The Ninth Circuit Affirms Implied Antitrust Immunity For USA Track & Field And The United States Olympic Committee
08/21/2018On August 7, 2018, the Ninth Circuit Court of Appeals affirmed a district court holding that USA Track & Field and the United States Olympic Committee were immune to antitrust liability for imposing advertising restrictions during the Olympic Trials for track and field athletes. Gold Medal LLC v. USA Track & Field, No. 6:16-cv-00092-MC (9th Cir. Aug. 7, 2018). The Court held that defendants were entitled to implied antitrust immunity because the advertising restriction was integral to performance of their statutory duties under the Ted Stevens Olympic and Amateur Sports Act (“ASA”) to fund the U.S. Olympic Team. Plaintiff alleged that the defendants’ anticompetitive conspiracy imposing advertising restrictions that excluded certain sponsors from the Olympic Trials for track and field athletes violated Section 1 of the Sherman Act.
The plaintiff, a chewing gum manufacturer called Gold Medal LLC d/b/a Run Gum (“Run Gum”), alleged that defendants illegally thwarted its attempts to sponsor athletes during the Olympic Trials by adopting an anticompetitive advertising restriction. Run Gum alleged that restrictions on the type and location of advertising allowed on the equipment, uniform, and bibs/numbers of competitors, and its exception for logoed apparel from certain pre-approved manufacturers, fixed “price[s] paid to athletes for individual sponsorship,” and created an unlawful group boycott of individual sponsors. The advertising restriction, for example, prevented Run Gum from paying an athlete to advertise with a small patch or logo on the athlete’s running shirt, but allowed that same Nike shirt to display the swoosh.
The district court had dismissed the case because the advertising restriction was within the broad authority granted to defendants to finance U.S. participation in the Olympics. The district court held that the restriction prevented a dilution of the Olympic brand and allowed defendants to serve their “gatekeeping function which preserves the exclusivity—and thus value—of the Olympic symbols and name.” On that basis, the district court granted defendants implied antitrust immunity in enforcing the advertising restrictions.
The Ninth Circuit reviewed the decision and analyzed a series of prior implied antitrust immunity cases under the ASA. An Eleventh Circuit case, addressing the propriety of a rule that A-rated equestrian competitions on the same date must be at least 250 miles apart, found that the rules were designed to promote the quality of competition and growth of equestrian by encouraging “competitions in more diverse locations,” and so the “imposition of antitrust liability for the promulgation of such a rule is plainly repugnant to the ASA.” See JES Props., Inc. v. USA Equestrian, Inc., 458 F.3d 1224, 1232 (11th Cir. 2006). Similarly, the Tenth Circuit granted implied antitrust immunity to an amateur basketball league that deemed ineligible any player who previously played professionally. In that case, the Tenth Circuit held that while a national governing body “is a private actor, the monolithic control exerted . . . over its amateur sport is a direct result of the congressional intent expressed in the Amateur Sports Act.” See Behagen v. Amateur Basketball Ass’n of the United States, 884 F.2d 524, 528 (10th Cir. 1989).
Adopting the reasoning of these other circuits, the Ninth Circuit affirmed the district court’s dismissal and granted defendants implied antitrust immunity. The Ninth Circuit held that “[i]n light of the broad authority bestowed upon [defendants] to fund the Olympic Mission, the challenged advertising restrictions” had “fall[en] within the mission to protect the value of corporate sponsorships and maximize sanctioned fundraising,” and that any different result here “would unduly interfere with the operation of the ASA.” While the concurring opinion did not agree that implied antitrust immunity applied, it would have found for defendants because Run Gum did not show that defendants profited from the exception for logoed apparel and it also failed to “establish a viable product market.”
This decision illustrates the wide scope of the antitrust immunity and the deference to the defendant’s judgment that courts will afford amateur sports governing bodies under the ASA. Challenges to restraints on competition that fall with the legitimate purview of such bodies’ authority will continue to face an uphill battle.