DEUTSCHER TENNIS BUND, German Tennis Federation; Rothenbaum Sports GMBH; Qatar Tennis Federation v. ATP TOUR INC.; Etienne de Villiers; Charles Pasarell; Graham Pearce; Jacco Eltingh; Perry Rogers; Iggy Jovanovic; John Doe 7; John Doe 8; John Doe 9
No. 09-4361
United States Court of Appeals, Third Circuit
Argued Nov. 17, 2011. Opinion Filed May 11, 2012.
ATP Tour Inc., Appellant.
Hamish S. Cohen, Esquire, Stanley C. Fickle, Esquire, Robert D. MacGill, Esquire, (Argued), Peter J. Rusthoven, Esquire, Jennifer W. Adams, Esquire, Barnes & Thornburg, Indianapolis, IN, Comrie B. Flinn, Esquire, James L. Higgins, Esquire, Pilar G. Kraman, Esquire,
Before: RENDELL, AMBRO, and NYGAARD, Circuit Judges.
OPINION
PER CURIAM.
ATP Tour, Inc., appeals the order of the United States District Court for the District of Delaware denying ATP‘s post-trial motion for attorneys’ fees, costs, and expenses after successfully defending against a suit brought by ATP member federations Deutscher Tennis Bund and Qatar Tennis Federation, and Rothenbaum Sports GMBH. For the reasons stated below, we vacate the order of the District Court and remand the case for further proceedings consistent with this opinion.
I.
ATP is a not-for-profit Delaware membеrship corporation that governs an international men‘s professional tennis tour. Members consist of tennis tournament federations and individual professional players. Two federation members, Deutscher and Qatar, who jointly own the German Open in Hamburg, Germany, sued ATP and certain individual Board members over its decision to restructure the ATP Tour, resulting in a change in the schedule and rules for tournaments on the tour.1
Because of ATP‘s restructuring, a plan known as the “Brave New World” (the “Plan“), the German Open lost its top-tier status, reducing the number of points participating players earned toward their world ranking. The Plan also moved the tournament from its slot just before thе French Open, which had made it easier to attract to the German Open highly ranked players, media coverage, and lucrative sponsorships.
Deutscher and Qatar alleged that the Plan created a fаvored class of tournaments and systematically disadvantaged the rest of ATP‘s tournaments from competing by controlling, inter alia, access to top players, prize money, broadcast rights, and the schedule. In so doing, Deutscher and Qatar asserted that ATP and its individual Board members violated sections 1 and 2 of the Sherman Act (
ATP and the individual Board members prevailed at trial on every claim. The District Court granted judgment as a matter of law to ATP and the individual defendants on all of the state law counts, and to the individual defendants on the antitrust claims. A jury concluded that ATP was not liable for any antitrust violations. We affirmed the judgment, Deutscher Tennis Bund v. ATP Tour, Inc., 610 F.3d 820 (3d Cir.2010), and thе Supreme Court denied the federations’ petition for certiorari, Deutscher Tennis Bund v. ATP Tour, Inc., — U.S. —, 131 S.Ct. 658, 178 L.Ed.2d 482 (2010).
ATP timely filed a post-trial motion, pursuant to
In the event that (i) any [current or prior membеr or Owner or anyone on their behalf (“Claiming Party“)] initiates or asserts any [claim or counterclaim (“Claim“)] or joins, offers substantial assistance to or has a direct financial interest in any Claim against the League or any member or Owners (including any Claim purportedly filed on behalf of the League or any member), and (ii) the Claiming Party (or the third party that received the substantial assistance from the Claiming Party or in whose Claim the Claiming Party had a direct finаncial interest) does not obtain a judgment on the merits that substantially achieves, in substance and amount, the full remedy sought, then each Claiming Party shall be obligated jointly and severally to reimburse the League and any such member or Owners for all fees, costs, and expenses of every kind and description (including, but not limited to, all reasonable attorneys’ fees and other litigation expenses)(collectively, “Litigation Costs“) that the parties mаy incur in connection with such Claim.
The ATP Board unilaterally drafted and promulgated Article 23.3 at approximately the same time that it was presenting the Plan to its members. ATP asserts that the federations agreed to be bound by the by-laws when they applied for membership. The District Court, however, denied ATP‘s motion principally because such an award would be contrary to the underlying policy of the federal antitrust laws. The Court, relying primarily on our decision in Byram Concretanks, Inc. v. Warren Concrete Products Co. of New Jersey, 374 F.2d 649, 651 (3d Cir.1967) (holding that, “in the absence of specific legislative authorization[,] attorneys’ fees may not be awarded to defendants in private аnti-trust litigation“), refused to give effect to Article 23.3. It reasoned that federal law preempts the enforcement of fee-shifting agreements when antitrust claims are involved. See Dist. Ct. Op. at 5–8. As for the state law claims, the Court reаsoned that because they “all related to the anticompetitive actions alleged in the four [antitrust] claims and were both incidental to and inextricably factually intertwined with the [antitrust] claims,” id. at 8 n. 5, and because thе “issues relating to the four [antitrust] claims predominated,” id., the fee-shifting provision in Article 23.3 is unenforceable as well with respect to the non-federal claims. ATP appeals.2
II.
The question we address first is one that was not raised by the parties: whether federal preemption is ripe for decision when there has been no determination of whether Article 23.3 is valid (therefore, enforceable) under state law. As no preemption issue exists here without a valid and enforceable by-law, the question answers itself. Moreover, courts “have held that federal preemption of state law is a constitutional question because it is premised on the Suрremacy Clause of the United States Constitution.” Columbia Venture, LLC v. Dewberry & Davis, LLC, 604 F.3d 824, 828 (4th Cir.2010) (citing Bell Atl. Md., Inc. v. Prince George‘s Cnty., 212 F.3d 863, 865 (4th Cir.2000), and H & R Block E. Enter., Inc. v. Raskin, 591 F.3d 718, 723–24 (4th Cir.2010)). When there
Because a determination that Article 23.3 is invalid under Delaware law would allow us (and the District Court) to avoid the constitutional question of preemption, it is an indeрendent state law ground. Consequently, the by-law validity issue needs to be addressed, and a finding of validity must be made, before the constitutional issue of preemption can be considered.
However, as the District Court points оut, “a number of other material factual issues would need to be resolved before” a determination can be made on the validity of Article 23.3 under Delaware law. Dist. Ct. Op. at 7 n. 4. As an appellate court, we are not in a position to make factual findings and thus do not decide this issue. We note, though, that (like the District Court) we are aware of no case in which a Delaware court has addressed the legal validity of a by-law—adopted as an internal dispute was brewing—that requires an organization‘s member to pay potentially large fees to the organization if the member files suit against the organization and loses.3
The District Court recognized thаt determining whether Article 23.3 provides a basis for fee-shifting might require analysis of the possibility that it was adopted specifically to deter members from suing the organization. See id. We concur. We also believe that other asрects of the by-law itself, and the circumstances of its adoption, might lead Delaware courts to refuse to enforce it.4 Indeed, we have doubts that Delaware courts would conclude that Article 23.3 imposes а legally enforceable burden on Deutscher and Qa-
Accordingly, we vacate the order of the District Court and remand the сase so that it can examine, in the first instance, whether Article 23.3 of ATP‘s by-laws creates an enforceable obligation under state law on Deutscher and Qatar to pay ATP‘s attorneys’ fees.6 This panel will consider any future appeal in this matter.