Opposition Brief — Los Angeles Raiders v. National Football League

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1986

Los ANGELES RAIDERS, A LIMITED PARTNERSHIP,

Petitioner,

v.

NATIONAL FOOTBALL LEAGUE,

AN UNINCORPORATED ASSOCIATION, ef a.,

Respondents.

BRIEF OF RESPONDENTS IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

SKADDEN, ARPS, SLATE, COVINGTON & BURLING

MEAGHER & FLOM *DANIEL M. GRIBBON

FRANK ROTHMAN JOHN H. SCHAFER

300 South Grand Avenue PAUL J. TAGLIABUE

Los California 90071 LYLE JEFFREY PASH

(213) 687-5000 1201 Pennsylvania Avenue, N.W.

Washington, D.C. 20004

(202) 662-6000

Attorneys for National Football League Respondents

*Counsel of Record

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TABLE OF CONTENTS

Page

pe ee ee li

PRELIMINARY STATEMENT ............0.ccccceeecs 1]

COUNTERSTATEMENT OF THE CASE ...............-.. ]

REASONS FOR DENYING THE WRIT................. 3

I. No Issue Of Res Judicata Is Presented ........ 3

Il. The Opinion Below Properly Determined The

Offset Issue, And Did So In A Manner

Consistent With Antitrust Law And Policy ... 6

A. No Conflict Exists Between The Resolution

Of The Offset Issue By The Court Below

And Any Decision Of This Court Or Any

Chter Cert GH AOGON nw. oi ccc ean. 6

B. The Offset Does Not Deny Petitioner Any ~

Relief To Which It Is Entitled Under The

EER an oor rr 9

C. The Offset Is Properly Deducted Before

Trebling In Determining Petitioner’s Actual

hae aks cn ae biplie ews uae 10

D. The Offset Creates No Immunity From The

PE elaine rt dhs baa nds cede 12

I Sr te a ie ere ag 14

ii

TABLE OF AUTHORITIES

Page

CASES:

Albrecht v. Herald Co., 452 F.2d 124 (8th Cir.

Lg | eee err eee PET T peer Ter ro eer 7

Berkey Photo, Inc. v. Eastman Kodak Co., 603

F.2d 263 (2d Cir. 1979), cert. denied, 444 US.

10S CURE aa 5 in 64004495) ee ews agi

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429

TLS. OPT COSTED onc vec dcdseuwecesets 7, 10,

11

Burlington Industries, Inc. v. Milliken & Co., 690

F.2d 380 (4th Cir. 1982), cert. denied, 461 USS.

Sid (AGREE uk enn cc knoe eee 11

Federated Department Stores, Inc. v. Moitie, 452

US. FOG CIGGAD oon cnn dks dae eee ans “$5

Hanover Shoe v. United Shoe Machinery Corp.,

992 US. GEE CID cock ca kis ta vt inns 4, 6, 8,

9, 11,

12

Jerard Associates Inc. v. Stanley Works, 1966

Trade Cas. (CCH) 4 71,820 (S.D.N.Y. 1966)... 11

J. Truett Payne Co. v. Chrysler Motors Corp., 451

OS: SOT COOG o k in ccce cutee aeeceeans 10, 11

Matsushita Electric Industrial Co., Ltd. v. Zenith

Radio Corp., 106 S. Ct. 1348 (1986).......... 13

MCI Communications Corp. v. American Tel. &

Tel. Co., 708 F.2d 1081 (7th Cir.), cert. denied,

464 U3. WER eee sk wh oe ees 7

National Basketbali Ass’n v. SDC Basketball

Club, Inc., 815 F.2d 562 (9th Cir. 1987)....... 12

ili

Perma Life Mufflers, Inc. v. International Parts

WR Ge |

Randall v. Loftsgaarden, 106 S. Ct. 3143 (1986) ..

