Case Information
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA CITY OF OAKLAND, Case No. 18-cv-07444-JCS Plaintiff, ORDER REGARDING MOTION TO v. DISMISS FIRST AMENDED COMPLAINT OAKLAND RAIDERS, et al., Re: Dkt. No. 73 Defendants. I.
Oakland Raiders (the “Raiders”), the National Football League (the “NFL”), and all thirty-one other teams in the NFL, asserting that the Raiders’ decision to leave Oakland, and the NFL’s approval of that decision, violate the antitrust laws and the NFL’s own governing documents, complaint with leave to amend. Oakland has now filed a first amended complaint, and Defendants among other claims. On a motion by Defendants, the Court previously dismissed Oakland’s INTRODUCTION Plaintiff the City of Oakland (“Oakland”) brings this action against the Defendants the
move to dismiss once again under Rule 12(b)(6) of the Federal Rule of Civil Procedure. The Court held a public hearing by videoconference on April 17, 2020. For the reasons discussed below, Defendants’ motion is GRANTED, Oakland’s claim under the Sherman Act is DISMISSED with prejudice, and its remaining claims under state law are DISMISSED for lack of subject matter jurisdiction, without prejudice to pursuing those claims in a court of competent jurisdiction. [2]
II. BACKGROUND
A. Factual Overview and Previous Order
This case concerns the Raiders’ decision, formalized in a January 2017 request to the NFL,
to relocate from Oakland, California—where the Raiders had played in a stadium known as the
Coliseum for many years—to Las Vegas, Nevada, despite efforts by Oakland to entice the Raiders
to stay. Under the NFL’s bylaws, any team’s relocation must be approved by a three-quarters
majority of all thirty-two NFL teams, and such decisions often require the relocating team to pay a
fee to the other teams. In March of 2017, the team owners voted to approve the Raiders’
relocation with a $378 million fee. Oakland brings claims for violation of § 1 of the Sherman Act,
breach of contract (i.e., the NFL relocation policy), and unjust enrichment. The factual allegations
of the case are summarized in more detail in the Court’s previous order dismissing Oakland’s
original complaint with leave to amend. Order Granting Mot. to Dismiss (“July 2019 Order,” dkt.
64)
[3]
at 2–8. New allegations of the first amended complaint are addressed where relevant in the
analysis section of this order.
antitrust injury. at 15–18. To the extent that Oakland’s claims were based on the NFL’s
Id.
The Court previously dismissed Oakland’s Sherman Act claims for failure to allege
imposition of a $378 million fee as part of its approval of the Raiders’ request to relocate, the
Court held that requiring such a fee would
discourage
teams like the Raiders from seeking to
relocate, and thus would tend to help rather than harm existing host cities like Oakland. at 15–
16. Once a team has applied to relocate, a mechanism that encourages the NFL to approve that
request moves the process closer to an unrestricted market (where teams would be free to relocate
without seeking approval), and the Court therefore held that any harm caused by that incentive for
approval is not “‘of the type the antitrust laws were intended to prevent.’”
Id.
at 16–17 (quoting
Somers v. Apple, Inc.
,
While those issues of antitrust injury were sufficient for dismissal, the Court also briefly
addressed some of Defendants’ arguments concerning damages.
Id.
at 19–24. The Court held that
Oakland’s status as a “landlord” did not inherently bar it from recovering antitrust claims,
id.
at
19–20 (distinguishing
R.C. Dick Geothermal Corp. v. Thermogenics, Inc.
,
Without reaching a firm conclusion on the subject of Oakland’s alleged relevant market, the Court addressed that issue as follows:
Oakland’s theory of the relevant market—cities offering or willing to
offer “home stadia and other support to major league professional
football teams in the geographic United States,” Compl. ¶ 88—is
somewhat unorthodox. Although
L.A. Memorial Coliseum
considered
a somewhat similar market for “[f]ootball stadia,”
The Court assumed for the sake of argument that the NFL’s relocation policy was enforceable as a contract, but held that Oakland had not alleged facts sufficient to show that it was a third-party beneficiary of that policy with standing to enforce it under California law. Id. at 24– 28. Although the Court declined to reach Defendants’ other arguments regarding Oakland’s claim for breach of contract, the Court noted that “the issues of whether the relocation policy’s statement that teams’ ‘business judgments may be informed through consideration of the factors listed below, as well as other appropriate factors’ is a sufficiently definite promise to be enforceable and whether Oakland has plausibly alleged a breach of that provision would likely also support dismissal of Oakland’s contract claim.” at 28. Finally, the Court dismissed Oakland’s claims for quantum meruit and unjust enrich because those claims do not lie where parties have an enforceable written contract, and Oakland’s relationship with the Raiders was governed by the Raiders’ lease agreement at the Coliseum. Id. at 29.
