Chicago Professional Sports Limited Partnership and Wgn Continental Broadcasting Company v. National Basketball Association, Cross-Appellee

negligence, plausible not a malpractice and rights. constitutional for violation of

action

The district court was unreasonable appointed denying Snipes counsel. See (7th Haas, F.2d

Farmer v. Cir.1993) (“We judge] not whether [the ask right denying appointment of coun- [in

was reasonable.”). sel], but whether he was

III. district court is Af-

The decision of the

firmed. ROVNER,

ILANA DIAMOND Circuit

Judge, concurring.

Snipes reply did not to defendants’ sum- and,

mary judgment motion even in his late

filing, regarding Dr. Eh- offered no evidence Snipes’

rhardt’s decision to treat toenail with- administering Snipes there-

out anesthetic.

fore failed to raise a factual as to Dr. state or the

either Ehrhardt’s mental I

propriety of his treatment method. would the matter there and refrain from our

leave procedures about

own evaluation of medical expertise. we are without evidence or

which

CHICAGO PROFESSIONAL SPORTS

LIMITED PARTNERSHIP and WGN Broadcasting Company,

Continental

Plaintiffs-Appellees, Cross-Appellants,

v. ASSOCIATION,

NATIONAL BASKETBALL dant-Appell

Defen ant, Cross-Appellee. 95-1341, 95-1376,

Nos. 95-

3935 and 95-4021. Appeals,

United States Court Circuit.

Seventh

Argued 1996. June Sept.

Decided 1996.

Rehearing Suggestion Rehearing 7, 1996.*

En Banc Denied Oct.

*Judge Cummings participate in the con- banc. did not rehearing suggestion sideration of the en Co., IL, Chicago, for

une WGN Continental Inc., Broadcasting, in No. 95-1341. McCambridge (argued), R. Darrell J. John Graham, Faber, Irving C. Michael P. Con- way, Bergen, Christopher B. Charles S. Wil- son, Elden, IL, Chicago, Grippo Charles J. & Sennet, Co., IL, Chicago, for Tribune WGN Inc., Broadcasting, in No. 95- Continental 1376. Hanlon, Jr., Katten,

James E. Muchin & Zavis, McCambridge (argued), John R. Dar- Graham, Conway, rell J. Michael P. Charles Wilson, Bergen, Christopher Grippo B. S. & Elden, IL, Sennet, Chicago, Charles J. Trib- IL, Co., Chicago, for une WGN Continental Inc., Broadcasting, in No. 95-3935. Hanlon, Jr., Katten, James E. Muchin & Zavis, McCambridge (argued), R. Dar- John Graham, Faber, Irving rell P. J. C. Michael Conway, Bergen, Christopher B. Charles S. Wilson, Elden, IL, Grippo Chicago, & Sennet, Co., IL, Chicago, Charles J. Tribune Inc., Broadcasting, for Continental WGN No. 95-4021. Goldstein, Cardoza,

Marc J. Michael A Ruskin, Krane, Bradley Stephen I. C. Steven Solomon, Rauchberg, D. Ronald S. Howard Ganz, Landrey, Stephen L. Francis D. L. Weinstein, Proskauer, Rose, Goetz & Men- delsohn, Wolf, City, York Christopher New Dennis, Proskauer, Rose, L. Warren Goetz & Mendelsohn, DC, Washington, James C. Schroeder, Fahner, Tyrone C. Andrew S. Marovitz, Rooney, Matthew A L. Herbert (ar- Hanlon, Jr., E. Joel G. Chefitz James Zarov, Muench, Mayer, John E. Brown & Libowsky, gued), Stephen D. Laura Keidan Platt, IL, Handler, Chicago, E. Carole Pros- Martin, Betman, Ronald S. Robert K. Niew- kauer, Rose, Mendelsohn, Ange- Goetz & Los Zavis, IL, Katten, ijk, Chicago, Muchin & les, CA, Jeffrey (argued), A Mishkin Nation- Chicago Sports Professional Ltd. Partner- Ass’n, al Basketball Office of the General ship, in Nos. 95-1376. Counsel, City, New York for National Bas- Ass’n, in (ar- ketball No. 95-1341. Hanlon, Jr., E. Joel G. Chefitz James gued), Stephen Libowsky, Laura Keidan D. Zarov, Platt, Mayer, L. Herbert Brown & Martin, Betman, Robert K. Niew- Ronald S. D, Goldstein, Washington, Marc J. Michael Fleishman, Katten, ijk, Wendy Muchin & Cardoza, Ruskin, Bradley I. Steven C. Zavis, IL, Chicago, Chicago Professional Krane, Solomon, Stephen D. Ronald S. Sports Partnership, in Ltd. No. 95-3935. Ganz, Rauchberg, L. Howard Francis D. Katten, Weinstein, Proskauer, Hanlon, Jr., Landrey, Stephen E. Muchin & L. James R; Zavis, Rose, Mendelsohn, City, McCambridge (argued), Dar- & New York John Goetz Faber, Wolf, Dennis, Graham, Christopher Irving rell Charles S. Warren L. Pros- J. C. Wilson, kauer, Rose, Mendelsohn, Washing- Bergen, Christopher Grippo B. & Goetz & Elden, IL, Sennet, ton, DC, Schroeder, Chicago, Tyrone Charles J. Trib- James C. C. television, Wile, Fahner, “superstation” carried on Kenneth E. Andrew S. Maro- cable Muench, systems popularity vitz, nationwide. The Bulls’ Rooney, A. E. Matthew John sys- makes WGN attractive to these cable Platt, IL, Chicago, Mayer, Brown & Carole tems; large audience makes at- WGN Handler, Proskauer, Rose, Goetz & Men- E. tractive to the Bulls. Since 1991 the Bulls delsohn, CA, Angeles, Jeffrey A. Los Mish- by injunction and WGN have been authorized Buchanan, (argued), kin Richard W. National games per year. or to broadcast 25 30 754 Ass’n, Basketball Office of the General Coun- (1991). F.Supp. in- 1336 We affirmed that sel, City, for National Basketball New York see 961 F.2d junction in and the Ass’n, in No. 95-1376. proceeded district court to determine wheth- Ruskin, Cardoza, Bradley A. I. Michael carry games er could even more WGN —and Solomon, Rauchberg, Stephen D. Ronald S. impose whether NBA could a “tax” on Proskauer, Rose, Weinstein, Stephen L. audience, games broadcast to national Mendelsohn, City, & New York Chris- Goetz paid superstations for which other have Wolf, Dennis, Proskauer, topher Warren L. pretty penny league. holding After Rose, Mendelsohn, DC, Washington, & Goetz receiving stipulations trial and 512 nine-week Sehroeder, Marovitz, C. Andrew S. James fact, 30-game the district court made a Zarov, May- Rooney, A. Herbert L. Matthew (1995), permanent, F.Supp. allowance 844 er, Platt, IL, Chicago, E. Brown & Carole excessive, and held the NBA’s fee 1995-2 Handler, Proskauer, Rose, Goetz & Mendel- 71,253. para. appeal. Both Trade Cas. sides sohn, CA, Angeles, Jeffrey Los A. Mishkin games per The Bulls want to broadcast 41 Buchanan, (argued), Richard W. National WGN; year over the NBA contends that the Ass’n, of the General Basketball Office Coun- fix antitrust laws allow it to a lower number sel, City, New York for National Basketball (15 20) proposed. and to collect the tax it Ass’n, in No. 95-3935. sides, apologies to With both we conclude Goldstein, Cardoza, they through Mare J. Michael A. must suffer still more liti- Ruskin, Krane, gation. Bradley Stephen I. Steven C. Solomon, Rauchberg, D. Ronald S. Howard opinion rejected league’s Our 1992 de- Ganz, Landrey, Stephen L. L. Francis D. Act, Sports Broadcasting fense based on the

