Sports Promoter Misses Goal In SDNY Antitrust Case Against US Soccer
08/18/2020On July 20, 2020, United States District Judge Valerie Caproni of the United States District Court for the Southern District of New York dismissed antitrust claims brought by a soccer promoter against the United States Soccer Federation (“USSF”), which alleged that USSF entered into anticompetitive agreements to block plaintiff from hosting international soccer matches in the United States. Relevent Sports, LLC v. United States Soccer Federation, Inc., No. 19-CV-8359 (S.D.N.Y. July 20, 2020).
Plaintiff Relevent Sports is a sports promoter that organizes soccer matches in the United States involving professional teams from foreign leagues. Defendant USSF is the national association for administering and overseeing soccer in the United States. USSF operates as a member of Fédération Internationale de Football Association (“FIFA”), soccer’s global governing body. In order to host a professional club soccer game in the United States, promoters like plaintiff must obtain an official sanction from USSF pursuant to FIFA rules and regulations. Additionally, promoters must obtain approval from each team’s national association, each team’s FIFA-recognized regional confederation, and the regional confederation where the match is held. Promoters like Relevent Sports are required by FIFA’s governing statutes to apply for these sanctions through a FIFA-licensed “match agent.”
In April 2019, USSF denied plaintiff’s sanction application to host an “Official Game”—a match that counts towards the competing clubs’ official records—in Miami between two Ecuadorian soccer clubs. USSF rejected the application on grounds that a 2018 FIFA directive prohibits hosting official season games outside of the participant teams’ home country. Subsequently, plaintiff brought suit against USSF, alleging under Sherman Act § 1 that: defendant’s denial of plaintiff’s application was part of an unlawful anticompetitive agreement with FIFA to block the hosting of international Official Games in the United States; USSF entered into an anticompetitive agreement with “horizontally competing” regional confederations and national associations to boycott professional leagues, clubs, and players that participate in US games without USSF approval; and USSF illegally exploited its exclusive sanctioning authority to enhance the competitive position of its marketing partners. Plaintiff also alleged a tort claim that USSF interfered with its business relationships by ignoring, delaying, and ultimately rejecting plaintiff’s attempts to obtain a sanction for the match.
Defendant moved to compel arbitration pursuant to FIFA regulations requiring that any dispute between a “match agent” and a national association be submitted to FIFA’s arbitral body, or, in the alternative, to dismiss the complaint. Judge Caproni agreed that plaintiff’s tort claim was subject to mandatory arbitration. Turning to the antitrust allegations, the Court found that FIFA’s tribunal lacked jurisdiction to hear these claims because they were outside the scope of the organization’s own statutes and regulations. Citing a prior case that was referred to FIFA’s tribunal by the Northern District of Illinois, Judge Caproni pointed to instructive statements from FIFA’s legal director that its tribunal would not entertain antitrust claims because they “were not within the categories of disputes that its regulations allowed its deciding bodies to hear.”
After finding that plaintiff’s antitrust claims were subject to the Court’s jurisdiction, Judge Caproni proceeded to dismiss these allegations for failure to state a claim. First, the Court addressed whether USSF’s denial of a sanction based on a FIFA directive constitutes an impermissible vertical agreement in violation of Sherman Act § 1. Here, plaintiff claimed that because USSF was “required to adhere” to FIFA’s directive to deny the sanction, there was direct evidence of a vertical agreement to restrain trade. However, the Court disagreed and held that “compliance with the FIFA directive, without additional factual allegations, is insufficient to constitute an unlawful agreement.” According to Judge Caproni, merely alleging compliance with FIFA’s directive, without more, did nothing to substantiate the conclusory accusation that an impermissible vertical agreement in restraint of trade was actually made.
Judge Caproni similarly disposed of plaintiff’s claims regarding an unlawful conspiracy between USSF and “horizontally competing FIFA-affiliated confederations, national associations, leagues, and teams” to withhold sanctions, and “to boycott leagues, clubs, and players that participate in unsanctioned games in the United States.” Plaintiff argued that by withholding sanctions, FIFA-affiliated confederations were essentially engaged in a “horizontal group boycott” that constitutes a per se violation of Sherman Act § 1. According to the Court, plaintiff’s conclusory allegations failed to identify any specific organizations as co-conspirators or even as competitors, or any specific agreements between these parties. Though all these organizations may have complied with FIFA’s policy, that fact was insufficient to show a concerted action to restrain trade without any pleadings suggesting “who agreed with whom, to what, and when.”