B. Parties’ Arguments
1. Arguments Regarding Oakland’s Sherman Act Claim
Defendants argue that Oakland has not cured the defects identified in the Court’s previous
order.
See generally
Mot. (dkt. 73). According to Defendants, Oakland has not added any factual
allegations to indicate that the Raiders would have remained in Oakland or a different NFL team
would have played in Oakland if the NFL permitted more than thirty-two teams in the league.
Id.
at 7–8. In response, Oakland argues its allegations that the Raiders have historically played at the
Coliseum and that a recent economic analysis ranked Oakland as the top city for an NFL team, as
well as allegations regarding the NFL’s barriers to entry, are sufficiеnt to show damage as a result
of the limited number of teams. Opp’n (dkt. 74) at 7–10.
Defendants also argue that Oakland lacks antitrust standing because it is not a participant
in the same market as Defendants, with Oakland neither competing against Defendants nor
consuming their product. Mot. at 9–10. Defendants contend that courts do not allow plaintiffs
who declined to purchase a product at issue to bring antitrust claims, even if the plaintiffs allege
that they would have purchased the product but for the price increase caused by purportedly
anticompetitive product, and that the same principle would apply regardless of whether Oakland
were viewed as a potential “buyer” or potential “supplier” in the relationship between “host cities”
and NFL teams. & 9–10 & n.4 (citing
Montreal Trading Ltd. v. Amax Inc.
,
Defendants contend that any injury suffered by Oakland is indirect, because Oakland
neither owns a football team excluded from the NFL nor directly entered a lease with the Raiders
for the use of the Coliseum, which Oakland and co-owner Alameda County instead leased to the
Oakland-Alameda County Coliseum Financing Corporation, which assigned its rights under the
lease to the Oakland-Alameda County Coliseum Authority (“OACCA”), which in turn leased the
stadium to the Raiders. Mot. at 10–11. Defendants briefly renew their argument (rejected in the
Court’s previous order) that the Ninth Circuit’s decision in
R.C. Dick
forecloses any antitrust
claim based on a party’s interest as a landlord, and also argue that Oakland has not alleged the sort
of price fixing directly affecting a rental market that the Court previously held might survive
R.C.
Dick
. at 11–12. Oakland contends that it is an appropriate plaintiff because Defendants’
arguments raise factual issues inapproрriate for resolution on the pleadings and because it alleges
that “‘[a]lthough [the OACCA] manages the Coliseum site for Oakland, Oakland is the entity with
the economic interest in that site and, accordingly, is the entity that suffers from losses related to
that site.’” Opp’n at 13–14 & n.4 (quoting 1st Am. Compl. (“FAC,” dkt. 68) ¶ 217).
In a somewhat overlapping argument, Defendants contend that Oakland’s alleged injuries
are not of a type cognizable under the antitrust laws, because the Ninth Circuit held in
Rohnert
Park
that lost municipal investment is not recoverable, because lost tax revenue is a sovereign
interest that does not fall within the commercial damages redressable under the Clayton Act,
because Oakland does not allege that the Raiders paid rent to Oakland, and because any
diminution of value of the Coliseum would occur even if the Raiders remained in Oakland but
played at a new stadium, which was one of the options contemplated in the parties’ negotiations.
Mot. at 12–14. Oakland argues that its injury is sufficient, based on the Supreme Court’s holding
that governments may sue under the Clayton Act in their “‘propriеtary capacity,’” and based on
general principles against requiring specificity in allegations of damages. Opp’n at 14–16 (citing,
e.g.
,
Hawaii v. Standard Oil Co. of Cal.