Weinstein, Rose, Proskauer, Men- Goetz & §§ im- 15 U.S.C. but our rationale delsohn, Wolf, City, Christopher New York plied that the NBA could restructure its Proskauer, Rose, Dennis, L. Warren Goetz & advantage of that contracts to take statute. Mendelsohn, DC, Washington, James C. 961 F.2d at 670-72. In 1993 the tried Sehroeder, Fahner, Tyrone C. Andrew S. so, signing to do a contract that transfers all Marovitz, Rooney, Matthew A. Herbert L. rights broadcast to the National Broadcast- Zarov, Muench, Mayer, John E. Brown & ing Company. only games NBC shows Platt, IL, Handler, Chicago, Carole E. Pros- season, however, during regular and the kauer, Rose, Mendelsohn, Ange- Goetz & Los contract allows the and its network les, CA, Jeffrey (argued), A. Mishkin Richard permit telecasts at other times. teams Buchanan, Ass’n, W. National Basketball Of- Every right to broadcast team received Counsel, City, York fice of the General New (41 games regular-season all 82 of its over Ass’n, in for National Basketball No. 95-1021. air, cable), unless NBC telecasts a on per- given contest. The NBA-NBC contract BAUER, CUDAHY, Before and games per year mits the to exhibit 85 EASTERBROOK, Judges. Circuit Seventy superstations. on were licensed to (TBS TNT), leaving the Turner stations and EASTERBROOK, Judge. Circuit potentially available for WGN to license years they In the six since filed this anti- league. opportuni- It disdained the from the suit, Chicago directly Bulls have four ty. games trust won The Bulls sold 30 WGN, titles and an treating National Basketball Association these as over-the-air broad- equal legal by number of victories. NBC contract —not Suit casts authorized injunction. titles are The Bulls want mention the district court’s connected. (perhaps more to more of their over WGN The Bulls’ concession broadcast proper, league) is that sions are understandable than to the WGN the market’ game consequences Sports under the a Bulls at the same does not broadcast Broadcasting By signing a contract telecast on a Turner Act. time as a basketball Bulls, rather than the superstation. with NBC that left authority league, to select the TV with the parties Back in 1991 games, station that would broadcast NBA’s television debating were whether the position Sports under the NBA made its Sports § 1 arrangements satisfied Broadcasting Act untenable. For as soon Act, § 1291. Broadcasting 15 U.S.C. We WGN, picked to control the Bulls effort not, Act addresses the ef held because the sig- system retransmission of the cable WGN clubs,” “league fects of “transfers” tripped nal over 2. The antitrust laws prescribed NBA rather than and the had apply, therefore and we must decide what rights. The 1993 “transferred” broadcast league’s they say effort to have to about in was written with that distinction contract superstation transmissions. curtail league copy title to the mind. The asserted arising games right from the and in 1992. interests Three issues were left unresolved NBC; WGN, rights to it transferred all broadcast Bulls and One was whether the back, subject to contractual injury. received some 961 F.2d producers, suffer antitrust 1 has been satisfied. pursued restrictions. Section at The NBA has not 669-70. pay enough league But did not attention jurisdictional possibility, and as 2, 15 § to which reads: fact), U.S.C. injury in let the (plaintiffs suffer we apply question pass. The other two issues are 1291 of this title shall not to Section any joint in related. concluded in 1992 that the dis agreement described the first We prohibits properly trict condemned the NBA’s in such section which court sentence quick-look any rights superstation such are sold rule under the ver person to whom Reason, televising any see National games from sion of the Rule of or transferred area, Collegiate v. Board except within the home Athletic Association within Oklahoma, league Regents University territory of a member club of the on (1984), 85, 104 day playing at 82 L.Ed.2d 70 when such club is home. U.S. (a) league argue did not that it because permits contract each club The NBA-NBC (b) entity, as a and should be treated games, of its and license the broadcast anti-free-riding justification for the su- then, superstation through the restriction on perstation collected rule failed because fee broadcasts, attempts to limit telecasts compen nationally games on telecast would provides teams’ markets. Section home whole) (and sate other teams as a inapplicable, § 1 that this makes so the of their contributions to the for the value Sports Broadcasting Act leaves the antitrust being broadcast. 961 F.2d athletic contests laws in force. court, at 672-76. Back in the district Sports prior opinion observed that the Our argued NBA that it is entitled to be treated Act, Broadcasting special-interest excep- as a possess and therefore should laws, beady- tion to the antitrust receives a options the same as other licensors enter eyed reading. jump through has to court, products; tainment outside every hoop; partial compliance do doesn’t league’s adopted Board of a rule Governors the trick. The NBA could have availed itself requiring any club that licenses broadcast Sports Broadcasting by taking Act rights superstations pay a fee based on licensing by selling rights and broadcast over pay for the amount the two Turner stations games many in the Bulls’ to one of the local they directly league. games license from the Chicago, stations in rather than to WGN. say single-entity argu- options other as well. Plaintiffs The statute offered by Apparently forfeited its omission from the did not want to use ment was them, part part appeal, in first but we think not. As our 1992 in for tax reasons and observed, initial trial sought responsibilities opinion to avoid the case went to because it weeks, licensor, being and within seven 961 F.2d that come from rather than decision salutary development possible in regulator, made of telecasts. Such business deci- excessive, by judicial willingness league’s unfair, part to entertain that the fee is subsequent arguments they say rounds the ease But the like. do not that it will fully developed that could not be in such output. They plan go reduce on broad- compass. If complex short defendants in casting games, if the court will let any arguments cases feared omitted them, $138,000 if pay per even must phase from the first of the case would be lost Although telecast. the fee exceeds WGN’s forever, they drag would their heels order revenues, outer-market evidently the station overlooked, nothing step to ensure that was (i) obtains other example, benefits —for Schering no would benefit one. Cf. presence games may of Bulls increase the Co., Corp. v. Illinois Antibiotics 89 F.3d 357 systems carry number of cable the sta- (7th Cir.1996). why That is we noted that tion, augmenting its revenues ’round the argument would be available the ensu (ii) clock; WGN slots into Bulls ads case, ing stages of the 961 F.2d at (iii) programming; for its other many why properly the district court enter keep viewers will on game WGN after the tained and resolved on the merits. and watch whatever comes next. Lack of an output effect on means that the fee does not unimpressed The district court was significance. have antitrust Once antitrust arguments. the NBA’s It latest held that aside, put issues are how much the NBA sports league should not be treated as a charges for national telecasts is for the single firm unless the teams have a “com league to gover- resolve under its internal unity plete they of interest” —which don’t. procedures. nance prin- It is no different in The court also held the fee to be invalid. (if ciple question from the any) how much opinion compelled judge Our to concede gate goes team, visiting the live to the who proper principle. that a fee is 961 F.2d at profits candy from the sale of cotton at the judge thought 675-76. But the the NBA’s stadium, and how the clubs divide revenues starting fee excessive. Instead of with the from bearing logos merchandise and price per game negotiated it had with Turner respect trademarks. Courts must a league’s (some $450,000), reducing and to account for issues, disposition just they of these as re- outlets, WGN’s smaller number of cable itas spect corpora- contracts and decisions did, judge concluded that tion’s board of Finley directors. Charles O. advertising should have started with the rev Kuhn, (7th Cir.1978); & Co. v. 569 F.2d 527 generated enues WGN from retransmission Orioles, Major League cf. Baltimore Inc. v. (the revenues”). on cable “outer market Association, Players Baseball 805 F.2d 663 half, figure Then it should cut have this (7th Cir.1986). held, judge so the Bulls could retain upshot: “their share” of these revenues. The According league, analogy to a judge per game roughly cut the from fee corporate apt ways board is in more than $138,000 $39,400. comprises this. The NBA concedes that it opinion juridical The district court’s con plus 30 entities —29 teams the na- cerning ruling organization, the fee reads like the of an separate corpora- tional each a agency exercising power regulate partnership. rates. tion or The teams are not the subsidiaries; Yet deputize league’s the antitrust laws do not they separate have judges Nonetheless, regulatory agencies. ownership. submits, as