Siegel v. Chicken Delight, Inc., 448 F.2d 43 (9th

Cir. 1971), cert. denied, 405 U.S. 955 (1972)...

Telex Corp. v. IBM, 367 F. Supp. 258 (N.D. Okla.

1973), affd in part and rev'd in part on other

grounds, 510 F.2d 894 (10th Cir.), cert.

dismissed, 423 U.S. 802 (1975) ..............

STATUTES AND RULES:

Federal Rule of Civil Procedure 42 .............

Federal Rule of Civil Procedure 54(b) ...........

Securities Exchange Act of 1934, § 28(a), 15

I np kb eae dsacssateceses

OTHER AUTHORITIES:

P. Areeda, Antitrust Violations Without Damage

Recoveries, 89 Harv. L.Rev. 1127 (1976) ......

II P. Areeda & D. Turner, Antitrust Law 4 347d

ee ee

Restatement (Second) of Judgments § 13 (1982) ..

1]

10

13

PRELIMINARY STATEMENT

“League’’), submit this brief in opposition to the petition for a

writ of certiorari filed by fhe Los Angeles Raiders. The petition

seeks review of that portion of a decision of the Court of Appeals

for the Ninth Circuit that remands an antitrust money judgment

in favor of the Raiders with instructions to reduce that judgment

to account for the value of the Los Angeles franchise which the

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Respondents National Footbal! League, et al. (“NFL” or

Raiders seized from the League. The Raiders’ petition identifies -

no conflict between the remand ordered by the court below and

any decision of either this Court or another court of appeals, and

presents no issue otherwise appropriate for review by this Court.

There is presently pending before the Court a petition by

respondents for a writ of certiorari to review other issues decided

by the court below on which guidance from this Court is plainly

necessary. National Football League, et al., v. Oakland Raid-

ers, Ltd. and Los Angeles Memorial Coliseum Commission, No.

86-1972 (filed June 10, 1987). Review by this Court of those

issues may weil moot the distinctly subsidiary issue raised by the

Raiders in this petition, which in any event was correctly decided

by the court below. '

COUNTERSTATEMENT OF THE CASE

The background and prior proceedings are fully set forth in

the petition in No. 86-1972. We briefiy describe the proceedings

below that relate to the remand challenged by the Raiders.

The liability phase of this bifggcated trial resulted in a

judgment in favor of petitioner and an injunction against the

League, which were affirmed by the Court of Appeals. (A-46 to

| A-95)?_ In affirming, the Court of Appeals stated: “We review

only the liability portion of the bifurcated trial; the damage

‘We concur with the concluding comments of the Raiders’ petition

concerning the importance of sports-antitrust issues and the significance of

professional sports in American life. (Pet. at 20) The public interest in

these matters is best served by addressing directly the issues raised in No.

86-1972.

2 The proceedings were bifurcated at plaintiffs’ request and over the

NFL’s objection.

2

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

(A-47)’ Although the Court of Appeals expressly acknowledged

that “the NFL teams are not true competitors, nor can they be”,

(A-60) and that “NFL football requires some territorial restric-

tions ...to secure each venturer the legitimate fruits of that

participation”, (A-68) it affirmed a jury finding that the

League’s disapproval of the Raiders’ transfer to Los Angeles

violated Section | of the Sherman Act. In so holding, the court

put principal emphasis on perceived defects in the “procedural

mechanism” by which the League administered Rule 4.3 of the

League agreement, which governs team transfers. (A-69, A-71)

The trial of petitioner’s claim for damages resulted in a

money judgment in favor of petitioner of approximately $35

million after trebling. The NFL’s appeal from this judgment was

heard by the same panel that had affirmed the earlier judgment

of liability. The court below held that the opportunity to place an

NFL team in Los Angeles belonged to the League as a whole,

(A-25, A-26, A-29) and that the Raiders’ damages should be

offset to reflect their unilateral seizure of that valuable business

opportunity. The offset was to equal the amount by which the

value to the League of the Los Angeles opportunity seized by the

Raiders exceeded the value of the opportunity to place a team in

Oakland, which was surrendered by the Raiders when they left

Oakland. (A-27 to A-28) The court accordingly vacated the

money judgment in favor of the Raiders and remanded to the

District Court to determine the amount of the offset and the

Raiders’ actual damages, if any. (A-34)

