seeking entry of a directed

verdict with respect to the defendants’ contention that the NFL

is a single economic entity for purposes of this lawsuit and

hence cannot as a matter of law have violated section | of the

Sherman Act. Having studied the parties’ briefs and heard the

oral argument of counsel on July 24, 1981, the court concludes

that the motions of the Coliseum Commission and the Raiders

should be graated and that of the NFL denied.

S4a

The Los Angeles Memorial Coliseum Commission ongi-

nally moved before trial for partial summary judgment on the

single entity issue. The court denied that motion because it

appeared that proper resolution of the issue could well depend

on the factual evidence adduced at the trial. Because summary

judgment is proper only when it is quite clear what the truth is,

Poller v. CBS, 368 U.S. 464, 467, 82 S.Ct. 486, 488, 7 L.Ed.2d

458 (1962), a district court may properly deny summary

judgment even where it would be technically proper, so that the

case may be fully developed at tnal. Robderts v. Browning, 610

F.2d 528, 536 (8th Cir.1979).

That development has now occurred, and it is apparent

that there are no genuine issues of material fact concerning the

single entity question. The parties’ disagreement concerns the

legal effect to be given to the undisputed facts. The question is

a close one, and the court has benefitted greatly from the briefs

and oral arguments of the parties. Careful consideration of the

legal arguments put forward by the Coliseum and by the NFL

have convinced this court that the undisputed facts preclude

treating the NFL as a single entity for purposes of this lawsuit.

On its face, the NFL certainly appears to be an association

of separate business entities rather than one single enterprise.

The twenty-eight member clubs are separate legal en-

tities—some corporations, some partnerships, and some sole

proprietorships. No two clubs have a common owner. The

clubs share a large part, but not all, of their revenues. They do

not share their profits or losses. They are managed indepen-

dently, each making its own decisions concerning ticket prices,

player acquisitions and salaries, the hiring of coaches and

administrators, and the terms of their stadium. leases. They do

not exchange or share their accounting books and records.

The Supreme Court has consistently rejected the single-

entity argument in circumstances more favorable to that argu-

ment than those presented in this case. Firms with a high

degree of common ownership have been held separate for

Sherman Act purposes. See Timken Roller Bearing Co. v.

United States, 341 U.S. 593, 597-98, 71 S.Ct. 971, 974, 95 L.Ed.

1199 (1951); Kiefer-Stewart Co. v. Joseph E. Seagram & Sons,

55a

Inc., 340 U.S. 211, 215, 71 S.Ct. 259, 261, 95 L.Ed. 219 (1951);

United States v. Yellow Cab Co., 332 U.S. 218, 227-28, 67 S.Ct.

1560, 1565, 91 L.Ed. 2010 (1947). Indeed, even a parent

corporation and its subsidiary have been held separate entities

in a Sherman Act context: since they had “availed themselves

_ of the privilege of doing business through separate corpo-

rations, the fact of common ownership could not save them

from any of the obligations that the law imposes on separate

entities.” Perma Life Mufflers, Inc. v. International Parts Corp.,

392 U.S. 134, 141-42, 88 S.Ct. 1981, 1985-86, 20 L.Ed.2d 982

(1968).

The Ninth Circuit has taken a similarly unreceptive view of

single-entity claims, as demonstrated by Knutson v. Daily

Review, Inc., 548 F.2d 795 (9th Cir. 1976), cert. denied, 433

U.S. 910, 97 S.Ct. 2977, 53 L.Ed.2d 1094 (1977). The

defendants there were two newspaper-publishing corporations,

one a wholly-owned subsidiary of the other. The Ninth Circuit

was reluctant to characterize these firms as a single entity for

Sherman Act purposes, stating only (in dictum) that they were

“(a]rguably” one enterprise. Yet not only were the two firms

parent and subsidiary, but one individual had control of the

parent, was president of both corporations, and published all of

both companies’ newspapers. Moreover, the firms shared many

key personnel, their newspapers exhibited numerous common

features, and the two companies did not compete. If all these

features together were insufficient to establish a single enter-

prise, it is difficult to see how the NFL can constitute a single

entity when it possesses none of those features. '

The League argues, however, that the unitary nature of the

product it creates—NFL football—necessarily implies that it is

a single entity. “(T]he economic substance is that of a single

firm selling a single product involving a necessary contribution

from each member.” NFL Opposition at 3. This argument

suffers from several defects.

1 The NFL is not the “parent” of any league member, nor do any two

clubs have a common owner. The clubs do not share key operational

personnel. And the NFL itself has conceded that “the existence of actual or

potential interclub competition in certain areas is not disputed.” NFL's

Opposition to Motion for Partial Summary Judgment, filed February 20, 1981

{hereinafter NFL Opposition), at 29.

56a

In the first place, the argument, if valid, would prove too

much. If the NFL must be treated as a single entity in this

lawsuit simply because all its teams must cooperate to produce

the League product, the NFL should be just as much a single

entity—and hence just as incapable of violating section | of the

Sherman Act—in cases challenging League restrictions on the

acquisition of players. Yet such League rules have repeatedly

been found to violate section 1. Smith v. Pro Football, Inc., $93

F.2d 1173 (D.C.Cir.1978); Mackey v. NFL, 543 F.2d 606 (8th

Cir. 1976), cert. dismissed, 434 U.S. 801, 98 S.Ct. 28, 54

L.Ed.2d 59 (1977); Kapp v. NFL, 390 F.Supp. 78

(N.D.Cal.1974), aff'd on other grounds, 586 F.2d 644 (9th

Cir.1978).2

Secondly, organizations whose product is just as unitary as

the NFL’s and requires the same kind of cocperation from the

organization’s members, have been found to violate section | of

the Sherman Act. The clearest instan.e is Associated Press v.