one-man The the NBA output. core in antitrust single entity, creating Unless it functions as a (“NBA Basketball”) output market, a contract single product reduces in some that com- consumers, (both petes leagues detriment of there is no anti with other basketball (“Ma- problem. high price college professional), trust not itself a and other jor Baseball”, football”), violation of League “college the Sherman Act. See Broadcast Music, CBS, Inc., 1, 9-10, movies, Inc. v. 441 plays, U.S. other entertainments such as 40, 1551, 1557-58, shows, 22 n. opera, Disneyland, Vegas. S.Ct. 1562- TV and Las (1979); n. Separate ownership 60 L.Ed.2d 1 promotes of the clubs Buffalo ASCAP, Broadcasting boosterism, interest; Co. v. 744 F.2d 917 local which increases (2d Cir.1984). argue and the Bulls ownership group powerful WGN each also has a team, managers); the second division which makes division’s a better to field incentive the first at get inputs' more from exciting might and thus want to the contests would maximize price, These functions transfer which attractive. a low imply that the profits. ownership paper do Conflicts team the second division’s however, separate cartel, any more than firm, multi-stage is a such as are endemic joints (again useful hamburger ownership of IBM, G. Ec- Motors or see Robert General device, Benjamin Klein see & as an incentive cles, Agen- Pricing a Problem as Transfer Saft, Economics The Law and Lester F. Principals Agents: The Structure cy, in Contracts, 28 J.L. & Econ. Tying Franchise (Pratt & Zeckhauser eds. Business 151 (1985)) is a car- McDonald’s implies that 1985), large imply that these do not analogy system is to the best tel. Whether justify acts under the firms must all of their (no expects a McDonald’s one of franchises partnership Or consider Rule of Reason. compete other members outlet to (or accounting): some practice of law for the corporate by offering pizza) or to a system lockstep off with a lawyers would be better (on which see company holding structure all agreement under which compensation Tube Independence Copperweld Corp. v. seniority same partners with the 752, 104 Corp., 467 income, prosper would un- same but others (1984)) matter from does not L.Ed.2d 628 system you kill” that re- der an “eat what point is that antitrust perspective. to the firm. bringing wards new business encourages, cooperation permits, law indeed Partnerships have dissolved as a result better to organization the inside a business wrangles every conflicts. Yet these these — organiza- competition between facilitate dispute among the as the bit violent say par- To producers. tion and other generate NBA’s teams about how may cooperate is organization ticipants in an not demon- divide broadcast revenues —do they they may what make say that control to cartels, subject firms are or strate that law producers of Star they it: the and how sell scrutiny under the Rule of Reason episodes a may two Trek decide to release open offices or about where to decisions licenses to show grant and exclusive week which clients to serve. them, the number though this reduces even given in a appear only on TV episodes of times not hold that con- Copperweld does market, just superstation rule may single as the NBA’s enterprises be treated as flict-free why doés. antitrust Instead it asks entities. distinguish between unilateral and con- laws possibility conceded this The district court action, assigns parent- a certed and then cooperation among all but concluded that in subsidiary group to the “unilateral” side by incorporated firms is forbidden separately firm, light of those functions. Like a Act, except to the extent § 1 of the Sherman cooperates parent-subsidiary combination according Copperweld, Copperweld permits. internally efficiency. to increase Conduct narrow, court, quite “is marketplace of the inde- “deprives parent a cor- solely upon the fact that rests decisionmaking that com- pendent centers of subsidiary ” wholly-owned poration and its assumes”, 467 at 104 S.Ct. petition unity (quoting ‘complete of interest’ have a 2740, without the efficiencies that come at 2741). 771, 104 at from 467 U.S. at S.Ct. firm, go integration inside a on the Copperweld, in Although phrase appears of the line. And there are “concerted” side a of fact offered it as statement Court joint “mergers, ven- in the middle: entities relation, not as a parent-subsidiary about the tures, agreements” {id. and various vertical permis- proposition about the limits of law 2740) 768, 104 at that reduce the law, cooperation. proposition sible As yet independent number of decisionmakers silly. single firm contains would be Even a may improve efficiency. These are assessed division many competing interests. One of Reason. We see no reason goods. under the Rule finished inputs for another’s make why sports league treated as a cannot be prod- might want to sell The first division typology. produces It market, single firm this in- directly to maximize ucts to the (a (and cooperation is essential single product; salary and bonus of the come thus the league why Supreme with one team would be like one hand is Court found it hard to clapping); league deprive and a need not characterize the League National Football — independent market of Football, Inc., centers decision- U.S. -, Brown v. Pro making. legal The district court’s standard -, 2116, 2126, 116 S.Ct. 135 L.Ed.2d 521 incorrect, judgment was therefore and a rest- (1996): up “the clubs profession that make ing application on the of that standard is sports league completely al indepen are not flawed. competitors, dent economic depend upon degree cooperation for economic Whether the NBA itself is more like a context, present survival- In the firm, howev analyzed only which would be er, that circumstance Act, league makes the joint § 2 under of the Sherman or like a venture, single bargaining like a subject employer, which would be to the which Rule analogy seems tough question legal of Reason irrelevant under is a issue say before us.” To Copperweld. under It has that the characteristics of “more colleges single bargaining employer” like a both. Unlike the and universities than a belong Collegiate multi-employer say unit the National Athlet- is not Association, one, ic Supreme necessarily every which the purpose. Court NCAA, treated as a venture the NBA The wants us to come to a conclu- sports. has no existence It (six subject years sion on this litigation basketball; professional only makes it can plenty!) victory. and award it the Yet as we games; malte “NBA Basketball” and unlike remarked in is a “Characterization the NCAA the NBA also “makes” teams. creative rather than exact endeavor.” 961 After this ease was last here the NBA creat- F.2d at plays 672. The district court Vancouver, ed new teams in Toronto and leading role, appellate followed deferential players stocked with existing from the 27 review. We are not authorized to announce plus helping teams an extra of draft choices. apply our own favored characterization All of this makes look like a unless the law admits of one choice. clubs, firm. plants, Yet the 29 unlike GM’s Supreme Brown, Court’s ambivalence in (wouldn’t right have the plant secede disagreement among like the judges on simi- that!), manager rearrange relish into two issues, implies lar that more than one charac- leagues. three Professional possible, terization is and therefore that the leagues have been assembled from clubs that subject using court must revisit the formerly belonged leagues; to other the Na- legal approach. the correct League tional Football and the NBA fit that pro Most courts that have asked whether description, and the teams have not surren- sports leagues fessional should be treated power rearrange dered their things yet single joint like firms or like ventures have Moreover, again. looks preferred joint venture characterization. depending less a firm like on which of facet (1st NFL, E.g., Sullivan v. 34 F.3d 1091 the business Phillip one examines. See E. Cir.1994); League North American Soccer v. Areeda, (1986). para. 7 Antitrust Law 1478d NFL, (2d Cir.1982); 670 F.2d 1249 Smith v. perspective From the of fans and advertisers Football, Inc., 1173, (who Pro 593 F.2d 1179 sports fans), use telecasts to reach (D.C.Cir.1978). But Rehnquist Justice filed “NBA product Basketball” is one from a strong dissent from the denial of certiorari though source Chicago even Bulls case, arguing in the soccer that “the Supersonies highly and Seattle are distin- competes against as a unit just other forms of guishable, as General Motors is a entertainment”, NFL v. North American though even a Corvette from a differs 1074, 1077, 103 League, Soccer 459 perspective Chevrolet. But from the of col- 499, 500, (1982), lege players 74 L.Ed.2d 639 basketball seek to who sell their skills, distinct, fourth circuit the teams concluded that the Professional and because the capital players human readily of is not trans- Golf Association should be treated as one (as sports purposes, though ferable to other firm for antitrust even even Michael Jor- that learned) sport dan economically integrated looks more like a is less than the group acting monopsony. Seabury of firms That Management, NBA. Inc. v. PGA of 600 case, Rule (D.Md.1994), to use a bobtailed the first