Whether by design or inadvertence, the Raiders overlook the

unanimity of the Court of Appeals in determining the appropri-

ateness of this offset. The court, without dissent, found that

“(t]he district court .. . erred in refusing to admit evidence of the

full benefits of the Los Angeles expansion opportunity received

by the Raiders, and in refusing to instruct the jury on the NFL’s

offset defense.” (A-29) Judge Nelson dissented only from the

court’s determination that the offset should be applied to reduce

’ Thus, the District Court’s decree of June 14, 1982, provided for retain-

ing jurisdiction in order to, inter alia, “determine the damages recover-

able .. . against defendants.” (A-99)

3

the single damages that the jury had found in favor of the

Raiders. (A-41 to A-45) In her view the offset should be applied

only to reduce the amount of the judgment after trebling.*

The Raiders challenge both the allowance of the offset and

its deduction from the single damages found by the jury.

REASONS FOR DENYING THE WRIT

I. No Issue Of Res Judicata Is Presented

The Raiders’ primary contention is that the Court of

Appeals’ correction of the District Court’s error in failing to

admit evidence and properly instruct the jury in the damage trial

“flouts res judicata principles.” (Pet. at 7) This argument

misconceives the decisicn below and has no support in the princi-

ples of res judicata.

Far from depriving the Raiders of their earlier judgment,

the Court of Appeals’ opinion on damages expressly reaffirms the

earlier grant of injunctive relief, pursuant to which the Raiders

have played in Los Angeles since 1982, and pursuant to which

they will continue to play in Los Angeles. (A-26, A-27) For the

past five years, the Raiders have enjoyed the considerable finan-

cial benefits of a Los Angeles address without paying for that

franchise territory and have also continued to receive all the

benefits of membership in the NFL. None of that is altered by

the opinion below on damages. The court made clear that its

focus was not on the injunctive relief that it had previously

affirmed, but rather on the windfall received by the Raiders—a

windfall that it found should be “taken into account when award-

ing additional damages beyond the injunctive relief.” (A-27)

(emphasis in original) There has been no “retool[ing of] a

judgment” for an injunction as the Raiders claim; (Pet. at 9)

instead, the court below merely vacated a judgment that awarded

money damages not limited to the actual extent of the injury.

* As to the appropriateness of the offset, Judge Nelson said: “I also agree

that the value of the Los Angeles opportunity, improperly conferred upon

the Raiders by the district court’s injunction, should be returned to the

NFL.” (A-41)

4

Without citation of authority, the Raiders claim that “[t]he

decision that the NFL could not lawfully keep the Raiders out of

the Los Angeles Coliseum did not mean that NFL could charge

the Raiders for letting it in.” (Pet. at 8) Presumably this is

intended to suggest that a finding of antitrust violation in support

of an injunction authorizes a damage claimant to appropriate the

violator’s property. However, as both Hanover Shoe v. United

Shoe Machinery Corp., 392 U.S. 481 (1968), and Siegel v.

Chicken Delight, Inc., 448 F.2d 43 (9th Cir. 1971), cert. denied,

405 U.S. 955 (1972), establish, an antitrust violation does not

preclude a violator from obtaining compensation for the use of

his property. The Court of Appeals simply applied the teachings

of these cases and did nothing to disturb the injunction previously

issued in the Raiders’ favor.

The Raiders’ argument also depends on a mistaken view of

res judicata. That doctrine only prohibits relitigating issues once

there has been a final judgment on the merits of an action. Res

judicata is intended to prevent two separate actions but does not

prevent timely appeals on all issues decided when a trial is

bifurcated. See Restatement (Second) of Judgments § 13

(1982).