United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945),

where Associated Press bylaws aimed at preventing competitors

of existing members from joining the association were held

unlawful. Associated Press was an incorporated membership

association whose members were newspapers. It gathered and

distrubuted “news which [its] member papers cannot collect

single-handed, and which requires their pooled resources.” Jd.

at 26 (Frankfurter, J., concurring). This was a product or

service distinct from that of the member publishers, and one

requiring the cooperation of all the members, none of whom

2 The NFL argues that the player cases are distinguishable because they

challenged NFL conduct in a different market—the market for player

services, rather than the market in which NFL football is sold. “In the player

market club had the capacity to employ players without necessarily involving

other clubs in such contracts.” NFL Opposition at 39. The distinction is

unconvincing. Each club likewise has the capacity to lease a stadium without

involving the other clubs in its contract. Of course, the other clubs will be

“involved” in the sense that they will have to play in the leased stadium. But

they are similarly “involved” when one club employs a player in the sense

that they will have to play against that player. In skort, players no less than

stadiums are a factor in producing professional football, and if the nature of

professional football makes ‘its producer, the NFL, a single entity, that

conclusion would apply as much in the player market as in the stadium

market.

57a

had the facilities or resources to produce AP’s stream of

worldwide news. Yet the Court had no trouble finding AP’s

anticompetitive bylaws a restraint of trade.? Likewise, in Silver

v. New York Stock Exchange, 373 U.S. 341, 365, 83 S.Ct. 1246,

1261, 10 L.Ed.2d 389 ( 1963), the Court held that the Exchange

had violated section | of the Sherman Act. Yet the Exchange

“nerform[ed] an important function” by “serv(ing] ...as an

indispensable mechanism through which corporate securities

can be bought and sold”—a function that none of its individual

broker-members could perform on its own. Jd. at 349, 83 S.Ct.

at 1253.4

A third problem with the NFL's argument is that it seems

to rest on a false premise—that the individual NFL clubs are

not separate business entities whose products have an inde-

pendent value. The League may be correct when it character-

izes its member clubs as “[e]ntities which have capacity to be

competitors only when acting jointly with members of a com-

mon enterprise.” NFL Brief on Cross-Motions for Directed

Verdict re Single Entity, filed July 23, 1981 [hereinafter NFL

Brief], at 21. But this means only that each club must act

jointly with some other teams in some cooperative framework in

3 See also United States v. General Motors Corp., 121 F.2d 376 (7th

Cir. ), cert. denied, 314 U.S. 618, 62 S.Ct. 105, 86 L.Ed. 497 (1941), affirming

the conviction of four corporations for violating section | of the Sherman Act.

The defendants were GM, its sales and financing subsidiaries GMSC and

GMAC, and a subsidiary of GMAC. The defendants had argued that they all

directed their operations “toward one end, the manufacture and sale of

General Motors automobiles,” id. at 384, and that GMAC and its subsidiary

were thus merely parts of one common enterprise engaged in the unitary

business of making and selling GM cars. The court rejected this defense. /d

at 404.

4The NFL would distinguish Associated Press and Silver as involving

“organizations made up of firms, each of which were self-contained com-

petitors separate and independent of their membership in the umbrella

cooperative,” unlike the NFL's member clubs. NFL Brief at 22. This is not,

in the court’s view, a “distinction of substance” as the NFL believes. /d at

23. As discussed below, any individual NFL team could, in theory, withdraw

from the NFL and join or found a new league. A team could even withdraw

and try to present non-league exhibition games, as the Harlem Globetrotters

do. Such a venture might be almost certain to fail—but then so would a stock

broker who decided to quit the New York Stock Exchange and operate

without a seat on any exchange.

58a

order to produce football games. It does not show that each

club can produce football games only as an NFL member.

Indeed, many of the current NFL members—including plainuff

Raiders—previously operated as members of a rival football

league. There is no conceptual reason why any NFL team

could not decide to pull out and join a new league.’ Thus,

although the Raiders can create a product only in collaboration

with other teams, it does not follow that they “have no capacity

to be competitors separate and apart from their membership in

the National Football League.” NFL Brief at 29. Indeed,

sports fans quite often wish to spend their money on the games

of a particular team, not simply on “NFL football,” “NBA

basketball,” or the like.®

Besides stressing its allegedly unitary product, the NFL

relies principally on North American Soccer League v. NFL,

505 F.Supp. 659 (S.D.N.Y.1980), and San Francisco Seals,

Lid. v. National Hockey League, 379 F.Supp. 966

(C.D.Cal.1974). But these cases do not help the League in this

lawsuit, for they arose in far different contexts. The North

American Soccer League case arose in the very different setting

of a clash between two separate professional sports leagues,

and Judge Haight specifically noted that the single entity

defense “fails where two member teams would compete in the

$3 The NFL might insist that although an individual club could secede

from the League and continue to take part in producing football games, it

would not be producing NFL foorbail. But that is a mere tautology and in no

way shows that the League's product has a special unitary quality. Even that

most blatant coalition of competing enterprises, charged with a Sherman Act

violation, could argue that no other entity except the coalition itself could

produce a “coalition product™: this would not mean that every such coalition

must be considered a single business entity.