America, Inc., NCAA F.Supp. 771 878 Wood, (4th Reason, Antitrust Diane P. part, 52 F.3d 322 see in relevant affirmed Theory, Cir.1995). appeals has in Search court Five Decisions Another 1984: 110-12, 69, satis cooperative as the Court Sup.Ct.Rev. an electric treated 1984 Electric Co firm, Associated market possesses Pleasant v. Mt. itself that the NCAA fied (8th Cir.1988), 268 operative, F.2d 838 court had held power. The district integrated than a co-op though the is less college telecasts market in football there is a yield a cases do not sports league. These fall, a time Saturday in the on afternoon proper characteriza principle about clear not flourish entertainments do when other not think leagues we do tion of Only after college football dominates. —and “right” charac imposes one Copperweld clearly not erroneous holding that this was sufficiently Sports are diverse terization. justification cast burden did Court organi investigate their essential at 104 S.Ct. on the NCAA. 468 U.S. ques Copperweld’s functional and ask zation Boxing 2965-67; see also International perhaps one league at a time —and tion one 242, States, 79 S.Ct. 358 U.S. Club v. United time, league at a for we do not rule facet of (1959). 245, 270 3 L.Ed.2d organization an such possibility that out the indis power market is an Substantial as one firm is best understood as the NBA every ingredient of claim under the rights pensable selling to a network when broadcast producers Digital Equipment a thousand other full Rule of Reason. competition with Inc., entertainment, Digital Technologies, but is best understood as 73 Corp. Uniq v. (7th Cir.1996); curtailing competition 756, Sanjuan when v. venture 761 F.3d opportu have few other market players Neurology, who Psychiatry Board & American ability (7th as the of McDonald’s Inc., 247, Cir.1994); Hardy nities. Just F.3d 251 40 (7th to coordinate the release of a new franchises Inc., 765, City Optical, 39 F.3d v. ability imply hamburger does Cir.1994); Sports Lim Chicago Professional workers, wages for counter so agree on Partnership Basketball As ited v. National agree ability sports teams to on a TV (7th Cir.1992); F.2d sociation ability imply an to set need not contract Accounting Corp., 776 Comprehensive v.Will Markham wages players. See Jesse W. (7th Cir.1985); 670-74 Carl Sand F.2d Teplitz, Economics and Paul Baseball & V. 1 v. burg Village Ass’n No. Condominium III, (1981); Policy Arthur A. Fleisher Public Co., Development First Condominium Tollison, The & Robert D. Brian L. Goff Cir.1985). (7th During the F.2d Collegiate Athletic Association: National case, argued lengthy trial the NBA (1992). Behavior Study in Cartel buy power, market whether the lacks as the viewers of ers are understood inquiry may come out However this n remand, (the way the district court characterized are satisfied that the NBA is on we NCAA) advertisers, who use things in or as superstation sufficiently integrated that (the way the Su games to attract viewers analysis may not be condemned without rules a related market preme Court characterized full Rule of Reason. We affirmed under the Times-Picayune Publishing Co. v. United original injunction court’s after the district States, 594, L.Ed. 73 S.Ct. 345 U.S. “quick version because the applying the look” (1953)). may predomi College football court had characterized the NBA district fall, Saturday in the nate on afternoons cartel, something close to a and the no time slot when NBA basketball there is Copperweld argument. made a had not then lasts from predominates. The NBA’s season argument, considering this we conclude After June; played through games November acting in the broadcast market the that when days overlaps all a week. This season seven firm than to a NBA is closer to college sports, professional and of the other firms. This means group of many op sports fanatics have other so even prevail without estab plaintiffs cannot perspective likely From advertisers’ power in a tions. lishing possesses NBA that the — one, advertisers are the market, right the because of this and that its exercise relevant actually mar- pay for telecasts —the injured in the ones who power has consumers. Even competitive. is even polating ket Advertisers from its discussion of whether the demographic may “single seek viewers of certain charac- NBA entity.” be a Classification teristics, homogeneity highly “single entity” and immunity valued. means from Act, 1, considerations, homogeneous targeted audience Sherman facilitates a distinc- toys ads: breakfast cereals and for tion cartoon much more drastic than the conclusion shows, appliances detergents question household and the conduct in here deserves daytime soap operas, “quizzical for automobiles and look” rather “quick than a mere So, sports. If although entirely clear, beer the NBA assembled for look.” it is not that, uniquely majority advertisers an audience that was saying seems to be since homogeneous, especially high willing- or had single entity, NBA be a its conduct ness-to-buy, might pow- certainly then it quick market merits more than a look. represented so, but, if portion Perhaps er even a small single entity ques- since the unresolved, parties air-time. The tion prefer directed considerable I would to address trial, problem attention to this slightly but the from a different di- judge any findings declined make rection. subject, deeming power of fact on the market “quick For approach look” should have things, power irrelevant. As we see market application, a narrow reflecting its recent and is irrelevant if the NBA is treated as a sharply origin delimited in the NCAA case. Copperweld; given under and Collegiate Nat’l Athletic Ass’n v. Bd. Re difficulty issue, may of that superior be Oklahoma, gents the Univ. 468 U.S. approach straight this as a Rule of Reason (1984). 104 S.Ct. 82 L.Ed.2d 70 That ease, starting inquiry which means with an case, involving a loose alliance of colleges and, power into power, market if there is agreed which price output had on re proceeding competitive to an evaluation of strictions on broadcast of their football effects. games, held that under some circumstances Perhaps accomplished using this can be analysis power full required of market is not the materials in the current record. Al- agreement to determine that an is anticom- though judge presided who petitive. at the trial This framework should not be ex year, parties may died earlier this be highly integrated tended to the more willing agree an economically assessment of credi- unitary NBA.

