California District Court Rules Antitrust Claims Against Hollywood Foreign Press Don’t Make Final Cut
04/20/2021On March 23, 2021, Judge Stanley Blumenfeld, Jr. of the United States District Court for the Central District of California dismissed amended antitrust claims brought by two entertainment journalists against the Hollywood Foreign Press Association (“HFPA”). Flaa v. Hollywood Foreign Press Ass’n, No. 2:20-cv-06974-SB (C.D. Cal. Mar. 23, 2021).
Plaintiffs Kjersti Flaa and Rosa Gamazo Robbins are Hollywood correspondents for several foreign news outlets who were denied HFPA membership. Defendants are the HFPA, a non-profit organization of international journalists that report on U.S. entertainment news, and a group of its members. Plaintiffs claimed the HFPA and its members committed a per se violation of Section 1 of the Sherman Act by engaging in an anticompetitive group boycott to block non-member reporters’ access to entertainment industry figures. Plaintiffs also claimed that defendants’ assignment of member journalists to specific geographic regions constituted an unlawful agreement between competitors to divide the market for entertainment news reporting. In the alternative, plaintiffs argued their exclusion from the HFPA was an unreasonable restraint of trade in violation of Sections 1 and 2 of the Sherman Act and California’s Cartwright Act, Cal. Bus. & Prof. Code §16750.
The Court addressed the group boycott claims first and found that plaintiffs failed to adequately allege that defendants possessed market power in, or provided exclusive access to, the market for entertainment news reporting. Judge Blumenfeld noted that an agreement must be “manifestly anticompetitive” to be considered a per se antitrust violation, “typically involv[ing] a joint effort by one or more firms with market power to disadvantage competitors by coercing necessary suppliers … to cease dealing with those competitors.” Regarding market power, plaintiffs alleged only that various Hollywood studios controlled “access to [industry] talent” and excluded non-HFPA members from that access. Judge Blumenfeld found plaintiffs’ allegations unavailing, highlighting the small size of the HFPA and its diminishing contributions to entertainment reporting. The Judge also found that plaintiffs’ own success as journalists cut against the notion that defendants controlled “unique access to a business element necessary for effective competition.”
Judge Blumenfeld also rejected plaintiffs’ argument that defendants committed a per se antitrust violation by allocating coverage of different geographic regions to HFPA-member journalists. Unlawful horizontal market division requires an agreement “between competitors at the same level” to “divide up the market for a given product” and “allocate territories in order to minimize competition.” The Court found that plaintiffs’ own descriptions of the relevant geographic markets effectively defeated their claims. Plaintiffs asserted that “each [foreign submarket] had unique outlets for [entertainment] reporting” requiring “country-specific news reporters and news stories,” thereby implying that a “reporter from one country generally is not able to provide a story in another country.” According to the Court, HFPA members are unable to enter into anticompetitive horizontal market division agreements because HFPA members cannot compete with each other due to the unique characteristics of each geographic submarket.
Finally, the Court rejected plaintiffs’ remaining arguments that their exclusion from HFPA membership violates Sections 1 and 2 of the Sherman Act and California antitrust law under a rule-of-reason theory. In alleging the relevant market as the market for “news concerning forthcoming American movies and the talent responsible for creating them,” plaintiffs defined an “artificially narrow” and “muddled” market without accounting for the substitutability of other relevant forms of entertainment news. Concluding that plaintiffs’ antitrust claims were “implausible and contradictory,” Judge Blumenfeld granted defendants’ motion and dismissed all claims against the HFPA and its members.