® For this reason, the NFL's analogy with Evans v. S. S. Kresge Co., 544

F.2d 1184 (3d Cir.1976), is unconvincing. NFL Brief at 19-20. That case

involved a retailer, Hempfield, who operated the grocery departments of a

number of defendant’s K-Mart stores. The court found an absence of

competition, since from a customer’s viewpoint, “whether the... item was

purchased from Kresge or from Hempfield, it was as if the item had been

offered for sale by Kresge alone, but at two different locations in its K-Mart

establishment.” 544 F.2d at 1193. In our case, by contrast, few football fans

would regard a Raiders game and, say, a Jets game as merely “NFL football”

dispensed at different locations.

59a

same geographical area for sports’ fans dollars, and league

restraint of that competition damages a stadium operator”—the

precise situation alleged here. 505 F.Supp. at 677, San

Francisco Seals turned on a finding that denial of the Seals’s

proposed move to Vancouver had no anticompetitive effect.

That finding cannot automatically be transferred to this case,

because the Seals, unlike the Raiders here, were not being

prevented from moving into another team’s home territory.

For the foregoing reasons, the court concludes that the

NFL’s member teams should be treated as separate business

enterprises for purposes of this lawsuit, rather than as com-

ponents of a single business entity. The NFL’s arguments are

by no means without force if marshalled in an attempt to

demonstrate that the competitive activity of the NFL’s teams

presupposes a degree of mutual cooperation perhaps unique to

the world of professional sports. But such unique features are

relevant in weighing the reasonableness of the restraint at issue

in this case—a task for the jury—and do not suffice to exempt

that restraint from antitrust scrutiny altogether by establishing a

single entity defense.

THEREFORE, IT IS ORDERED that the motions of the

Coliseum Commission and the Raiders for directed verdict on

the single entity issue be granted, and the NFL’s motion be

denied.

The Clerk of the Court is directed to serve copies of this

order by United States mail upon the attorneys of record

appearing for the parties herein.

ee a ee eee ee ee Se re u

SD eeeentetineeeene eee neti

6la

APPENDIX C

Untrep States Distrratct Court

Centra. District or CALIFORNIA

Civil No. 78-3523-HP

Los AncELES Memoria CoLisEuM CoMMISSION,

Plawmiif,

vs.

Natrona. Foorsau, Leacug,

an unincorporated association, et al.,

Defendants.

Oax.anpD Ramers, Lrp.,

Cross-Claimant,

vs.

NationaL Foorsauy, Leacvue,

an unincorporated association, et al.,

Cross-Defendants.

OakLanpb-ALAMEDa County Co.iseuMm, Inc.

Intervenor.

ORDER DENYING MOTION

FOR CHANGE OF VENUE

This matter is before the court on the National Football

League’s motion for change of venue. Having considered

the pleadings, the affidavits, the memoranda of law, and

the oral argument of counsel, the court has concluded that

the motion for change of venue should be denied.

The NFL’s motion, based on 28 U.S.C. § 1404(a), seeks

to transfer the case out of the Centrai District of Califor-

nia. The NF'L argues that its due process rights to a fair

trial would be denied by holding a trial in Los Angeles,

where, the NF'L argues, a jury would likely be predisposed

to favor the transfer of a second NFL franchise to the Los

Angeles Coliseum. The NFL further claims that a transfer

is necessary to avoid the risk of a verdict based on juror

prejudice, financial interest, and the influence of pretrial

a

§2a

publicity. The defendant Los Angeles Rams join in the

NFL’s motion. Before evaluating the factors to be consid-

ered in ruling on a motion under section 1404(a), a brief

review of the history of this case and some of the issues

involved may be in order.

I. BACKGROUND

The Los Angeles Coliseum Commission originally filed

it. complaint against the NFL on September 13, 1978. The

complaint sought to have sections 3.1 and 4.3 of the NFL

Constitution and Bylaws, which required a unanimous

vote of all NFL teams to permit a \tansfer of a team’s

home location, declared invalid as a restraint of trade vio-

lative of sections 1 and 2 of the Sherman Act, 15 U.S.C.

§§ 1 and 2. In an order filed February 28, 1979, this court

dismissed the complaint with leave to amend on the ground

that plaintiff had not adequately alleged standing to bring

the action. Los Angeles Memorial Coltseum Commission v.

N.F.L. (“Coliseum I”), 468 F.Supp. 154 (C.D.Cal. 1979).

Plaintiff filed a second amended complaint for injunctive

relief on March 5, 1979.

The next major event in the case occurred on January

18, 1980, when plaintiff filed a motion for a preliminary in-

junction against the NFL. The court was told that the Oak-

land Raiders Football Club had agreed to move its home

location to the L.A. Coliseum but that an injunction was

necessary to prevent the NFL from blocking the move by

requiring, under its newly amended transfer rule, the ap-

proval of three-quarters of the NFL members. After a

hearing held on February 4, 1980, and the filing of several

supplemental briefs, this court granted a preliminary in-

junction against the NFL in an order filed on February 21,

1980. Los Angeles Memorial Coliseum Commission v. N.F.L.

(“Coliseum IT”), 484 F.Supp. 1274 (C.D.Cal. 1980). The

Ninth Circuit subsequently stayed the order pending ap-

peal, and later reversed, in an opinion filed December 12,

a

63a

1980, for lack of a showing of irreparable injury. Los An-

geles Memorial Coliseum Commission v. N.F.L., 634 F.2d

1197 (9th Cir. 1980).