,
Defendants argue that Oakland has not alleged a cognizable market, contending that because “Defendants do not compete with each other in the alleged relevant market of ‘hosting NFL team,’” but instead cities and stadiums compete to attract teams, a more appropriate framework would view the cities as suppliers and the NFL teams as consumers of the cities’ stadiums. See Mot. at 14–15. Because the Ninth Circuit has held that a market cannot be defined merely by the identity of its consumers, Defendants argue that viewing host cities as suppliers and the teams as consumers would require the market to encompass other forms of stadium entertainment or other ways in which cities can generate tax revenue and economic activity, which Oakland’s complaint does not consider. at 15–16. Oakland contends that the Ninth Circuit has more than once recognized that NFL football is a unique product, that a jury so found in litigation regarding the Raiders’ 1982 move to Los Angeles, and that it has addressed the appropriate economic test for determining a relevant market in the context of alleging that the United States is the relevant geographic market. Opp’n at 17–18. Defendants also contend that Oakland has not stated a claim based on the NFL’s limited thirty-two structure because courts have generally recognized that sports leagues may limit their membership, and because Oakland has not—despite the invitation of the Court’s previous order— addressed what alternative structure might be permissible if the NFL’s current structure is not. Mot. at 16–17. Oakland argues that this case differs from those cited by Defendants because the teams and athletes seeking to join leagues in those cases had not alleged a broader harm to competition beyond their own exclusion. Opp’n at 18–20. Finally, Defendants argue that Oakland has not stated a claim based on a “group boycott” because it has not alleged that it sought to attract any NFL team besides the Raiders (or a new expansion team) nor alleged that the NFL prevented any other team from playing in Oakland, Mot. at 17–18, while Oakland argues that it has alleged a boycott because the decision to relocate the Raiders required joint approval by the other NFL teams and because commentators have suggested that, in closed sports leagues, “ ‘ “a threat by an individual team to relocate may comprise an implicit threat of a concerted boycott,” ’ ” Opp’n at 20 (quoting FAC ¶ 140 (in turn quoting a law review article)).
2. Arguments Regarding Breach of Contract and Unjust Enrichment Defendants argue that Oakland’s claim for breach of contract fails for the same reason it was previously dismissed—Oakland is not an intended third-party beneficiary capable of enforcing the NFL’s relocation policy under California law. Mot. at 20–24. Oakland contends that new allegations regarding the development of factors eventually incorporated into the relocation policy—in response to a Senate bill intended to “protect[] . . . сities” and in the creation of a “Statement of Principles” with the Mayors’ Conference—are sufficient, along with provisions of the policy addressing interests of “communities,” to show that Oakland should have standing to enforce the policy. Opp’n at 22–24. The parties also dispute whether the relocation policy’s requirement that teams “consider” certain factors in determining their business interests is enforceable as a contract, and whether Oakland has alleged a breach. Mot. at 19–20; Opp’n at 20– 21, 25.
With respect to Oakland’s final claim for “unjust enrichment,” Defendants argue that Oakland has not cured the defect for which the Court previously dismissed the claim—that such a claim cannot lie where the Raiders’ tenancy at the Coliseum was governed by a written and enforceable lease agreement—while Oakland contends that it should be allowed to assert a claim for unjust enrichment in the alternative to its claim for breach of contract. Mot. at 25; Opp’n at 25. III. ANALYSIS A. Legal Standard A complaint may be dismissed for failure to state a claim on which reliеf can be granted
under Rule 12(b)(6) of the Federal Rules of Civil Procedure. “The purpose of a motion to dismiss
under Rule 12(b)(6) is to test the legal sufficiency of the complaint.”
N. Star Int’l v. Ariz. Corp.
Comm’n
,
In ruling on a motion to dismiss under Rule 12(b)(6), the court generally takes “all
allegations of material fact as true and construe[s] them in the light most favorable to the non-
moving party.”
Parks Sch. of Bus. v. Symington
,
otherwise, or conspiracy, in restraint of trade.” 15 U.S.C. § 1. Courts have long held that the
Sherman Act is not as broad as its literal language might suggest, and “that Congress intended to
outlaw only
unreasonable
restraints.”
Texaco v. Dagher
,
Section 4 of the Clayton Act, codified as 15 U.S.C. § 15, authorizes suits for treble
damages by “any person who shall be injured in his business or property by reason of anything
forbidden in the antitrust laws.” 15 U.S.C. § 15(a). In much the same way that the facially broad
language of the Shermаn Act has been construed as addressing only certain restraints on
competition, however, “[t]he Supreme Court has held that Congress did not intend to afford a
remedy to everyone injured by an antitrust violation.”
Knevelbaard Dairies v. Kraft Foods, Inc.