This is not a case in which the NFL has attacked the

injunction in a separate action, or has denied its effect. Rather, a

panel of the Ninth Circuit—the same panel that heard the initial

appeal——has reviewed and vacated a subsequent judgment for

money damages in favor of the Raiders while leaving intact the

injunctive relief that entitles the team to play in Los Angeles. No

issue of res judicata is presented and it is not surprising that the

Raiders can offer no authority for their extraordinary view of the

law.’

* The Raiders’ argument, if accepted, would make appellate review a

hollow remedy. The NFL had no reason to present its offset defense prior

to the damages trial. If the Raiders’ view of res judicata were accepted, the

Ninth Circuit would have been powerless, because of the outstanding

injunction, to correct the District Court’s error in refusing to allow the

NFL to present its offset defense and in refusing to instruct the jury on that

defense. -

a i Bb it ts tie

5

Federated Department Stores, Inc. v. Moitie, 452 U.S. 394

(1981), offers no support for the Raiders’ novel view of res

judicata. In Moitie, a party whose federal case had been dis-

missed and who did not appeal that dismissal, sought to bring a

second action in state court based on the same facts. This Court,

in a straightforward application of settled law, held that a second

action could not be maintained. 452 U.S. at 398-402. Moitie

has no application to this case, where a bifurcated trial predict-

ably resulted in separate appeals and where the appellate court

did no more than rule on various legal and factual issues in the

order that those points were necessarily presented.

In the end, the Raiders’ argument is based not on res

judicata, but rather on an asserted “inconsistency” in the two

opinions of the Ninth Circuit. The Raiders claim that the more

recent opinion “rests upon the inconsistency” and must therefore

be wrong. (Pet. at 8) (emphasis in original) The alleged “incon-

sistency” is the court’s holding that the value of the Los Angeles

opportunity “belonged to the league as a whole, or in other

words, was owned in part by each franchise owner.” (A-26)

Petitioner characterizes this holding as

“a different way of expressing precisely the contention

on which [Judge Williams] had unsuccessfully dis-

sented from the previous decision on liability, viz., that

NFL and its members are an ‘entity’, and that the right

to play football in the National Football League in Los

Angeles is property of that ‘entity’ for which it can

ar a price to any member wishing to move.” (Pet.

at 6

The inconsistency between the two decisions is not, however,

that identified by the Raiders. Apart from other objections to its

holding on liability, it clearly was consistent for the court below

to conclude that the League had not employed proper procedures

in excluding the Raiders from Los Angeles, and also to conclude

that the League had a valuable property right in the Los Angeles

location that the Raiders, having appropriated it, should account

for in any damage calculation. The only inconsistency in the two

decisions is between the court’s conclusion that the League did

have a common property right in the Los Angeles opportunity

6

and its conclusion that the League was not free under the Sher-

man Act to protect that right. This latter conclusion is the

subject of the Petition in No. 86-1972.°

II. The Opinion Below Properly Determined The Offset Issue,

And Did So In A Manner Consistent With Antitrust Law

And Policy

A. No Conflict Exists Between The Resolution Of The Offset

Issue By The Court Below And Any Decision Of This

Court Or Any Other Court Of Appeals

The Raiders can point to no conflict between the opinion

below and any opinion of this Court or another court of appeals

on the appropriateness of an offset in the circumstances

presented in this case.