In the meantime, the L.A. Coliseum Commission filed a

third amended and supplemental complaint adding a dam-

age claim to their claim for injunctive relief. Shortly there-

after, the defendant Oakland Raiders filed a cross claim

against the NFL for damages and an injunction. Although

the L.A. Coliseum’s jury trial demand was included in its

third supplemental complaint, filed on March 7, 1980, the

Coliseum subsequently indicated a desire to try the case

without a jury.’ The NFL, however, has demanded its right

to a trial by jury.

Trial was originally scheduled for November 18, 1980.’

The NFL’s motion for change of venue was filed on Sep-

tember 8, 1980. The motion was taken under submission

after oral argument on September 30th. Intensive settle-

ment diseussions were held on numerous occasions from

October 1980 until February 4, 1981. The Oakland-Alameda

County Coliseum was permitted to intervene in the suit by

an order filed on January 16, 1981. Supplemental memo-

randa on the motion for change of venue were received on

January 14, January 23, January 29, February 4, February

20, February 24, March 6, and March 12, 1981. Discov-

ery having been substantially completed, several motions

for partial summary judgment were filed. Remaining

at issue are the following basic claims: (1) the claims

of the L.A. Coliseum and the Oakland Raiders that the

NFL’s three-quarters vote requirement for approval of

10n February 2, 1981, the L.A. Coliseum filed a motion under

Fed.R.Civ.P. 42(b) for a separate, non-jury trial of its equitable

claims, to be held before the jury trial on the Oakland Raiders’ cross

claims. An order denying the motion was filed after a hearing on

February 24, 1981. A copy of that order is attached as Appendix I.

*Pursuant to an October 30, 1980 agreement of counsel, the trial

date was continued to February 9, 1981. This date was subsequently

rescheduled for March 23, 1981.

64a

transfers is both a restraint on trade and an attempt to

monopolize, in violation of sections 1 & 2 of the Sherman

Act; (2) the L.A. Coliseum’s claim for tortious interfer-

ence with contractual advantage and business relations;

and (3) the Oakland Raiders’ claim that the NFL’s con-

duct in blocking the Raiders’ move to Los Angeles is a

breach of the duty of fair dealing. The NF'L has responded

with the following basic defenses: (1) since the NFL acts

as a “single economic entity” in deciding where NFL foot-

ball will be marketed, the “multiple actors” requirement

for a section 1 violation has not been met; (2) blocking the

move of the Oakland Raiders to Los Angeles has no sub-

tantial effect on competition; (3) the NFL’s rule on trans-

fers is valid under the rule of reason and was reasonably

applied; (4) the proposed contract between the L.A. Coli-

seum and the Oakland Raiders would not have received

the necessary approval of the appropriate governmental

bodies; and (5) the Oakland Raiders Club is precluded

from recovering any damages, based on the invalidity of

the transfer rule, because of the club’s adoption of the by-

laws containing the rule and its failure to exhaust intra-

league remedies. Trial is scheduled to begin on March 23,

1981.

II. FACTORS TO BE CONSIDERED UNDER SECTION

1404(a)

The statute on which the motion for transfer is based,

28 U.S.C.§ 1404(a), reads as follows:

For the convenience of parties and witnesses, in the

interest of justice, a district court may transfer any

civil action to any other district or division where it

might have been brought.

In ruling on a transfer motion, a district court must con-

sider each of the issues listed in section 1404(a): (1) the

convenience of parties; (2) the convenience of witnesses;

and (3) the interests of justice. Kasey v. Molybdenum

65a

Corp., 408 F.2d 16, 90 (9th Cir. 1969). Moreover, since sec-

tion 1404(a) was “designed as an attempt to statutorily

embody and modify the doctrine of forum non conveniens,”

A.J. Industries, Inc. v. United siates District Court, 503

F.2d 384, 386 (9th Cir. 1974), the factors weighed by courts

under the old common law doctrine of forum non conve-

niens should also be considered. This remains true even

though the court’s discretion under section 1404(a) is

broader than it was under the doctrine of forum non con-

veniens. Norwood v. Kirkpatrick, 349 U.S. 29, 32 (1955).

Some of those factors, discussed by the Court in Gulf Ol

Corporation v. Gilbert, 330 U.S. 501, 508-09 (1974), are as

follows:

the relative ease of access to sources of proof; avail-

ability of compulsory process for attendance of unwill-

ing, and the cost of obtaining attendance of willing, wit-

nesses; possibility of view of premises, if view would

be appropriate to the action; and all other practical

problems that make trial of a case easy, expeditious

and inexpensive. . . . relative advantages and obstacles

to fair trial.

The basic factors to be considered then, in determining

whether, on balance, a transfer to a different forum would

allow a case to proceed more conveniently and better serve

the interests of justice, are: (1) the plaintiff’s choice of

forum; (2) the convenience of the parties; (3) the conve-

nience of the witnesses; and (4) the interests of justice.