bility unnecessary, judge so that a new colleges up which made the NCAA dispute could resolve the reviewing after entirely entities, separate were economic exhibits, transcript, stipulations, and en- competing many with each other in areas tertaining argument. See Fed.R.Civ.P. 63. unrelated to their athletic encounters. There events, judgment At all of the district is, course, a sort of continuum of economic vacated, court is and the ease is remanded integration, points with entities at different proceedings opinion. consistent with this along warranting differing the continuum lev- Pending proceedings further in the district els of antitrust concern. At one end are agreement among parties, court or having loose alliances of economic actors in- respect Bulls and league’s WGN must (like NCAA), dependent concerns (and contract’s) the NBC limitations on the anticompetitive agreements nature of whose maximum superstation number of telecasts. “quick is obvious from a look.” At the other fully-integrated end are entities which the CUDAHY, Judge, concurring: Circuit participants economic interests of the are so Although agree I majority’s completely with the aligned scrutiny that antitrust of “quick conclusion that the look” policies unnecessary except doctrine does is where apply facts, complex to these I must of the is In Sherman Act violated. the significant indicate some differences in mat- range organizations center is the broad of NBA) ters that (generally are reached in the separate course of the like the whose con- Thus, majority opinion. arriving in individually at its stituents are owned but are conclusion that a analysis closely full Rule of Reason completely economically but not tied required, majority is the organizations. seems to be extra- to their These entities are policies highly agreements, forgiving for anticompetitive should more capable of analysis necessary big highly compensated in full Rule of is skilled and counsel Reason cooperation is not productive corporate pro litigants eases se ensure that than for Single anticompetitive conduct. mistaken for appointed perhaps qualifica of counsel lesser aside, certainly enough con- entity is certainly there is to me. earlier tion unclear Our efficiency the cern here the in this did opinion case states “the NBA market competitor in entertainment the the not contend the district court that analysis. require full of Reason Rule single entity, NBA is a let that it is alone entity Chicago as a matter of law.” point, I think it was a more clear-cut On Sports Partnership Ltd. v. Na Professional Judge the appropriate Will to examine Ass’n, tional Basketball 961 F.2d fee for the broad- size of the NBA’s WGN (7th Cir.1992), denied, 954, 113 cert. connection, In this the games. casts of Bulls (1992). 409, also L.Ed.2d 334 We rejects majority of fairness considerations that: stated that, core like” asserts “The “and the Maj. output.” Op. at question in antitrust is a creative rather than Characterization is prevails view that 597. Under the reductive Appellate ac- exact endeavor. is review matters, grating in antitrust somewhat cordingly The district court deferential. efficiency aphorism appears If to be correct. trial, evidence, held a and con- heard welfare) (or is the and end- consumer be-all cluded that the best characterization of the all, how to be better no matter seems NBA is the we have third mentioned: taking more is But these distributed. production venture in the still me principles given, is difficult for but more like a cartel the sale of output disjoined how can be understand output. this is the charac- Whether best the circumstances of this from cost under sports professional terization of is a sub- fact, Judge In as a fact case. Will found ject that has courts divided and scholars that, may proposed well at “[the fee] NBA’s years, making for some it hard to charac- output and distri- some future date decrease judge’s clear terize choice as WGN_” games on Dist. bution of Bulls error. Fact, Findings of Law and Ct. Conclusions argued Id. at 672. No one seems to have But, Opinion, App. particularly NBA at 77a. the basic NBA has structure output currently since constrained to 30 think, changed opinion. since that I there- games, whatever market rather than fore, that, despite opinion dicta in our earlier produce, would it is difficult to ascertain speculating “[p]erhaps parties will high enough to whether the reduce fee join fully [regarding issue more output competitive below the level. Since entity proceedings status NBA] magnitude is not clear to me court,” come in still to the district id. at justified Judge adjustment Will’s was an- question is a real reach there whether we can alone, I titrust would include considerations entity fascinating though it this issue with other matters to be consid- issue— may be. ered on remand. However, assumption on the that the “sin- said, issue, single entity That I turn (and entity” question may gle be reached majority is de- where discussion remand) a presumably will be reached on serving of as to comment both substance number of will considerations be relevant. procedure. My proce- first reservation is Assuming goal as I must that sole dural and concerns whether this issue or, efficiency put way, antitrust another majority be reached at all. The announces wealth, the maximization of total societal my exception precedent an —without “single whether a is a knowledge the usual rules of waiver —from entity” turns on whether the of the appeal. exception ac- actions applies, issues on The cording majority, league potential have to lessen economic to to “defendants the complex Why competition among separately we cases” without elaboration. owned compete significant teams.1 The fact that teams on the competition economic between is more or less irrelevant to them. Br. ease, floor whether NBA at 25-27. If this is the they compete economically only (2) argument goes, is type drop concerns —it (cid:127) (1) competition germane only type economic which is out and concerns Type remain. (1) course, concerns, analysis. course, principle, antitrust In a of exactly those sports league actually single § appropriate analysis could be a firm single of a firm. individual uni- teams could be under are, however, single There flaws in this ownership management. fied Such a entity argument. assumption underly- The would, course, subject scrutiny firm be ing league sports it is that are a different and only § 2 of under the Sherman Act and not product more desirable than disorganized a point under 1. From the of view of wealth independently arranged collection of maximization, league a independently- reason, between teams. For this it is con- teams, likely if it owned is no more than a joining sports tended that teams into a single firm to management make inefficient league is efficiency-enhancing and desirable. decisions, should be treated a enti- as I accept premise.2 will perhaps It is ty. single entity question thus would true, argued by many the NBA and com- boil down to “whether member clubs of a mentators, sports that are different from sports league legitimate economic inter- many joint