The Court of Appeals relied on three different lines of

authority, each of which separately established the error in the

District Court’s failure to admit evidence and instruct the jury on

the offset. The first, based on decisions such as Hanover Shoe

and Siegel v. Chicken Delight, establishes that a damage award

must reflect not only a plaintiff's losses, but also “benefits that

would not have been received by the plaintiff had there been no

violation...” (A-23) By moving to Los Angeles, the Raiders

“appropriated for themselves the expansion value that had accu-

mulated in Los Angeles.” (A-26) The value of the Los Angeles

opportunity was largely attributable to “the NFL’s well-estab-

lished and widely followed nationwide entertainment product”,

and not to any antitrust violation. (A-25) Because the NFL’s

successful joint production and marketing of its product made

Los Angeles a valuable expansion opportunity, the court cor-

rectly concluded that any damages awarded to the Raiders had

to take into account the valuable property right the Raiders had

obtained.

* The Raiders’ invocation of Federal Rules of Civil Procedure 42(a) and

(b), and 54(b) (Pet. at 7) is a transparent and flawed effort to assert a

contention of some broader significance. There has been no transgression

of these rules and the decision below creates no threat to their continued

utility.

ee

7

Second, relying on Brunswick Corp. v. Pueblo Bowl-O-Mat,

Inc., 429 U.S. 477 (1977); MCI Communications Corp. v. Amer-

ican Tel. & Tel. Co., 708 F.2d 1081 (7th Cir.), cert. denied, 464

U.S. 891 (1983); and Berkey Photo, Inc. v. Eastman Kodak Co.,

603 F.2d 263 (2d Cir. 1979), cert. denied, 444 U.S. 1093 (1980),

the court below held that an offset was appropriate where, as

here, a damage judgment “includes damages which go beyond

the scope of the adjudicated antitrust liability.” (A-24) Because

the NFL’s development of the Los Angeles opportunity was

lawful, “an award of that opportunity to the Raiders would

constitute a recovery for conduct of the NFL which was not

found to be illegal.” (A-26) Thus, the Raiders had been given

“a windfall benefit” that exceeded “the scope of the antitrust

verdict”, and an offset to the damage award was appropriate. (A-

27)’

Finally, the Court relied on a line of cases (e.g., Albrecht v.

Herald Co., 452 F.2d 124 (8th Cir. 1971)) establishing that a

plaintiff may recover damages based on either “lost profits” or

the “value of a business”, but not both. (A-31 to A-32) Should

the Raiders be awarded both the Los Angeles business opportu-

nity, the value of which is its potential profitability, and the

interim lost profits for 1980-82, the Raiders would improperly

receive a double recovery.

’ There is substantial question as to whether any award to the Raiders is

consistent with the teachings of Brunswick. The sole basis on which anti-

trust damages may be awarded is for injuries “of the type the antitrust laws

were intended to prevent and that flow[{] from that which makes defen-

dant’s acts unlawful.” Brunswick, 429 U.S. at 489. The only restraint on

competition identified by the court below was the prevention of competition

between the Raiders and the Rams in Los Angeles, and, to be recoverable,

any damages must flow from that restraint. But the Raiders’ evidence on

damages completely ignored the presence of the Rams, and assumed, for

example, that the Raiders could charge substantially higher prices for

tickets, advertising, and the like, notwithstanding the presence of a compet-

itive alternative. Thus, the judgment below took no account of such

competition and awarded damages solely on the basis of what the Raiders

projected they would earn in Los Angeles, as if merely keeping the Raiders

out of Los Angeles, irrespective of any impact on competition that the

Sherman Act is designed to protect, were a violation.

8

The Raiders complaint that they were not heard below on

the offset issue (Pet. at 5 n.5) is without merit. They were

sufficiently aware of the NFL’s offset defense to devote an entire

section of their brief in the court below to that issue. They

argued to the trial court that one aspect of the NFL’s defense

was an “attempt to offset the damages suffered by the Raiders by

an increase in value attributable to the Raiders’ franchise being

in Los Angeles...” (CR 2376 at 2) And the League squarely

asserted its right to control the disposition of the Los Angeles

opportunity in both the liability and the damages trials and

requested instructions on the offset issue at the damages trial.