A. Plaintiff's Choice of Forum

The burden of establishing that an action should be trans-

ferred is on the moving party. 1 Moore’s Federal Practice

7.0.145([5], at 1615 (2d ed. 1980); 15 Wright, Miller &

Cooper, Federal Practice and Procedure: Jurisdiction

§ 3848, at 244 (1976) ; Commodity Futures Trading Comm'n

v. Savage, 611 F.2d 270, 279 (9th Cir. 1979) ; Factors Etc.,

Inc. v. Pro Arts, Inc., 579 F.2d 215, 218 (2d Cir. 1978),

66a

cert. dented, 440 U.S. 908 (1979). It has also been stated

that the plaintiff’s choice of venue should not be lightly

disturbed. 1 Moore’s Federal Practice, supra § 0.145[5],

at 1616; Northern Acceptance Trust 1065 v. Gray, 423 F.2d

653, 654 (9th Cir.), cert. denied, 398 U.S. 939 (1970). This

is particularly so when the forum chosen is not only the

plaintiff’s domicile but also has a significant connection

with the subject matter of the case. See, e.g., Pacific Car

and Foundry Co. v. Pence, 403 F.2d 949, 954 (9th Cir.

1968); American Can Co. v. Crown Cork & Seal Co., 433

F.Supp. 333, 338 (E.D.Wis. 1977); Mayer v. Development

Corp., 396 F.Supp. 917, 932 n.26 (D.Del. 1975). Moreover,

the defendant’s burden on a transfer motion is said to be

especially heavy in antitrust suits, where plaintiff’s choice

of forum is entitled to particular respect. See Ford Motor

Co. v. Ryan, 182 F.2d 329 (2d Cir.), cert. denied, 340 U.S.

851 (1950); Star Lines, Lid. v. Puerto Rico Maritime Ship-

ping Authority, 442 F.Supp. 1201 (S.D.N.Y. 1978).

The plaintiff Los Angeles Coliseum Commission has its

headquarters or “domicile” in Los Angeles. Its suit was

prompted by the departure of the Los Angeles Rams from

the Los Angeles Coliseum and the Coliseum’s subsequent

inability, allegedly due to the NF'L’s rule on transfers, to

find a replacement NFL tenant. The NF'L meeting at which

the league formally voted not to approve a transfer of the

Oakland Raiders to Los Angeles was held within the Cen-

tral District. Plaintiff thus claims that this district is

where “the defendant .. . committed violations of the Act

and inflicted the forbidden injuries.” Pacific Car and Foun-

dry Co., 403 F.2d at 954, quoting, Umted States v. National

City Lines, 334 U.S. 573, 583 (1948). See also Commodity

Futures Trading Comm’n v. Savage, 611 F.2d at 278-79.

Moreover, one of the NF'L’s defenses is that the Coliseum’s

proposed agreement with the Raiders would not have re-

ceived the approval of the appropriate Los Angeles City

and County officials. The NFL also challenges plaintiff’s

67a

argument that the addition of another NF'L team in the

Los Angeles area would have a significant effect on local

competition for players, coaches, and fans. The Central

District thus bas a significant connection with the subject

matter of the case, and plaintiff’s choice of this forum is

entitled to considerable weight.

As the “Background” section indicated, the motion for

change of venue was filed two years after the filing of the

original complaint, and six months after the Coliseum first

demanded a jury. Although section 1404(a) sets no limit on

the time at which a transfer motion may be made, the pas-

sage of time is a factor to be considered. Adler v. McKee,

92 F.Supp. 613 (S.D.N.Y. 1950). Delays of five months have

induced courts to refuse transfers that might otherwise

have been granted. See McGraw-Edison Co. v. Van Pelt,

350 F.2d 361, 364 (8th Cir. 1965) (en banc) ; Metropolitan

Life Ins. Co. v. Potter Bank and Trust Co., 135 F.Supp. 645

(W.D.Pa. 1955). See also Securities € Exchange Comm’n v.

Savoy Industries, Inc., 587 F.2d 1149, 1156 (D.C.Cir. 1978),

cert. dented, 440 U.S. 913 (1979); Henry v. First Nat'l

Bank, 50 F.R.D. 251 (N.D.Miss.), vacated on other grounds,

444 F.2d 1300 (5th Cir. 1971), cert. denied, 405 U.S. 1019

(1970) (transfer motion, filed three months after the filing

of the original complaint, was denied because several mo-

tions and preliminary injunction had already been decided).

Finally, the NFL has not requested transfer to any

specific district, but has merely suggested several possible

alternative locations, e.g., Las Vegas, Phoenix, Sacramento,

and Portland. The arguments with respect to transfer have

therefore been made in the abstract—the NFL claiming, in

essence, that any forum would be better than Los Angeles.

The fact that the plaintiffs choice of forum is its home

district, however, has been considered sufficient to defeat a

motion for transfer, absent concrete indications as to why

another particular forum was better. Industrial Solvents

Corp. v. Towboat Valley Voyager, 388 F.Supp. 1055, 1057

(S.D.N.Y. 1975).

68a

B. Convenience of the Parties

The present forum serves the convenience of the parties

because the plaintiff, the defendant Rams, most of the

attorneys, and many of the witnesses are located here.

Moreover, the litigation has proceeded in this court for

over two years. See, e.g., Commodity Futures Trading

Comm'n, 611 F.2d at 279 (“The district court was familiar

with the case and transfer may have led to delay.”) ; Securi-

ties € Exchange Comm'n v. Savoy Industries, Inc., 587 F.2d

at 1156 (“‘[RJelative docket congestion and potential speed

of resolution is an appropriate factor to be considered.’ ...

[N]ot only would delay from a crowded docket be present,

but also the delay associated with the [transferee] district

court’s having to prepare itself for this complicated case.’’).