,
The first of those factors, “antitrust injury,” is a “substantive element of an antitrust claim,
and the fact of injury or damage must be alleged at the pleading stage.”
Somers v. Apple, Inc.
, 729
F.3d 953, 963 (9th Cir. 2013). “‘Antitrust injury’ means ‘injury of the type the antitrust laws were
intended to prevent and that flows from that which makes defendants’ acts unlawful,’” and
“consists of four elements: ‘(1) unlawful conduct, (2) causing an injury to the plaintiff, (3) that
flows from that which makes the conduct unlawful, and (4) that is of the type the antitrust laws
were intended to prevent.’”
Id.
(quoting
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.
, 429 U.S.
477, 489 (1977);
Am. Ad Mgmt., Inc. v. Gen. Tel. Co. of Cal.
,
1. Relocation Fee and Joint Approval Process
The Court previously dismissed Oakland’s Sherman Act claims to the extent that they were
based on the NFL’s relocation fee because any harm that the fee caused Oakland “neither ‘flows
from that which makes the conduct unlawful’ nor ‘is of the type the antitrust laws were intended to
prevent.’” July 2019 Order at 17;
see Somers
,
To the extent that the fee was relevant to the Raiders’ decision to seek permission to relocate, it would have weighed against that decision—a business motivated by self-interest does not generally seek out opportunities to pay its competitors, or even its joint venturers or cartel co- conspirators, hundreds of millions of dollars that it could otherwise keep for itself. At that stage of the decision-making, the relocation fee tended to protect Oakland’s interests against other cities that might seek to attract the Raiders away.
There is no question that once the Raiders committed to relocate and pay whatever fee might be imposed, the fee increased the likelihood that owners of the other teams in the NFL would vote to approve the relocation, because they stood to benefit financially from doing so. At that stage, however, such approval does not impair competition. As the Court previously held:
Restrictions on NFL teams’ ability to relocate to different citiеs are themselves restraints on competition favoring the existing cities , although they may in some circumstances be justified under the rule of reason. See L.A. Mem’l Coliseum , 726 F.2d at 1395 (“The competitive harms of Rule 4.3 are plain.”). In a market entirely lacking such restraints, no approval from the NFL would have been necessary, and the Raiders’ decision to relocate to Las Vegas would have been the end of the story. Oakland has not explained how the relocation fee, which makes approval more likely—only after a team has applied to relocate—and thus brings the process closer to that which would exist in a market lacking competitive restraints, is itself an anticompetitive restraint harming existing host cities. Oakland’s position on this issue would go beyond the dicta of Los Angeles Memorial Coliseum indicating that some restraints on team relocation may be permissible , and instead asks the Court to hold that such restraints are required under the antitrust laws. July 2019 Order at 16–17. Despite the relocation fee once again taking center stage in Oakland’s amended complaint—Oakland seeks as relief a declaration that “redistribution of the resulting ill-gotten supra-competitive gains through artificially set relocation fees to all NFL Clubs, and the supra- competitive revenue generated by the relocation, as a quid pro quo for breaching the terms of those Policies, amount to an unreasonable restraint on trade and interstate commerce and a violation of the antitrust laws,” FAC at 83 (prayer for relief)—Oakland barely discusses the fee in its opposition brief, arguing only that the ability of the Raiders to pay a $378 million fee tends to suggest that Defendants extract supracompetitive subsidies from the localities that host their teams. See Opp’n at 4.
To the extent that the first amended complaint pursues a claim based on the relocation fee Oakland also alleges that the Raiders’ value would have increased with a new stadium in Oakland, see id. , the first amended complaint does not allege that the value of the Raiders would have been higher if they had remained in Oakland than if they moved to Las Vegas, nor does it explain why, if that were the case, the Raiders would have chosen to seek permission to relocate. A business moving to a new city under terms that maximize its value is not anticompetitive. as itself a restraint on trade, or more generally based on the NFL’s approval of the Raiders’ request to relocate, it is DISMISSED for the same reasons stated in the previous order. Whatever harm may result from allowing teams to relocate to the city with the highest bid is not harm redressable under the antitrust laws.
2. Limited Supply of NFL Teams
The more traditional antitrust problem presented by this case is that to the extent that NFL
teams might be a unique product making up a distinct market, the NFL restricts the supply of such
teams, requiring approval by three quarters of the existing thirty-two teams to expand beyond that
number.