(CR 1090, 2042)*

In an effort to create the appearance of a conflict, the

Raiders cite this Court’s decision in Randall v. Loftsgaarden,

106 S. Ct. 3143 (1986). That case presented no issues under the

antitrust laws, and instead required this Court to reconcile sev-

eral different remedial provisions of the securities laws, one of

which provided that a plaintiff may recover no more than “his

actual damages on account of the act complained of.” 106 S. Ct.

at 3148, citing § 28(a) of the Securities Exchange Act of 1934,

15 U.S.C. § 78bb(a). This Court concluded that tax benetits

need not be offset against a damage award under that statute.

106 S. Ct. at 3150. The case involves only construction of one

section of the 1934 Securities Exchange Act, and has nothing to

say about the proper computation of damages for violations of

the antitrust laws.’

* References to “CR” are to the Clerk’s Record in the District Court and

to Tr.2d are to the transcript of the second liability and the damages trial.

* Because Randall focused on the proper treatment of tax benefits, it

plainly has no application here. But even as to tax benefits, Randall broke

no new ground. In Hanover Shoe, 392 U.S. at 503, this Court similarly

refused to offset taxes in computing antitrust damages.

ee

9

B. The Offset Does Not Deny Petitioner Any Relief To Which It

Is Entitled Under The Injunction

By virtue of the District Court’s June 1982 injunction, the

Raiders presently play in Los Angeles, and were permitted to

acquire a franchise opportunity that the Court of Appeals found

belonged to the NFL as a whole and that could otherwise have

been sold by the League and the asses distributed for the

benefit of all the members.

The excess value of that franchise over the value of the

Raiders’ Oakland franchise was plainly recognized throughout

the case. Thus, the Raiders’ managing partner “testified that the

Raiders increased their value by some $25 million by moving to

Los Angeles.” (A-26) Counsel for the Raiders in his questioning

demanded that NFL Commissioner Rozelle agree that a new Los

Angeles franchise “is worth at least $20 million more” than a

new Oakland franchise. (Tr.2d 3153) And in final argument,

Raiders’ counsel referred to “the hundred-mil ion-dollar jackpot

in Los Angeles.” (Tr.2d 7562) In short, as the Court of Appeals

held in its second opinion—its first opportunity to consider the

issue—the Raiders seized a valuable business opportunity from

the remainder of the League as a result of the injunction.

The Raiders are flatly wrong to contend that the decisions

below force them to choose between injunctive relief and dam-

ages. (Pet. at 11) The decisions entitle the Raiders to play in Los

Angeles but do not authorize them to take from their League

partners the value of that opportunity, which is not tainted with

illegality. If the interim lost profits found by the jury are greater

than the amount by which the value of a Los Angeles franchise

exceeds the value of an Oakland franchise, the Raiders will

receive that difference three-fold. The Raiders have no more

been forced to choose between damages and equitable relief than

were the plaintiffs in Hanover Shoe or Siegel v. Chicken Delight.

They are simply being precluded from enjoying as a windfall

benefit a property right that belonged to the League.

Concerned that the offset may wipe out the damages found

by the jury, the Raiders mistakenly argue that because the

Clayton Act provides for both damages and injunctive relief,

(Pet. at 11) a litigant is entitled as of right to both. In a

consistent line of decisions this Court has made clear, however,

10

that antitrust damages do not flow from a violation as a matter of

course, but only where a plaintiff makes “some showing of actual

injury attributable to something the antitrust laws were designed

to prevent.” J. Truett Payne Co. v. Chrysler Motors Corp., 451

U.S. 557, 562 (1981); Brunswick, 429 U.S. at 489. As Professor

Areeda has counselled, this may properly result in an antitrust

“injury that does not warrant a damage award.” P. Areeda,

Antitrust Violations Without Damage Recoveries, 89 Harv.

L.Rev. 1127, 1128 (1976).

