United States: Ninth Circuit Finds Implied Antitrust Immunity For USATF And USOC In Advertising Restriction Case

Last Updated: August 16 2018
Article by Bruce D. Sokler and Shawn N. Skolky

Earlier this week, a three judge panel of the Ninth Circuit Court of Appeals issued a ruling in the case of Gold Medal LLC v. USA Track & Field. The decision, on appeal from the District Court for the District of Oregon, rejected allegations that USA Track & Field (USATF) and the United States Olympics Committee (USOC) engaged in an anticompetitive conspiracy in violation of antitrust law by imposing certain advertising restrictions during Olympic Trials. The court found that the Ted Stevens Olympic and Amateur Sports Act conferred implied antitrust immunity that shielded the advertising restrictions from attack.

The Alleged Anticompetitive Behavior and District Court's Ruling

The case was brought by Gold Medal LLC d/b/a Run Gum (Run Gum), a company that sells chewing gun containing caffeine, taurine, and b vitamins. In its Complaint, Run Gum alleged that it was precluded from sponsoring athletes during the Olympic trials based on USATF advertising restrictions. Run Gun alleged that such limitations "exclude scores of sponsors from the marketplace" in violation of Section 1 of the Sherman Act. Under the Sherman Act, Run Gum alleged that limiting sponsorships of athletes during Olympic Trials was an "anticompetitive horizontal and vertical agreement among competitors to fix artificially – and unlawfully – the number of individual sponsors and the price paid to athletes for individual sponsorship." Moreover, apparel and equipment manufacturers were not categorically excluded from advertising (as their logos are present on the apparel and equipment used by athletes).

In 2016, the District Court for the District of Oregon granted USOC and USATF's motion to dismiss. The district court held that the organizations should be granted implied antitrust immunity in order to carry out their duties under the Ted Stevens Olympic and Amateur Sports Act (ASA).

Ninth Circuit's Holding – Implied Antitrust Immunity Under the ASA

The question of implied antitrust immunity under the ASA was one of first impression for the Ninth Circuit, and the court noted that such immunity can only be justified "by a convincing showing of clear repugnancy between the antitrust laws and the regulatory system." The court found its way to conferring immunity by turning to two other circuit court opinions from the 11th and 10th circuits.

In Behagen v. Amateur Basketball Assoc. of the United States (10th Cir. 1989), the Tenth Circuit overturned a jury verdict in favor of a basketball player who challenged a rule prohibiting a player from participating in amateur events if the player had previously participated in professional games. The Tenth Circuit recognized that the basketball association had an underlying need to maintain control over its sport, and the ASA's intent was to provide that degree of control to such associations.

Similarly, in JES Props., Inc. v. USA Equestrian, Inc. (11th Cir. 2006), the Eleventh Circuit found implied antitrust immunity for the US Equestrian Foundation in imposing a mileage distance for equestrian competitions – restricting certain competitions being held on the same date to be a minimum of 250 miles apart. The Eleventh Circuit, relying on Behagen, held that because the Equestrian Foundation's mileage distance rules were imposed by the organization charged with nationwide governance of the sport, the rule was necessary to preserve the integrity of the sport, and allowing for antitrust liability would be "repugnant to the ASA."

Relying upon both cases, the Ninth Circuit held:

"In light of the broad authority bestowed upon national governing bodies to fund the Olympic Mission, the challenged advertising and logo restrictions precluding advertisers from impinging on this delegated authority falls within the mission to protect the value of corporate sponsorships and maximize sanctioned fundraising. To compel the Olympic Committee and USATF under the antitrust laws to permit any would-be advertiser to sponsor individual athletes without national governing body approval 'would unduly interfere with the operation of the ASA."

As a result, although the ASA is silent on antitrust immunity, the Ninth Circuit becomes the third appellate court to find such immunity.

At base, it appears that nationwide sports-governing bodies are free to make restrictive rules so long as those rules are sufficiently integral to the organizations' mission. We will keep you updated on any upcoming cases and developments in this area.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Bruce D. Sokler
Shawn N. Skolky
 
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