By Emily H. Stone, of Loeb & Loeb
The Olympic Trials for track and field that will determine which athletes represent the United States in the sport at the upcoming Olympic Games in Rio will be held July 1-10 in Eugene, Oregon. Until recently, the two entities central to running and hosting the track and field Olympic Trials —the United States Olympic Committee (USOC) and USA Track and Field (USATF) — were distracted from this mission by a lawsuit hoping to gum up USOC’s control over advertising at the Trials.
In January 2016, the chewing gum company known as Run Gum—a company co-owned by Olympic runner Nick Symmonds and running coach Sam Lapray—filed an antitrust lawsuit against USOC and USATF in the Federal District Court for the District of Oregon. The lawsuit complained that a USOC restriction on logos appearing on athlete attire during the Olympic Trials for track and field violated antitrust laws. The longstanding restriction prohibits athletes from displaying company logos or other advertising on their apparel during their participation in the Olympic Trials. The only exceptions to this restriction are apparel and equipment manufacturer logos (e.g., a Nike logo on Nike-made apparel) and pre-approved track club logos. Run Gum alleged that these exceptions evidenced an antitrust conspiracy to prohibit athletes from obtaining individual sponsorships from non-apparel manufacturers and to prohibit companies like Run Gum from sponsoring athletes at the Trials.
USOC and USATF moved to dismiss the complaint on four, independent grounds. First, that USOC and USATF enjoyed implied antitrust immunity relating to the restriction based upon Congress’ mandate that USOC control the commercial use of the Olympic symbol and fund the United States’ participation in the Olympic Games. Second, that Run Gum failed to allege a plausible agreement in restraint of trade because USATF merely accepted the USOC regulation as a condition of hosting the Olympic Trials. Third, that Run Gum failed to allege a plausible relevant market because the purported relevant market consisting solely of apparel advertising at the Olympic Trials excluded other, obvious alternatives. And fourth, that Run Gum did not adequately plead a conspiracy with apparel manufacturers and other unnamed coconspirators to support a per se antitrust claim because there were no specifics pled as to that conspiracy.
After full briefing and oral argument, District Judge Michael J. McShane issued an 18-page Opinion and Order on May 11, 2016, dismissing the complaint with prejudice. The Court addressed each of the four grounds for dismissal put forth by the USOC and USATF, but ultimately held that
Because Congress charged Defendants with financing the United States’ participation in the Olympics, in part by preserving the value of the Olympic brand, Run Gum’s challenge fails under an implied grant of immunity. USATF and USOC may exercise control over the apparel worn by competitors on the field of competition at the Olympic Trials, particularly as it relates to individual advertisements and sponsorships that would undercut USOC’s fundraising mission.
Notably, this is the first case finding implied antitrust immunity for USOC. The Court drew from three sources to conclude the existence of immunity.
First, the Court pointed to the language of the Ted Stevens Olympic and Amateur Sports Act (the “ASA”), which, among other things, grants USOC with exclusive jurisdiction over all matters pertaining to the United States’ participation in the Olympic games, authorizes the USOC to finance the Unites States’ participation in the games, and grants the USOC exclusive power over the Olympic brand. As noted by the Court, the United States is the only nation that does not federally fund or subsidize its Olympic team’s participation in the Olympics.
The Court also relied on longstanding Supreme Court and Second Circuit authority discussing the USOC’s mission for raising money to fund the United States’ participation in the Olympic Games through exclusive rights to the Olympic brand and symbol.
Lastly, the Court cited to the handful of cases discussing implied antitrust immunity with respect to certain actions by National Governing Bodies (“NGBs”) of particular sports in the United States. NGBs are organized under the ASA to coordinate amateur athletics in the United States. These bodies, USATF among them, are granted “monolithic” control over particular sports by, among other things, establishing governance structures for the sport. Accordingly, rules and regulations of NGBs aimed at minimizing scheduling conflicts and determining athlete eligibility have enjoyed implied immunity from antitrust suit.
Taking these three sources, the Court stated that
The logo restrictions in this case directly implicate USOC’s ability to generate revenue for the United States Olympic Team; allowing any company to advertise on competitor apparel would unduly interfere with USOC’s fundraising mission… [because the restrictions] prevent a dilution of the Olympic brand [and]… bolster the value of USOC’s and USATF’s corporate sponsorships.
The Court concluded that “to the extent Run Gum attempts to associate with the Trials’ public profile and alleged sanctity, it treads on ground that Congress reserved for USOC and USATF,” rejecting Run Gum’s assertion that implied antitrust immunity amounted to a license for USOC to “fix prices with abandon.”
Run Gum has appealed the decision to the Ninth Circuit Court of Appeals. Any decision in that appeal will come well after the 2016 Trials this July.
Stone represents individuals and companies in general commercial litigation, internal investigations and corporate compliance and white collar criminal defense. She also conducts internal investigations and responds to government inquiries, both criminal and civil. In civil matters, she has successfully represented businesses in a broad variety of business and commercial disputes, including claims for fraud, consumer fraud, breach of contract, and violations of state false advertising and gift card laws. Stone has defended clients in both individual and class action disputes. She advises Fortune 500 and other clients concerning gift card and rebate regulation and compliance, as well as unclaimed property issues. She has counseled clients responding to FTC inquiries related to alleged FTC Act and related statutory violations. She has also counseled clients in connection with internal investigations of FCPA issues.