ventures because the individual own, independent league ests of their of the cannot, teams even in principle, produce the Sports Leagues and each other.” Revisited product league sports. However, the fact — sports at 127. It league, follows that a no cooperation necessary is produce structure, ownership matter what its can league imply basketball does not make inefficient if decisions the individ- league necessarily will produce product gain ual teams have some chance of economic the most efficient potential fashion. is There expense league. for inefficient decisionmaking regarding the joint product “league basketball” even form Another of the same when the individual engage teams in no eco- a league whether more like activity nomic outside of league. This joint firm or efficiency like venture. With potential arises because the structure of the criterion, joint the sole venture warrants league is such that league all “owners” of the (1) scrutiny for at least two reasons — must be “owners” of individual teams and possess venture could power market with decisions are made a vote of the teams. (es- respect jointly produced product This means will not necessar- sentially act like a monopoly ily make efficient decisions about the number (2) power) or the fact the venturers or, of teams generally, fielded more com- competitors remain might in other arenas petitive Thus, among balance teams. way either distort product fact that required several teams are to make managed or allow the venturers to use the necessarily imply does not that the joint product as a smoke-screen behind which makeup current is the most competition cut deals to reduce in the desirable or “efficient” one. other arenas. convincing “single The most entity” argument involving justification the NBA is that The NBA’s for its restriction produce only joint product the teams of of Bulls broadcasts centers on the need to “league basketball” and that competitive there is thus no among maintain a balance teams. See, Jacobs, e.g., (1989); Roberts, 1. Sports Gary Michael S. Sports Leagues R. Professional Leagues, Single-Entity Theory: Antitrust and the the Sherman Act: The Use and Abuse Section I Quo, the Status 67 Ind.L.J. 25 Defense of Regulate Intraleague Rivalry, Restraints on (1991); Roberts, Gary R. The Antitrust Status of (1984), UCLA L.Rev. 219 for discussions of this Revisited, Sports Leagues 64 Tul.L.Rev. 117 issue. (1989); Grauer, Myron C. The Use and Misuse of the Term "Consumer Once More to the Welfare”: Bay Chicago 2. But the Green Packers and the Single Entity Sports Mat on the Issue Status played, presumably Act, Bears Leagues before enthusiastic Under Section 1 the Sherman crowds, (1989); Goldman, before there Sports, Tul.L.Rev. 71 Lee was National Football Anti- trust, Single Entity Theory, League. and the 63 Tul.L.Rev. only league the club can needed to ensure that individual exist when a balance is Such quality unequally among league provides high entertainment revenues are distributed optimize as to com- throughout participation so on club the season the member clubs based of games generating forms entertainment. petition other in the the revenue.” only not the contribu- Competitive Sports Leagues balance is Act at 297- and the Sherman value bas- of NBA disproportionate tor to the entertainment 99. When teams receive ketball, enjoyment league of Fan generated however. of the share broadcast revenues opportunity the to depends on both sports by games, own such situation exists. the identify favorite team and with local or analysis tricky, of is howev- The this issue quality play. of watching of the best thrill er, since decisions about how to allocate the would single owning firm all of teams broadcasting by are the revenues made arrange for the number of teams presumably league. It that “member clubs of a be efficiently to maximize fan and their locations any legitimate indepen- not league do have is, league There enjoyment of the season. league prod- in the dent economic interests however, expect the cur- no to reason ownership “each uct” and team has an inter- necessarily make such team will rent owners every game” (including equal in an est efficiently, given their individual decisions priori ownership interest the broadcast of in the financial health economic interests every Sports Leagues rights game). to Re- their own teams. assumption If this cor- visited 135-36. is far-flung want surprising not fans It’s rect, arrangements then whatever for reve- superstars supersta- to watch the Bulls’ on league nue the decides to make distribution broadcasting argues that the tion. The NBA be, salespeople like will bonuses to successful ,dis- Bulls to these fans will of more ordinary firm, presumptively in an efficient. among competitive balance teams. turb the however, If, rights initially broadcast inure that, However, speculate since can also one participating particular teams the two viewing become more of a televi- has if, certainly case, as game and is the some activity, activity an “in the sion than flesh” games are more attractive to than oth- fans might prefer these fans have a ers, presumed cannot be to have (like fewer, composed of better teams allocating made decisions broadcast those Bulls). case, league policies If this were efficiently. revenues up of the teams designed to shore all current course, point, would be inefficient. The of analogy, within the context of an ordi necessarily speculation not that this cor- firm, nary salespeople is to allow the to vote rect, of teams but that the efficient number get. bonuses is to on the each Each sales (or, generally, competitive the efficient incentive, course, person pro has some balance) may be obtained as a matter not efficiency mote the overall firm on given league ownership course current salary, which his or her the value perhaps framework. stock, depends of his or her firm and there larger thus retain to award bonuses most The team owners fore However, productive salespersons. This would be the case in this economic interests. compete ways salesperson even if for the revenues scenario each has two did not compete league. maximizing personal increasing do for broad- of the Teams wealth — revenues, conflicting efficiency “A cast however. eco- overall of the and redistribut ing an firm.3 nomic interest between income within the The result of valid, however, single favoring entity 3. Those treatment if law firms should be treat- do, fact, compare sports leagues frequently them to law ed as entities. If law firms firms, making argument sports leagues potential some same inefficiencies entities, firms, sports leagues are like law law firms are as because of diverse econom- See, economically sports leagues partners, therefore entities. ic interests of the Grauer, e.g., Myron Recognition sports leagues C. solution to treat the Nation correct is still Single analogy League Entity al Football Under Sec ventures. A mere law firms is Implications seeking convincingly tion Sherman Act: invoked those Model, arguments purely Consumer 23- defend their (rather on economic Mich.L.Rev. Welfare (1983); precedential) grounds. Maj. Op. argument than at 597-98. This