The NFL has not shown that the present forum is incon-

venient for it. Indeed, counsel for both the NFL and the

Rams are located here. Therefore, the cost to the NFL,

the Rams, and Plaintiff of having to transport their coun-

sel to, and house them in, another district, for what the

NFL estimates will be a three to five month trial, would no

doubt be considerable. See Altman v. Deramus, 342 F.Supp.

72, 76 (S.D.N.Y. 1972); Mobi Ow Corp. v. W. R. Grace &

Co., 334 F.Supp. 117, 124 n.5 (S.D.Tex. 1971) (“The cost of

counsel’s transportation and time in route must be borne

by the parties. Therefore this factor directly bears upon

the convenience of the parties and costs of litigation.’’).

Thus, unlike the usual transfer motion, where the court is

asked to balance an increase in costs for one party against

a significant decrease in the costs of another, the transfer

requested here would result in greatly increased costs for

every party to the suit. The convenience of the parties is

therefore another factor weighing against transfer of this

action under section 1404(a).

:

69a

C. Convenience of Witnesses

The convenience of witnesses is said to be the most im-

portant factor in passing on a transfer motion. Saminsky

v. Occidental Petroleum Corp., 373 F.Supp. 257, 259 (S.D.

N.Y. 1974); 15 Wright, Miller & Cooper, supra, 4 3851, at

264 (“If the forum chosen by plaintiff will be most conve-

nient for the witnesses, this is a powerful argument against

transfer.”).

In assessing the effect of a transfer on the convenience

of witnesses, courts consider the effect of a transfer on the

availability of certain witnesses, and their live testimony,

at trial. E.g., B.J. McAdams, Inc. v. Boggs, 426 F.Supp.

1091, 1104-05 (E.D.Pa. 1977); Commercial Solvents Corp.

v. Laberty Mutual Ins., 371 F.Supp. 247 (S.D.N.Y. 1974) ;

Polaroid Corp. v. Casselman, 213 F.Supp. 379, 382 (S.D.

N.Y. 1962) (“Depositions, deadening and one-sided, are a

poor substitute for live testimony especially where, as here,

vital issues of fact may hinge on credibility.”).

Witnesses may not be compelled to attend trial unless"

they can be served with subpoenas within the trial district,

or at any place outside of the district that is within 100

miles of the place of trial. Fed.R.Civ.P. 45(e). Thus, trans-

fer may be denied when witnesses either live in the forum

district or are within the 100-mile reach of the subpoena

power. 15 Wright, Miller & Cooper, supra at 267-68; B.J.

McAdams, Inc. v. Boggs, swpra (transfer refused where

plaintiff asserted that compulsory process might be nec-

essary to secure the live testimony of witnesses who could

not be compelled to testify in the proposed transferee dis-

trict); U.S. Industries, Inc. v. Procter € Gamble Co., 348

F.Supp. 1265 (S.D.N.Y. 1972).

Plaintiff claims that many of its witnesses will be beyond

the court’s subpoena power if transfer is granted. Among

the witnesses, whose names and testimony plaintiff has

specified, are members of the Los Angeles County Board of

70a

Supervisors, representatives of other Coliseum tenants,

and the owners of the Los Angeles Rams and the San Diego

Chargers. The last two names, those of the Rams and

Chargers owners, are also contained in the NF'L’s tenta-

tive witness list, filed January 14, 1981. The NFL, on the

other hand, has not indicated that a transfer is necessary

for the convenience of any of its witnesses. The factor of

convenience of witnesses therefore provides additional sup-

port for denial of the requested transfer.

D. Interest of Justice

Many considerations have been evaluated by courts under

the heading “the interest of Justice.” One such considera-

tion is whether a speedier trial may be had in one court

than another. Transfer has been denied where, as here, a

speedier trial could be had where suit was brought than in

the proposed transferee court. E.g., National Super Spuds,

Ine. v. New York Mercantile Exchange, 425 F.Supp. 665

(S.D.N.Y. 1977); In re Fenwick Island, Inc., 330 F.Supp.

1191 (E.D.N.C. 1971); Vandusen v. J.C. Penney Co., 207

F.Supp. 529, 536 (W.D.Ark. 1962).

The most important “interest of justice” consideration

before the court in this case is the defendants’ claim that

transfer is necessary to avoid the risk of an unfair trial.

As part of this claim, defendants argue that jurors in the

Central District have been exposed to excessive and ad-

verse pretrial publicity. Defendants also argue that jurors

in the Central District would screen evidence “through a

filter of local financial and political interests, including the

real or perceived financial impact of the Raiders’ arrival

in Los Angeles and the effect of a second NFL franchise

on the area’s spiritual and economic well-being.” These

two proposed bases for a transfer—pretrial publicity and

juror bias—will be discussed in turn. First, however, it

may be helpful to have in mind some background informa-

tion on the nature of this judicial district.

7la

1. Background

The Central District of California comprises the counties

of Los Angeles, Orange, Riverside, San Bernardino, San

Luis Obispo, Santa Barbara, and Ventura. 28 U.S.C. § 84.