See
FAC Ex. 1 (NFL Bylaws) § 3.1. Courts have long recognized that restrictions on
supply can increase prices beyond competitive levels.
See, e.g.
,
NCAA v. Bd. of Regents of Univ.
of Okla.
,
a. Relevant Market Definition
As a starting point, Oakland has not rigorously addressed the relevant market for its
antitrust claim. Failure to plead a relevant market for a rule of reason antitrust claim warrants
dismissal,
Hicks v. PGA Tour, Inc.
,
The relevant market in this action is the market for hosting NFL teams. The consumers in this market are all Host Cities offering, and all cities and communities that are willing to offer (i.e., potential Host Cities), home stadia and other support to major league professional football teams in the geographic United States. The product in this market is the NFL team, as a hosted entity. FAC ¶ 189. Oakland alleges that cities and other localities are willing to provide such support in order to “generate direct payments to local government, economic benefits to the community, media impact (effectively showcasing the community to other parts of the country and world), and provide a public consumption benefit (quality of life offerings) or psychic impact for local residents.” ¶ 188.
Despite the Court’s previous note of this deficiency, Oakland still has not “address[ed] the
test of ‘whether a hypothetical monopolist could impose a “small but significant nontransitory
increase in price” (“SSNIP”) in the proposed market,’ or whether potential host cities would
respond to such an increase by substituting other ‘products.’” July 2019 Order at 24 (quoting
Saint Alphonsus Med. Ctr.
,
b. Non-Speculative Antitrust Injury The Court also previously held that Oakland had not plausibly alleged that, but for the limited number of teams, Oakland would still have an NFL team. July 2019 Order at 17–18. The Court identified the following “incomplete list of issues that might be relevant” but were not addressed in Oakland’s original complaint: (1) whether there are additional potential owners willing to establish new teams if the NFL allowed them to do so; (2) whether such potential owners would have based a team in Las Vegas before the Raiders decided to relocate there; (3) whether the Raiders would still have left Oakland for another city if the NFL allowed additional
teams; (4) if the Raiders might still have left, whether an additional
team would have been established in Oakland to replace the Raiders;
or (5) whether Oakland has made any effort to attrаct an existing team
other than the Raiders or to establish a new expansion team to replace
the Raiders.
at 18.
Oakland’s first amended complaint alleges none of those things. Instead, it repeats an
allegation from the original complaint that entrepreneur and basketball-team-owner Mark Cuban
believes Oakland is a better site for the Raiders than Las Vegas, FAC ¶ 127, and adds an
allegation that an economic analysis commissioned by Oakland determined that, of U.S. cities
without NFL teams, Oakland “best reflect[s] the demographic and financial conditions of existing
Host Cities” and has “the best prospects for new NFL franchises,”
id.
¶ 138. But Oakland still has
not plausibly alleged what the playing field would look like if the NFL allowed more than thirty-
two teams. In that hypothetical world, what would prevent Las Vegas from offering a more
attractive deal, as in fact occurred? Would another team have already existed in Las Vegas?
Would the Raiders have gone elsewhere if Las Vegas already had a team? If the Raiders left,
would a different team plаy in Oakland? The first amended complaint answers none of those
questions. Oakland also once again declines to address what sort of league structure might be
permissible if the current number of teams is not. Oakland’s injury remains speculative, and its
claim remains subject to dismissal on that basis.
Oakland argues that the “barriers to entry” of the NFL are sufficient that “[n]o rational
investor or city would put together a team or build a football stadium without Defendants’ prior
approval,” and that Oakland therefore should not be required to attempt to create an expansion
team to pursue this claim. Opp’n at 8–9. The cases that it cites for that proposition generally
involve businesses excluded by their potential direct competitors.
See generally Rebel Oil Inc. v.
Atl. Richfield Co.