605 might really expect vote not be to distribute bonuses in the courts to aid in con- the them potential vincing competition The that most efficient fashion. for consumers if the exists particularly really If type inefficiency great of is does this not. consumers want eco- when, NBA, teams, competition sports as with the the is “the nomic between only game independent ownership then preserva- in town” so that team does not if option going independent of elsewhere it is not tion of economic have interests is receiving likely sports league. revenues commensurate with its an efficient choice for a league product.4 choice, joint ventures, to the But that with other contribution overall as event, any brings team group In of owners who with it attendant do antitrust risks. games all might ways. share revenues from all The NBA cannot it both not do make decisions that not maximize well Relating all to the majority’s of this treat- profit of the as a whole.5 issue, single entity ment of the I two see demonstrates, problems First, majority analysis. As this discussion deter- noted, mining potential already divorcing for as question whether the inefficient of decisionmaking joint single entity within a ownership survives ven- from the of independent likely messy because of is ture economic to lead to and inconsistent partners extraordinarily application of interests of antitrust law. The line bottom reason, complex inquiry For confusing. sepa- be that the into whether simple, way if courageous, by not out of the rate economic interests maintained might legal pre- joint problem participants enterprise likely be to establish in a sumption single entity that a cannot exist be no easier than a full Rule of Reason single ownership. analysis. To without avoid the complexities attempted of and confusions Second, majority’s some of the discussion analysis, might simply one ordain that com- independent of puzzling. interests is that economic

