The 2nd U.S. Circuit Court of Appeals has affirmed a ruling of a lower court that denied injunctive relief to Madison Square Garden, L.P. owner and operator of the New York Rangers hockey team in a dispute over whether the National Hockey League should have control over the Rangers’ web site.
MSG had sued the NHL for antitrust violation and sought injunctive relief from an NHL-mandated fine until its claim could be considered
The decision echoed a federal judge’s decision last fall.
In that ruling, the court adopted the rule of reason analysis, rather than the quick look doctrine, thereby raising the threshold that MSG would have to overcome in proving its antitrust claim was meritorious.
“The district court did not abuse its discretion in denying injunctive relief,” held the appeals court. “First, it correctly determined that MSG failed to establish a likelihood of success or sufficiently serious questions under ‘quick look’ analysis. ‘Quick look’ is essentially an abbreviated form of rule of reason analysis, to be used in cases in which the likelihood of anticompetitive effects is so obvious that ‘an observer with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect on customers and markets.’ Cal. Dental Ass’n v. FTC, 526 U.S. 756, 770 (1999)); see also Todd v. Exxon Corp., 275 F.3d 191, 207 (2d Cir. 2001). “
“A court must abandon ‘quick look’ and proceed to a full-blown rule of reasons analysis, however, ‘once the defendant has shown a precompetitive justification for the conduct.’ Bogan v. Hodgkins, 166 F.3d 509, 514 n.6 (2d Cir. 1999).” The appeals court agreed with the district court that it “is far from obvious that [the NHL’s ban on independent websites] has no redeeming value.”
Background
At the center of the dispute was the NHL’s desire to create a national brand by bringing all team web sites under its purview and on a single content management system. It also identified other reasons “for the transition, including: ensuring minimum quality standards across team sites; enabling greater interconnectivity; facilitating the sharing of local content; and the creation of a $2 million savings.”
While the NHL was on this path, the Rangers devoted considerable energy through the years to developing its own web site. Ownership was not inclined to turn over what it believed to be a competitive advantage in its own market – where it competes with the New Jersey Devils and New York Islanders – to the league.
The standoff came to a head this fall when the NHL announced it was fining the Rangers $100,000 each day that it operated its website outside of the League platform. The Rangers responded with a complaint for injunctive relief on September 28, 2007.
Specifically, it alleged that the NHL “has become an ‘illegal cartel’ in its attempts to prevent off-ice competition between and among the NHL member clubs. Regarding the New Media Strategy, in particular, the Rangers alleged that there is no competitive justification for ‘seizing’ the Rangers website.”
The district court found that because “I find that the NHL’s New Media Strategy is not a ‘naked restraint’ and that it has pro-competitive virtues, the quick look doctrine is inapplicable.”
MSG’s appeal spawned the instant opinion.
Madison Square Garden, L.P. v. National Hockey League et al.; 2d Cir.; No. 07-4927-cv; 3/19/08
For the summary order, visit here:
http://www.ca2.uscourts.gov:8080/isysnative/RDpcT3BpbnNcU1VNXDA3LTQ5Mjdfc28ucGRm/07-4927_so.pdf#xml=http://www.ca2.uscourts.gov:8080/isysquery/irl4e0b/15/hilite