,
Oakland cites no case where, as here, a plaintiff that was priced out of the market for a product it wished to purchase (or perhaps to sell) established antitrust injury, much less without some showing that the plaintiff would have obtained the product but for the purported anticompetitive conduct that raised the price. Courts have generally rejected such a theory. The Tenth Circuit addressed the issue in Montreal Trading :
A price fixing conspiracy is certainly “aimed” at those who purchase the product at the inflated price; their injury is more direct and more proximately caused than those who are unable to purchase due to product scarcity. But a conspiracy to withhold goods from the market may also injure nonpurchasers and we must determine whether a nonpurchaser in Montreal Trading’s position should be treated as “directly injured.” The two purposes of the treble damage remedy are “to compensate victims of antitrust violations for their injuries” and to deprive violators of “the fruits of their illegality.” Illinois Brick [ Co. v. Illinois , 431 U.S. 720, 746 (1977)]. Here, we note that while nonpurchasers may be considered victims of the conspiracy, the alleged conspirators gained no “fruits” from nonsales except to the extent that sales volume had to decline if they were to succeed in charging inflated prices. Other factors that merit consideration are whether a grant of standing might result in “potentially disastrous recoveries by those only tenuously hurt,” Jeffrey v. Southwestern Bell ,518 F.2d 1129 , 1131 (5th Cir. 1975), and whether the fact of a party’s injury, as opposed to the amount, would be inherently speculative. We find these considerations dispositive. If nonpurchasers who have never dealt with a defendant could recover, a seemingly unlimited number of plaintiffs could assert a virtually unlimited quantity of lost purchases, perhaps exceeding the potential output of the entire industry. With a treble damages entitlement, the result could be multiple recoveries and total damage awards wholly out of proportion with “the fruits of the illegality,” easily bankrupting the named defendants. See Illinois Brick ,431 U.S. at 730 ,97 S. Ct. at 2067 ; Mid- West Paper Prods. Co. v. Continental Group, Inc. ,596 F.2d 573 , 586- 87 (3d Cir. 1979).
Montreal Trading Ltd. v. Amax Inc.
,
Allowing nonpurchasers to recover would unduly broaden the
spectrum of potential plaintiffs with price fixing and monopolization
claims. Anyone who considered, or claimed to consider, purchasing a
product or service would have standing to bring such claims.
Damages would vary widely depending on the consequences of a
potential consumer’s inability to purchase. Courts would also be faced
with complex causation issues.
Lambert v. Bd. of Comm’rs of Orleans Levee Dist.
, No. CIV A 05-5931,
Oakland is, of course, correct that the
Montreal Trading
court distinguished a plaintiff with
a prior course of dealing as a potential exception where “injury may not be inherently
speculative.”
Ultimately, Oakland’s refusal to grapple with the question of what would be permissible if the thirty-two structure is not, much less how the distribution of teams might fall under such a structure, renders this case particularly unsuitable as a novel expansion of antitrust liability to non- purchaser plaintiffs. Reading Oakland’s complaint and arguments as a whole—in particular, the lack of any suggestion as to how the NFL should be structured, and the request for equitable relief only as to the decision to permit a relocation rather than the limitation on the number of teams—it doеs not appear that Oakland actually objects to the limited number of teams in the NFL. Instead, it would seem that Oakland simply wishes it could have kept one of those teams for itself, and benefited from the prestige and economic windfall that derive from that scarcity, without paying the supracompetitive price that also arises from it. This Court declines to be the first to endorse that unorthodox theory of antitrust injury, and GRANTS Defendants’ motion to dismiss. In light of Oakland’s failure to address the concerns raised in the Court’s previous order, the Court finds that further leave to amend would be futile, and dismisses Oakland’s Sherman Act claim with prejudice. c. Injury Compensable Under the Antitrust Laws As a separate and sufficient reason for dismissal, none of Oakland’s damages are of a type compensable under the Clayton Act. That statute provides for recovery of injury to “business or property.” 15 U.S.C. § 15(a). Oakland alleges injury in the form of: (1) lost investment value, FAC ¶¶ 201–03; (2) “Lost Income” (including rental income, payments on bonds to fund Coliseum renovations, and money collected for ticket sales tо fund education), id. ¶¶ 204–05; lost tax revenue, id. ¶¶ 206–20; and (4) devaluation of the Coliseum property, id. ¶¶ 211–17.
Beginning with lost tax revenue, the Supreme Court has held that while the Clayton Act
allows a state to “seek[] damages for injuries to its commercial interests,” it “does not authorize
recovery for economic injuries to the sovereign interests of a State.”
Hawaii v Standard Oil Co. of
Cal.
,
As for lost rent, Oakland has not specifically alleged that the Raiders paid rent to Oakland directly, and instead alleges that Oakland and co-owner (but non-party) Alameda County leased the Coliseum to the Oakland-Alameda County Coliseum Financing Corporation, which assigned its rights under the lease to the OACCA. FAC ¶ 29. The Ninth Circuit has rejected such indirect claims under the Sherman Act in the somewhat analogous context of corporate shareholder plaintiffs:
“A shareholder of a corporation injured by antitrust violations has no
standing to sue in his or her own name . . . .”