binations lack diverse inter- majority that contends the district court opt joint ownership should of ests a sin- cooperation sepa- among “concluded that all enterprise gle problems. antitrust avoid rately incorporated firms is by forbidden 1 hand, judges may play the other want On Act, except of the Sherman to the extent resisting simplify- economist the extent Maj. 598, Copperweld permits.” Op. citing ing assumptions. Copperweld Independence v. Corp. Tube event, 752, 771, leagues 2731, sports argue Corp.,

In 104 467 U.S. S.Ct. (1984). they must maintain 628 ownership Copperweld 81 L.Ed.2d separate ownership parent corporation the teams because en- concluded that a and its appearance competitiveness wholly-owned subsidiary “complete hances de- have a leagues unity manded fans. But cannot interest” and hence should be treat- reverse, them, Applying logic the same there law firms not be treated should as precedent treating sports considerable entities either. leagues joint Collegiate as Nat'l ventures. Athletic Regents ssoc. v. Bd. the Univ. A homa, Okla hypothetical example taking 4. The team 85, 2948, 468 U.S. 104 S.Ct. 82 L.Ed.2d rights suggest, broadcast does seem to elsewhere (1984); League, 70 Sullivan v. National Football however, rights are at broadcast bottom denied, 1091, (1st 1994), F.3d 34 1099 Cir. cert. property participating given of the teams in a 1252, U.S. -, 115 S.Ct. 131 L.Ed.2d - Indeed, game. if the team does not own (1995); Angeles 133 Los Memorial Coliseum rights partici- broadcast which it League, Comm’n v. National 726 Football F.2d pates, it is hard to understand what it means 1381, Cir.1984), denied, (9th 1388-90 cert. 469 own a team at all. 990, 397, (1984); L.Ed.2d 105 S.Ct. 83 331 NFL, League North American Soccer v. 670 F.2d Hovenkamp, 5. See Herbert Exclusive Ven Cir.1982), Joint 1249, (2d denied, 1252 rt. 459 U.S. ce Policy, tures Co Antitrust 1995 1074, (1982); 103 L.Ed.2d 74 639 (1995), general lum.Bus.L.Rev. for a discussion Inc., Football, v. Pro 593 F.2d Smith ways act in which ventures can (D.C.Cir.1978); National Levin v. Basketball (or, inefficiently by excluding Ass’n, either members (S.D.N.Y.1974). F.Supp. members) Therefore, over-including perhaps, by ex here might argue equally one well broadcasts, (superstation cluding products per leagues been treated have never and, haps?). that law entities to the extent firms are like revenues, how do not decree entity. court firm’s Here ed NBA, will Thus their con- because that revenue be shared. simply concluded pose cooperation antitrust separately- flict or does cooperation between involved ventures, other teams, analy- either. on the subject to antitrust issues Joint owned was hand, subject Fact, scrutiny pre- antitrust are Findings of Conclusions sis. Dist.Ct. cisely separate economic interests App. This because Opinion, NBA at 34a. of Law and decisionmaking, poten- deciding joined all in with the cry from that are is a far conclusion separately incorporated tial for distorted results. among cooperation is, firms forbidden. long individually As as are owned teams majority’s propor- and revenue not shared fixed agree I also cannot tion, “unity independent eco- interest” the teams both retain analysis type major make in con- entity status. The nomic interests and decisions required single case, a states, Maj. is the there is Op. “[e]ven at that cert. Where this ity argument sports leagues many competing strong inter should single firm contains joint than sin- opinion goes on to cite the com be treated as ventures rather ests.” gle potential divi there remains a salary and bonuses between entities because petition for However, example. league policy satisfy made managers will be as an sion independent of some Copperweld unity about of inter economic interests when talks teams, context, entity group I think it rather than maximize single in the ests Thus, unity performance league. economic overall of the must be taken to mean Cop games if possible, more Bulls were broad- interests of decisionmakers. See But, cast, profits if might at 2740- increase. perweld, diverse revenue from the broadcast of Bulls single firm does not evidence 41. Bulls, goes disproportionately world be outside economic interests made not vote for final the owners the other members cause decisions stockholders, only care about this more efficient result. who Only the firm. be performance of overall may, course, There be cases which be this is case can firms cause in a independent ownership partners of the profit- in the to behave canonical assumed any pose possibili- venture does not real maximizing The diverse interests fashion. decisionmaking. ty of inefficient This would majority opinion as seem mentioned compete in parties be the case if the did not analysis as is the irrelevant the antitrust if all other arena and revenues were rivalry teams in the NBA. on-court between part- proportions among in fixed shared however, Thus, general, plausible In case Copperweld refers to conduct ners. when “deprives marketplace proposition of the inde- can be made for the that inde- presumptively decisionmaking pendent ownership that com- should pendent centers of assumes,” single entity. This preclude it does not to “deci- treatment as a petition refer mean, course, certainly “all independence is does not sionmakers” whose economic really cooperation among separately incorporated only potential. The antitrust issue is whether, by § 1 of cooperative firms is forbidden as result some Sherman venture, Act,” Maj. Op. It economic interests which remain at 598. would mean jus- cooperation ordinarily As must their decisions. that such be coordinate notes, under Rule of Reason. Justifica- Copperweld officers of tified “[t]he pursu- might not than the separate firm are not economic actors tion be difficult ing separate interests....” Id. elusive search for treatment enti- economic Therefore, joint decisionmaking ty- is of no Employees or divisions

antitrust concern. firm, hand, may remain

within on the other pursuing separate

separate economic actors they do make the

economic interests but opera- governing

final decisions the firm’s They may compete

tions. shares

Case Details

Case Name: Chicago Professional Sports Limited Partnership and Wgn Continental Broadcasting Company v. National Basketball Association, Cross-Appellee

Court Name: Court of Appeals for the Seventh Circuit

Date Published: Oct 7, 1996

Citation: 95 F.3d 593

Docket Number: 95-1341, 95-1376, 95-3935 and 95-4021

Court Abbreviation: 7th Cir.