C. The Offset Is Properly Deducted Before Trebling In

Determining Petitioner’s Actual Damages

Relying solely on cases involving settlements and unrelated

counterclaims, the Raiders assert that the Court of Appeals erred

in directing that the offset be deducted prior to trebling. (Pet. at

15-17) This case involves neither a settlement nor a counter-

claim, but rather a windfall recovery growing out of the very

transaction that was the occasion of the violation and the Raid-

ers’ interim loss of profits. The authorities are consistent as to

how offsets should be handled in such cases, and the Court of

Appeals properly determined that such a windfall served to

reduce or eliminate the Raiders’ actual damages.

The Raiders rely chieflygon the dissenting opinion of Judge

Nelson, while failing to note precisely how narrow that dissent

was. There was, as has been indicated, no disagreement among

the court that the award to the Raiders of the Los Angeles

opportunity was a windfall. (A-41) Similarly, Judge Nelson

concurred that offsets related to the antitrust violation should be

deducted prior to trebling. (A-42) In her view, “the court should

separately assess all offsets which are not related to the pre-

trebled damage calculation. That is, offsets which do not flow

from the violation itself should be deducted after trebling.” (Id.)

(emphasis in original)

In short, the only disagreement expressed in the opinions

below was whether the windfall in this case was sufficiently

related to the Raiders’ transfer to Los Angeles that it should be

deducted before or after the trebling of the interim loss of profits

found by the jury. The court’s resolution of that question—that

the offset “should occur prior to trebling” (A-31)—rests on the

Fok aA tn nbs ne

11

facts of this case, and presents neither a conflict nor a legal issue

that demands resolution by this Court. The seizure of the

League opportunity resulted when the Raiders moved to Los

Angeles. The interim loss of profits on which the jury’s award

was based was intended to compensate for the delay in the move

to Los Angeles. It is difficult to conceive of a case in which the

damage award and the source of the offset are more intimately

related.

This Court’s holdings in Hanover Shoe, Brunswick, and J.

Truett Payne, all require that a plaintiff's recovery be limited to

three-fold its actual damages. In Siegel v. Chicken Delight, the

Ninth Circuit correctly applied this rule of law and reduced

plaintiff's damages prior to trebling. The Fourth Circuit reached

a similar result in Burlington Industries, Inc. v. Milliken & Co.,

690 F.2d 380, 385-86, 391 (4th Cir. 1982), cert. denied, 461 U.S.

914 (1983) (offsetting before trebling “the amount which plain-

tiffs would have paid...in the absence of the royalty-mainte-

nance conspiracy.”).'° And in Telex Corp. v. IBM, 367 F. Supp.

258, 352-53 (N.D. Okla. 1973), aff'd in part and rev'd in part on

other grounds, 510 F.2d 894 (10th Cir.), cert. dismissed, 423

U.S. 802 (1975), the court upheld an offset based on plaintiff's

unlawful misappropriation of IBM’s trade secrets; because

“plaintiffs prospective market position ... would have included

[this] competitive advantage’, an adjustment was required

“before plaintiff's damages are trebled.” Jd. The court in Telex

considered and distinguished many of the counterclaim and set-

tlement cases cited by Judge Nelson’s dissent on this issue.

Because this case does iiot involve a deduction of an unre-

lated counterclaim, cases such as Jerard Associates Inc. v. Stan-

ley Works, 1966 Trade Cas. (CCH) § 71,820 (S.D.N.Y. 1966),

(Pet. at 16) are inapposite. Cases involving deductions of settle-

ment amounts are even further removed from the issue at hand.

A settlement, by definition, is not part of the underlying transac-

tion, but rather a subsequent reduction of already accrued dam-

ages. Thus, to deduct amounts received in settlement before

© The court in Burlington Industries specifically distinguished the treat-

ment of related offsets and amounts received in settlement, deducting the

former before trebling and the latter after trebling. Compare 690 F.2d at

385-86, with id., at 391-92.