Solinger v. A. & M.
Records, Inc.
, 718 F.2d 298, 299 (9th Cir. 1983). This rule applies
even if the injured shareholder is the sole shareholder,
Sherman v.
British Leyland Motors, Ltd.
,
Because Oakland has not alleged a cognizable direct injury to business or property, its antitrust claim must be dismissed. 3. Group Boycott Finally, to the extent that Oakland continues to argue that it has alleged a “group boycott,”
Opp’n at 20, it still has not alleged that any NFL team besides the Raiders has refused to deal with Oakland, or that the NFL has prohibited any team from dealing with Oakland or set any “agreed terms” that Oakland must meet to attract a new or different team. Certain commentators’ view that “‘a threat by an individual team to relocate may comprise an implicit threat of a concerted boycott’” does not, without more, show that such a boycott in fact occurred. See id. (quoting Haddock et al., League Structure & Stadium Rent-Seeking – The Role of Antitrust Revisited , 65 Fla. Law Rev. 1, 6 (2013)) (emphasis added).
C. State Law Claims
Oakland asserts its claims for breach of contract and unjust enrichment under California
law. With no indication that there is complete diversity of citizenship as required for jurisdiction
under 28 U.S.C. § 1332, those claims fall within this Court’s subject matter jurisdiction only by
virtue of their relationship to Oakland’s federal antitrust claim under the supplemental jurisdiction
provided by 28 U.S.C. § 1367(a). Under subsection (c) of that statute, however, a district court
“may decline to exercise supplemental jurisdiction over a claim under subsection (a) if,” among
other reasons, “the district court has dismissed all claims over which it has original jurisdiction.”
28 U.S.C. § 1367(c). “[I]n the usual case in which all federal-law claims are eliminated before
trial, the balance of factors to be considered under the [supplemental] jurisdiction doctrine—
judicial economy, convenience, fairness, and comity—will point toward declining to exercise
jurisdiction over the remaining state-law claims.”
Carnegie-Mellon Univ. v. Cohill
,
Although the concerns regarding these claims raised in the Court’s previous order remain largely unаddressed, this case has not progressed beyond the pleading stage, and the Court finds no reason to deviate from the usual approach of declining to exercise supplemental jurisdiction after all federal claims have been dismissed. The Court therefore DISMISSES Oakland’s state law claims for lack of subject matter jurisdiction, without reaching the parties’ arguments regarding the sufficiency of Oakland’s allegations. IV. CONCLUSION For the reasons discussed above, Defendants’ motion is GRANTED, and Oakland’s Sherman Act claim is DISMISSED with prejudice. Based on Oakland’s failure to redress the deficiencies noted in the previous order, the Court concludes that further leave to amend that claim would be futile. Oakland’s state law claims for breach of contract and unjust enrichment are DISMISSED for lack of subject matter jurisdiction, without prejudice to Oakland bringing those claims in a court of competent jurisdiction. The Clerk is instructed to enter judgment in favor of Defendants and close the case.
IT IS SO ORDERED.
Dated: April 30, 2020
______________________________________ JOSEPH C. SPERO Chief Magistrate Judge
Notes
[1] The other teams are the Arizona Cardinals, Atlanta Falcоns, Baltimore Ravens, Buffalo Bills, Carolina Panthers, Chicago Bears, Cincinnati Bengals, Cleveland Browns, Dallas Cowboys, 25 Denver Broncos, Detroit Lions, Green Bay Packers, Houston Texans, Indianapolis Colts, Jacksonville Jaguars, Kansas City Chiefs, Los Angeles Chargers, Los Angeles Rams, Miami 26 Dolphins, Minnesota Vikings, New England Patriots, New Orleans Saints, New York Giants, New York Jets, Philadelphia Eagles, Pittsburgh Steelers, San Francisco 49ers, Seattle Seahawks, Tampa Bay Buccaneers, Tennessee Titans, and Washington Redskins. The full names of the entities controlling those teams and named as defendants can be found at paragraph 31 of Oakland’s amended complaint.
