55 F.4th 680
9th Cir.2022Background
- Plaintiffs Kjersti Flaa and Rosa Gamazo are foreign entertainment journalists who sought admission to the Hollywood Foreign Press Association (HFPA) and were denied or unable to obtain sponsorship under HFPA’s restrictive membership rules.
- HFPA is a California nonprofit (501(c)(6)) with ~85 members; membership confers access to Hollywood interview opportunities, festival trips, and Golden Globe voting benefits.
- Plaintiffs sued in federal court alleging HFPA membership policies violate Sherman Act §§ 1 and 2 and California’s Cartwright Act (group boycott, market division, and monopolization theories), California’s right of fair procedure, and sought a declaratory judgment that HFPA bylaws conflict with its tax-exempt obligations.
- The district court dismissed the original complaint (gave leave to amend on antitrust claims); plaintiffs filed an amended complaint; the district court dismissed the amended complaint and denied further leave to amend.
- The Ninth Circuit affirmed: it held HFPA’s membership practices are not per se unlawful, plaintiffs failed to plausibly allege market power under the rule of reason, the California fair-procedure doctrine does not apply to HFPA, and a tax-related declaratory claim is barred by 28 U.S.C. § 2201(a).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Per se group boycott (§ 1) | HFPA’s exclusionary admissions amount to a concerted refusal to deal with all non-members, warranting per se condemnation | HFPA’s admissions are internal membership decisions; studios, not HFPA, control access to talent; practices have plausible procompetitive justifications | Not per se; court applies rule of reason because HFPA lacks characteristics warranting per se treatment |
| Horizontal market division (§ 1) | HFPA enforces geographic/ outlet allocation by barring members from encroaching on others’ countries/outlets | HFPA members do not compete in the same market (distinct country-specific submarkets), so no horizontal competitors could agree to divide a market | Dismissed: complaint alleges separate country submarkets, defeating market-division theory |
| Rule of reason / market power (§§ 1 & 2; Cartwright Act) | Plaintiffs defined the market as reporting on U.S. movies for foreign outlets and claimed HFPA wields exclusionary power harming competition | HFPA is small, lacks the ability to exclude competition or control market; many alternative content sources exist (non-HFPA journalists, influencers, wire services) | Dismissed: plaintiffs failed to plausibly allege market power in any reasonable market; rule of reason claim fails |
| California right of fair procedure | HFPA membership denial severely impairs journalists’ careers, so HFPA should be treated as quasi-public and subject to fair-procedure protections | HFPA is a small private association that does not affect the public interest in the manner required for quasi-public status | Dismissed: HFPA is not quasi-public; fair-procedure doctrine does not apply |
| Declaratory relief re: HFPA bylaws and 501(c)(6) status | Plaintiffs seek declaration that HFPA bylaws conflict with its tax-exempt obligations | Such a declaration effectively challenges HFPA’s tax-exempt status and is barred in federal court unless raised under IRC § 7428 by the organization itself | Dismissed for lack of jurisdiction under 28 U.S.C. § 2201(a); § 7428 exception not available to plaintiffs |
Key Cases Cited
- Associated Press v. United States, 326 U.S. 1 (Supreme Court case finding AP bylaws anticompetitive in context of control over news distribution)
- Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284 (Supreme Court limiting per se treatment for group boycotts; requires caution)
- Federal Trade Comm’n v. Indiana Federation of Dentists, 476 U.S. 447 (Supreme Court discussing group boycotts and per se approach)
- National Society of Professional Engineers v. United States, 435 U.S. 679 (Supreme Court on per se rule and when detailed inquiry is needed)
- Ohio v. American Express Co., 138 S. Ct. 2274 (Supreme Court explaining rule-of-reason framework and that §1 outlaws only unreasonable restraints)
- PLS.com, LLC v. National Ass’n of Realtors, 32 F.4th 824 (9th Cir. case discussing group boycott doctrine in modern context)
- Bhan v. NME Hosps., Inc., 929 F.2d 1404 (9th Cir. case recognizing not all boycotts are per se unlawful)
- Metro Indus., Inc. v. Sammi Corp., 82 F.3d 839 (9th Cir. decision describing market-division as classic per se violation)