12

trebling would deprive a plaintiff of its entitlement under Section

4 to receive three times its actual damages. Further, a rule

requiring the deduction of settlement amounts before trebling.

would create a powerful disincentive for antitrust plaintiffs to

settle. Neither of those concerns apply in this case and peti-

tioner’s reliance on such cases simply underscores the validity of

the holding below."

D. The Offset Creates No Immunity From The Antitrust Laws

The decision below leaves intact—mistakenly, in respon-

dents’ view—a judgment that the League and its members vio-

lated Section 1 of the Sherman Act. Under the District Court’s

injunction, respondents may not inhibit petitioner from present-

ing the League’s joint product in Los Angeles. And respondents

remain liable to the Raiders for treble such actual net damages

as may be found on remand, as well as for costs and attorneys’

fees.

Under these circumstances, the suggestion that respondents

have somehow been immunized from the antitrust laws is not

merely disingenuous; it is plainly false.'* Nor does the opinion

establish any concept of territorial exclusivity. (Pet. at 20)

Instead, it holds that one member of a lawful joint venture may

not appropriate for itself a property interest that properly belongs

to the venture as a whole, or as applied to this case, the League is

not required by the antitrust laws to give away even to one of its

members the “fruits of its success...” Berkey Photo, 603 F.2d

at 298.

Moreover, as the decisions in Perma-Life Mufflers, Inc. v.

International Parts Corp., 392 U.S. 134 (1968), and Hanover

''The Raiders’ reliance on the Ninth Circuit’s recent decision in

National Basketball Association v. SDC Basketball Club, Inc., 815 F.2d

562, 570 (9th Cir. 1987), (Pet. at 17) is misplaced. That case merely

refused to award damages to the NBA for a lost expansion opportunity on a

motion for summary judgment. It did not, however, question either that an

offset is appropriate in this case or that the deduction should take place

prior to trebling.

"The Raiders lengthy—and often mistaken—description of various

pieces of legislation that Congress has considered over the past three

decades (Pet. at 18-20) demonstrates that, far from being immune, sports

leagues remain subject to the antitrust laws.

13

Shoe demonstrate, antitrust policy has long recognized the

proper role of offsets in preventing windfall recoveries and in

limiting damages to actual losses attributable to conduct forbid-

den by the antitrust laws. See also Matsushita Electric Indus-

trial Co., Ltd. v. Zenith Radio Corp., 106 S. Ct. 1348, 1354

(1986); Brunswick, supra. Although the Raiders claim that the

decision below will cripple private enforcement of the antitrust

laws, (Pet. at 15) the court below was sensitive to that concern,

and struck the proper balance between encouraging private

enforcement and awarding damages in a manner consistent with

settled law. (A-30 to A-31) The availability of injunctive relief

and the recovery of costs and attorneys’ fees—as well as the

prospect of a three-fold recovery of their actual damages—

should offer more than sufficient incentive for aggrieved parties

to bring suit. See II P. Areeda & D. Turner, Antitrust Law

q 347d at 257 (1978). As the court below noted, “[n]o case cited

by the Raiders stands for the proposition that encouragement of

antitrust suits requires a damage recovery (before trebling) to go

beyond the extent of the plaintiffs’ actual injury.” (A-31)

lo

CONCLUSION

The petition presents no issues that create a conflict or are

otherwise worthy of review by this Court and, accordingly,

should be denied.

Respectfully submitted,

COVINGTON & BURLING

DANIEL M. GRIBBON

JOHN H. SCHAFER

PAUL J. TAGLIABUE

LYLE JEFFREY PASH

1201 Pennsylvania Ave., N.W.

Washington, D.C. 20004

(202) 662-6000

SKADDEN, ARPS, SLATE,

MEAGHER & FLOM

FRANK ROTHMAN

300 South Grand Avenue

Los Angeles, California 90071

(213) 687-5000

August 1987