[2] The parties have consented to the undersigned magistrate judge presiding over the case for all purposes pursuant to 28 U.S.C. § 636(c). 27
[3]
City of Oakland v. Oakland Raiders
, No. 18-cv-07444-JCS,
[4] Defendants note that the NFL’s bylaws do not restrict the league to thirty-two teams per se, but required approval by the existing teams to admit any new teams beyond the existing thirty-two teams. Mot. at 7.
[5] As noted in the Court’s previous order, California law does not recognize a claim for “unjust enrichment” under that name, but courts generally construe claims so captioned as asserting an implied contract. July 2019 Order at 29.
[6] Oakland’s allegations based on revenue sharing somewhat similarly fail to address the Raiders’ 26 self-interest. Oakland alleges that the NFL’s revenue sharing policy “breeds indifference to the home territory” and that, as a result, “it simply does not matter that Raider Nation was one of the most devoted fan bases in the NFL,” thus incentivizing a move to Las Vegas. See FAC ¶¶ 54–56. 27 In the same breath, however, Oakland alleges that revenue sharing allowed Defendants to collectively benefit from “the Raiders’ doubled enterprise value” after the move. ¶ 56. While
[7] Once again, this Court has no occasion to consider whether a team seeking to relocate or a city or stadium seeking to attract a team from a different location might have a valid antitrust claim based on the impediment to relocating caused by the NFL’s policies and fee. See July 2019 Order at 16 27 n.10. The Court holds only that to the extent the NFL’s policies allow a teаm to leave a city where it no longer wishes to play, that city has no recourse under the Sherman Act.
[8] Although not relevant to the outcome of the present motion, the Court notes that the U.S. Census 24 Bureau’s most recent estimate of the population of the city of Oakland is 429,082 people. See U.S. Census Bureau, QuickFacts: Oakland city, California, 25 https://www.census.gov/quickfacts/oaklandcitycalifornia.
[9] In some cases involving “naked restriction[s] on output,” a plaintiff may “not [be] required to
26
establish a relevant market,” even under the rule of reason.
See In re Nat’l Football League’s
Sunday Ticket Antitrust Litig.
,
[10] Defendants argue that cities must be suppliers rather than consumers in whatever market exists between cities and NFL teams, because cities compete to host NFL teams, rather than NFL teams 25 competing for cities. See Mot. at 14–15. While Defendants are correct that in some markets (for example, retail markets) consumers generally do not compete with one another, other markets 26 include competition both among sellers and among buyers. As one example, in the real estate market for single family homes, sellers compete in their list prices, but buyers also compete in their offers. Defendants’ lack of competition among themselves could just as easily be explained 27 by their agreement not to compete—which Defendants characterize as a joint venture and Oakland characterizes as a cartel—as by any inherent market dynamic.
[11] Some of Oakland’s citations also refer to entry barriers in the context of market power rather than as a substitute for showing injury.
[12] At the hearing, Oakland’s attorney stated that Oakland’s argument is not that the NFL cannot permissibly restrict the number of teams, but that it cannot do so “in an anticompetitive way,” without meaningfully explaining how the NFL might restrict the number of teams in a manner that 27 Oakland would not consider anticompetitive, or what number of tеams would be appropriate. See Apr. 17, 2020 Tr. at 13:20–14:13, 19:4–25.
[13] Oakland provides no details, for example, with respect to funds that it “collected . . . from each Raiders ticket for the express purpose of funding education in Oakland” to suggest those funds constituted a commercial rather than sovereign interest. See FAC ¶ 204.
[14] The Court previously declined to read R.C. Dick as foreclosing a claim by a landlord alleging 26 anticompetitive conduct in the market for rental transactions. While the Court stands by that conclusion, it is now clear that Oakland was not itself a landlord renting the Coliseum to the Raiders. See FAC ¶ 29 (alleging that Oakland and Alameda County leased the Coliseum to the 27 Oakland-Alameda County Coliseum Financing Corporation, which assigned its rights to the OACCA, which manages the Coliseum).
[15] The Court raised this issue at the hearing, and Defendants submitted a supplemental brief 26 confirming that they “do not believe that there is complete diversity of citizenship under 28 U.S.C. § 1332,” although they asked the Court to exercise supplemental jurisdiction under 28 U.S.C. § 1367 even if the only federal claim is dismissed. See dkt. 84. Oakland also has not suggested 27 that this case satisfies § 1332, and its counsel stated at the hearing that Defendants would likely have more knowledge of the facts relevant to this issue. Apr. 17, 2020 Tr. at 29:5–13.