Although the Los Angeles Coliseum is located in Los An-

geles County, the Big “A” Stadium, in which the defendant

Los Angeles Rams play, is located in the City of Anaheim

in Orange County. The combined population of these seven

counties is approximately 10 million. Excluding Orange

and Los Angeles counties, the combined population of the

Central District’s five other counties is approximately three

million. Residents of the Central District engage in many

forms of recreation, from hiking and skiing to surfing and

spectator sports. Some are fans of local college or nonpro-

fessional teams, while others may root for a variety of pro-

fessional teams, including the Los Angeles Dodgers, the

California Angels, the Los Angeles Lakers, the Los Angeles

Kings, and the Los Angeles Aztecs. Still others are prob-

ably wholly oblivious to team sports. Such persons may

turn for entertainment to the symphony, a wide variety of

music and night clubs, visiting ballets and operas, com-

munity theater, church groups, films, or, perhaps even

gardening or reading. Thus, the population of the Central

District is highly diverse, and its residents are far from

homogeneous in their interests and backgrounds.

2. Pretrial Publicity

Both the NFL and the defendant Rams argue that it will

be impossible for them to receive a fair trial in Los Angeles

due to “prolonged, extensive, and highly prejudicial’

pretrial publicity. In affidavits supporting and opposing

the transfer motion, the parties have filed copies of hun-

dreds of articles on various aspects of the case which have

appeared in numerous newspapers over the course of a

year. According to the affidavits, radio and television

stations have also given extensive coverage to this litiga-

ee

72a

tion. Defendants focus particular attention on articles

published by a local newspaper which, although it has a

relatively small circulation, is alleged to be particularly

biased against the defendants. See Los Angeles Coltseum

Commission v. NFL, ...... F.Supp. ...... , No. 78-3523-HP

(C.D.Cal., filed Jan. 5, 1981) (memorandum and order

granting motions to quash subpoenas served on two Herald

Examiner reporters). While defendants claim that local

media coverage “has consisted in large part of vitriolic

attacks on the league, its personnel and its membership,”

many of the articles filed with this court appear to contain

straightforward and neutral reports on the progress of

this litigation. Other articles are sharply critical of the

Raiders’ management and express doubts about the legality

or fairness of certain aspects of the Raiders’ proposed

agreement with Los Angeles Coliseum. Although the affi-

davits support the defendants’ claim that “[e]very major

courtroom event has been reported by the local press,” this

fact alone does not justify transfer of the case. Moreover,

it should be kept in mind that jurors in the Central District

hail from Orange County and five other counties besides

Los Angeles, and that the defendant Rams have asserted,

in a motion to exclude certain evidence from trial, that

“Tt is certain ... that wherever the action is tried, intense

press coverage will continue.”

Defendants argue that the pretrial publicity in this

district requires the court to grant a transfer, as a matter

of due process, even before the court has an opportunity

to determine the effect of this publicity in the context of

voir dire proceedings. Numerous cases are cited which

purportedly support this proposition. On careful reading

of these precedents, however, the court concludes that

defendants’ pretrial publicity argument is based on two

types of authority: (1) dicta from cases having nothing to

do with either transfers of venue or pretrial publicity,

and (2) standards evolved in criminal cases in which

TT

73a

extreme and virulent pretrial publicity was found to be

coupled with demonstrated effects on prospective jurors.

Citations which fall into the first category include the

following Supreme Court cases: Greenholtz v. Nebraska

Penal Inmates, 442 U.S. 1 (1976); Matthews v. Eldridge,

424 U.S. 319 (1976); and Goldberg v. Kelly, 397 U.S. 254

(1970). In Greenholtz v. Nebraska Penal Inmates, the

Court rejected a due process challenge to prison parole

procedures. Matthews v. Eldridge held that states were not

required to provide an evidentiary hearing prior to the

termination of social security benefits. Finally, in Goldberg

v. Kelly, cited for the proposition that “factfinding based

on assertions of fact contained in extra-judicial sources, or

upon political, social or financial persuasions occurring

outside the record is erroneous factfinding,” the Court held

that New York City procedures for termination of public

assistance payments to welfare recipients did not meet the

requirements of procedural due process. Those procedures,

among other things, failed to permit welfare recipients to

appear personally before the officials charged with making

the final decision on the recipients’ continued eligibility.

Other cases falling into the first category include Jn re

Japanese Electronics Products Antitrust Litigation, 631

F.2d 1069 (3d Cir. 1980) ; United States v. Allsup, 566 F.2d

68 (9th Cir. 1977); Kiernan v. Van Schaik, 347 F.2d 775

(3d Cir. 1965) ; and In re Union Leader Corp., 292 F.2d 381

(1st Cir. 1961). In Im re Japanese Electronics Products,

the Third Circuit held that the Seventh Amendment does

not guarantee a right to a trial by jury when a lawsuit is

so complex that the jury would not be able to perform its

task of rational decision making with a reasonable under-

standing of the evidence and relevant legal rules. United

States v. Alsup was a bank robbery case in which the court

refused to excuse for cause two prospective jurors who

worked for the bank that had been robbed. This and other

74a

cumulative errors were held to have resulted in a denial

of the defendant’s right to a fair trial. Kiernan v. Van

Schatk, cited for the proposition that “it is well settled

that any extraneous influences that threaten to deprive a

civil litigant of an impartial jury are grounds for

transfer,” held that the trial court abused its discretion in

refusing to seek voir dire questions about prospective

jurors’ relationships with insurance companies. Finally, in

In re Union Leader Corp., cited for the proposition that

“the right to be tried before an unbiased [trier of fact]

is... basic to our judicial system,” the First Circuit denied

a petition for a writ of mandamus which sought to transfer

a case away from a trial judge who had been personally

attacked in many newspaper editorials published by the

defendant.

Defendants’ second category of authorities, in which

extreme and virulent publicity was found to be coupled

with demonstrated effects on potential jurors, are highly

distinguishable from the instant case. For example,

defendants cite five Supreme Court cases: Sheppard v.

