Ninth Inning, Inc. v. Directv, LLC
933 F.3d 1136
9th Cir.2019Background
- Plaintiffs are a putative class of residential and commercial subscribers to DirecTV’s NFL Sunday Ticket, which bundles all out-of-market Sunday NFL telecasts and is sold exclusively by DirecTV.
- NFL teams entered a Teams–NFL Agreement pooling teams’ telecasting rights and authorizing the NFL to license those rights on their behalf.
- The NFL then licensed (a) local Sunday-afternoon telecasts to CBS/Fox (NFL–Network Agreement) and (b) all live telecasts to DirecTV for the Sunday Ticket (NFL–DirecTV Agreement).
- Plaintiffs allege these interlocking horizontal (teams to NFL) and vertical (NFL to DirecTV) agreements limit output (one telecast per game and limited local distribution) and force consumers to buy the entire Sunday Ticket at supra‑competitive prices.
- District court dismissed claims under §§ 1 and 2 of the Sherman Act for failure to state a claim; Ninth Circuit majority reversed as to both §§ 1 and 2, holding plaintiffs pleaded antitrust injury and antitrust standing to pursue damages and injunctive relief; Judge Smith dissented on antitrust‑standing for damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs plausibly alleged a §1 rule‑of‑reason violation | The Teams–NFL and NFL–DirecTV agreements operate together to restrict output (one telecast per game) and foreclose competition, reducing telecasts and raising prices | Agreements are procompetitive or lawful vertical exclusives; league coordination is necessary to produce telecasts; NCAA and SBA controls limit review | Court: Allegations suffice under NCAA framework; plaintiffs plausibly pleaded an injury to competition from a naked output restriction and need not define market at this stage |
| Whether plaintiffs have antitrust standing (damages) to challenge Teams–NFL Agreement given Illinois Brick | Plaintiffs allege a single multi‑level conspiracy including DirecTV, so purchasers of Sunday Ticket are direct victims of the conspiracy (co‑conspirator rule) | Illinois Brick’s direct‑purchaser rule bars indirect purchasers seeking damages for horizontal agreement among teams because plaintiffs bought from DirecTV, not the teams | Court (majority): Illinois Brick inapplicable where plaintiffs allege a single conspiracy including direct seller; standing alleged. Dissent: disagrees—Illinois Brick still bars damages absent allegation that conspirators fixed the consumer price |
| Whether plaintiffs plausibly alleged a §2 (monopolization / conspiracy to monopolize) claim | Interlocking agreements maintain or attempt to create monopoly power in the market for NFL telecasts by limiting output and exclusion | Plaintiffs failed to allege a properly defined market, market power, or specific intent to monopolize | Court: Complaint plausibly alleges market power and intent; §2 claims survive pleading stage |
| Proper analytic scope: dissect agreements or view holistically | Plaintiffs: must view horizontal and vertical agreements together to assess competitive effect | Defendants: separate horizontal teams agreement from vertical DirecTV license; vertical exclusive distribution is presumptively lawful | Court: Evaluate the character and effect of the agreements as a whole (no artificial compartmentalization) |
Key Cases Cited
- National Collegiate Athletic Ass’n v. Bd. of Regents of Univ. of Oklahoma, 468 U.S. 85 (1984) (league‑wide TV restraints that limit output and competitors’ freedom to compete violate §1 under rule of reason)
- American Needle, Inc. v. National Football League, 560 U.S. 183 (2010) (league decisions concerning separately owned intellectual property can constitute concerted action subject to antitrust analysis)
- Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) (direct‑purchaser rule: indirect purchasers generally may not recover antitrust damages)
- Apple Inc. v. Pepper, 139 S. Ct. 1514 (2019) (direct purchasers may sue monopolist who sells to them; discussion of proximate cause principles in antitrust standing)
- Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679 (1978) (rule‑of‑reason inquiry requires considering business facts, history, and reasons for restraint)
- Cal. Dental Ass’n v. FTC, 526 U.S. 756 (1999) (price‑fixing and output‑reducing agreements have similar anticompetitive effects)
- In re Musical Instruments & Equipment Antitrust Litig., 798 F.3d 1186 (9th Cir. 2015) (distinguishing horizontal and vertical agreements and applicable analysis; court here declines to compartmentalize)
- Brennan v. Concord EFS, Inc. (In re ATM Fee Antitrust Litig.), 686 F.3d 741 (9th Cir. 2012) (co‑conspirator analysis and application of Illinois Brick where direct purchaser conspires to fix price paid by plaintiffs)