Maawell, 384 U.S. 333 (1966); Estes v. Texas, 381 U.S.

532 (1965); Rideau v. State of Louisiana, 373 U.S. 723

(1963) ; Irvin v. Dowd, 366 U.S. 717 (1961); and Marshall

v. United States, 360 U.S. 310 (1959).

In Sheppard v. Maxwell, 384 U.S. 333 (1966), massive

and outrageous publicity, both before and during trial, was

coupled with the refusal of the trial judge either to question

the jurors on whether they had heard certain highly preju-

dicial mid-trial broadcasts or to admonish the jury to

ignore press accounts of the case. The defendant in the case

was a doctor accused of murdering his wife. Prior to his

indictment for murder, headlines, editorials, and cartoons

asked rhetorically why the doctor was not already in jail.

A continuous stream of articles purported to contain state-

ments of the defendant and details of his alleged extra-

marital love affairs with numerous women. The trial began

75a

just two weeks before the November general election, in

which the chief prosecutor was a candidate for judge and

the trial judge was up for re-election. Newspapers pub-

lished the names and addresses of prospective jurors, who

reported receiving numerous phone calls regarding the

case. Nearly all the seats in the courtroom were assigned

to reporters, whose photographs of the jurors were printed

constantly in newspapers during the trial. Every juror

stated at voir dire that they had read and heard about the

case. The jury’s visit to the scene of the alleged crime be-

came a full-scale media event. Moreover, in addition to the

judge’s refusal to order the jury not to read press accounts

of the trial, jurors were allowed to place phone calls during

deliberations. On the one occasion the judge questioned the

jury regarding publicity during the trial, two jurors ad-

mitted having heard the highly inflammatory charge that a

prison inmate claimed the defendant was the father of her

illegitimate child. According to the Supreme Court, “the

judge never considered . . . means that are often utilized to

reduce the appearance of prejudicial material and to pro-

tect the jury from outside influences.” 384 U.S. at 358. The

Court mentioned several ways of insulating jurors, such as

regulating the conduct of journalists in the courtroom, in-

sulating witnesses from interviews with reporters, con-

trolling leaks of information by the prosecution, and pro-

scribing extrajudicial statements by counsel and witnesses

on certain prejudicial matters. The Court concluded that,

despite the massive and highly prejudicial local publicity,

“these procedures would have been sufficient to guarantee

[the defendant] a fair trial... .” Zd.

In Estes v. Texas, 381 U.S. 532 (1965), the Court was

concerned with the impact of live TV and radio coverage of

courtroom proceedings on the defendant’s due process right

to a fair and impartial trial. Estes v. Texas was therefore

not a pretrial publicity case. Justice Clark’s “majority”

cient

76a

opinion® reasoned that live TV cameras had a tendency to

distract jurors, pressure witnesses, place extra burdens on

the judge, transgress the dignity of the defendant, and in-

terfere with his ability to concentrate. The Court has since

characterized Estes as a trial lacking due process since

“the volume of trial publicity, the judge’s failure to control

the proceedings, and the telecast of a hearing and of the

trial itself” prevented a sober search for the truth. Nebraska

Free Press Ass'n. v. Stuart, 427 U.S. 539, 552 (1975),

Moreover, the Court in Chandler v. Florida, 101 S.Ct. 802

(1981), recently declined to constrve Estes as laying down

a per se constitutional rule barring live broadcast coverage

under all circumstances.

In Rideau v. State of Louisiana, 373 U.S. 723 (1963), the

Court held that the trial court’s refusal of a request for

change of venue was a denial of due process where the de-

fendant’s confession had been broadcast over TV through-

out the district. The confession had been obtained by law

enforcement officers who interviewed the defendant on tape

without an attorney present. The Court also noted that two

jurors were deputy sheriffs, who had been kept on the panel

over defense counsel’s objections.

In Irvin v. Dowd, 366 U.S. 717 (1961), the Court held

that a trial which resulted in a conviction and death sen-

tence violated the defendant’s due process rights when two-

thirds of the members of the jury admitted, before hearing

‘Justice Clark's opinion received the concurrences of Chief Justice

Warren, and Justices Douglas and Goldberg, who also concurred in

a separate concurrence by Chief Justice Warren. Justice Harlan

concurred in the result, but indicated that the Court's holding

should not be read to extend beyond the facts of the case, as he

was not yet prepared to resolve the question addressed in the

other concurrences as to whether all live TV coverage was in-

herently prejudicial, 381 U.S. at 587-96. Four other justices dis-

sented in three separate opinions.

77a

any testimony, their belief that the defendant was guilty.

Police press releases publicized the defendant’s confession

to six murders. A barrage of headlines, articles, cartoons,

and pictures continued for six or seven months preceding

the trial. A change of venue to an adjoining county, which

relied on the same news sources as the transferor district,

was granted, but a second motion for change of venue was

denied on the basis that state law only permitted one change

of venue. Motions for a continuance were also denied. Radio

and TV revealed the defendant’s 20-year-old conviction for

arson, a prior conviction for burglary, and a court-martial

on AWOL charges during the war. The press also reported

the defendant’s offer to plead guilty if promised a 99-year

sentence, the determination of the prosecutor to secure the

death penalty, and the defendant’s purported confession to

24 burglaries. Other highly emotional press stories sug-

gested a “pattern of deep and bitter projudice”’ i

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