A federal judge from the District of New Jersey has provided relief, albeit partial, to two National Football League teams, who were sued by a season ticket holder for breach of contract and antitrust violations. While the court allowed the breach of contract count to continue, it granted the defendants’ motion to dismiss the antitrust claims.
The impetus for the lawsuit was the decision of the New York Giants and the New York Jets to require season ticket holders to purchase personal seat licenses as a way to defray the cost of building a new stadium.
Season ticket holder Harold Oshinsky filed a six count complaint seeking relief for violations of state consumer laws, breach of contract, unjust enrichment and violations of antitrust laws.
Both the Giants and the Jets moved to dismiss the claim.
Before entertaining each side’s arguments, the court noted the heightened demand each club has for tickets. “The waiting list for Giants and Jets season tickets is currently over 150,000 and 13,500 people, respectively. For this reason, the Giants and Jets do not sell tickets to individual games. Instead, all tickets are purchased by season ticket holders. The price of season tickets has always been (that is, prior to the upcoming 2010 season) calculated by multiplying the face value of the ticket by the number of games in the season.”
The court added that in the summer of 2008, “the plaintiff and all those similarly situated received notice from the Giants that season ticket renewal procedures were being changed for the 2010 season,” that they would “now be required to first purchase a PSL for each season ticket at a cost of $1,000 to $20,000” if they wanted to maintain their season tickets.” Jets season ticket holders faced a similar ultimatum.
In addressing the defendants’ motions to dismiss, the court focused first on the breach of contract claim.
“The plaintiff alleges that he has two contracts with each team: (1) a contract to purchase a bundle of individual tickets to all pre-season and regular season home games for an established seat location; and (2) an implied option contract to continue to purchase this bundle of tickets in perpetuity,” wrote the court. “It is the latter contract that gives rise to the plaintiff’s breach of contract claim and serves as the central feature in the parties’ dispute.”
The court focused specifically on the renewal rights, noting two cases that were persuasive: Brotherson v. Prof. Basketball Club, L.L.C., 604 F.Supp.2d 1276 (W.D.Wash.2009) and I.D. Craig Serv. Corp., 138 B.R. 490 (W.D.Pa.1992). “Collectively, these cases make clear that season ticket renewal rights can derive expressly from a written agreement or implied through course of conduct. Renewal rights are not, as the defendants’ contend, an ‘unfounded premise.’ Thus, the first issue confronting the court on the defendants’ motions to dismiss is not whether renewal rights can exist at all, but whether they exist under the particular facts of this case.
“In Brotherson, three basketball season ticket holders who renewed their tickets for the 2008 season with the option to renew for the 2009 and 2010 seasons brought an action against the Seattle Supersonics for breach of contract and consumer fraud after the team moved to Oklahoma before the start of the 2008 season. On the plaintiffs’ motion for summary judgment, the court held that but for a factual issue regarding waiver, it would have found the team had breached its renewal rights with the season ticket holders.
“Brotherson is noteworthy for three reasons. First, the court found that a ticket brochure could suffice to create renewal rights for season ticket holders. … Second, the court found that the season ticket agreement, although a license, did not permit the team to revoke season tickets at will. The court reasoned that ‘if a reasonable consumer understood that he or she was buying nothing other than the right to be subject to the unfettered whim of the defendant,’ then no one would have entered into a season ticket contract. Third, the court held that fans’ renewal rights did not require further consideration.
“Similarly, in I.D. Craig, the owner of the Pittsburgh Steelers objected to a bankruptcy trustee’s motion to sell renewal rights to season tickets. Addressing many of the arguments put forth by the defendants in this case, the bankruptcy court granted the trustee’s motion based on a finding that season ticket holders had two distinct contractualinterests; one in the game tickets themselves and the other in the right to renew the season tickets for the following year. According to the bankruptcy court, the concept of renewal rights can be ‘illustrated by analogy to the interest that the holder of a liquor license enjoys.’ The bankruptcy court characterized the season ticket holder’s renewal rights as an ‘expectancy interest’ as opposed to an option contract (as the Brotherson court did), but the overarching reasoning in both I.D. Craig and Brotherson was the same. Furthermore, the I.D. Craig court recognized that the season ticket holder’s renewal rights were implied through course of conduct because the expectation of renewal was ‘created and fostered’ by the Steelers. Id. at 502.
Citing Brotherson and I.D. Craig, the court noted that the plaintiff has “sufficiently alleged renewal rights for both Giants and Jets season tickets. … At this stage of the litigation, this conduct demonstrates that the plaintiff may possess a valuable implied right to renew his season tickets at both the Existing Stadium and the New Stadium.”
Next, the court addressed whether the imposition of PSLs constituted a breach of the plaintiff’s renewal rights.
The plaintiff alleged that the defendants breached his renewal rights in at least two respects: (1) the additional fee required to purchase PSLs; and (2) the default terms imposed by PSLs. The court, however, was unwilling to address this argument until further into the discovery process when “the exact parameters of the plaintiff’s renewal rights (if any) will be defined, and only then can a determination be made as to whether those renewal rights have been breached by the imposition of PSLs.” Thus, it denied the defendants’ motion to dismiss the breach of contract claim.
The court also granted the motion to dismiss the count seeking relief for unjust enrichment, finding that the plaintiff “fails to sufficiently allege how the defendants have unjustly enriched themselves at the plaintiff’s expense.”
Turning to that portion of the complaint that alleges violation of New Jersey’s Consumer Fraud Act, the court again sided with the defendants, noting that the plaintiff “has failed to allege with particularity any misstatements regarding PSLs attributable to the defendants.”
The final substantive count in the plaintiff’s complaint alleged violations of § 1 of the Sherman Act, 15 U.S.C. § 1. Specifically, he alleged that the defendants “illegally restrained trade in two respects: (1) illegally tying the purchase of a PSL to the purchase of a 2010 season tickets; and (2) colluding in the price and maintenance of PSLs.”
“A tying arrangement is ‘an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier.’ The first inquiry in any § 1 tying case is whether the defendant has sufficient market power over the tying product, which requires a finding that two separate product markets exist and a determination precisely what the tying and tied products markets are. To demonstrate separate product markets, Plaintiff analogizes renewal rights to stock options. Stock options and underlying securities are sold on different markets and constitute different financial products. PSLs and season tickets will be sold on different markets after the 2011 season.” Thus, the plaintiff maintains that “renewal rights and season tickets constitute ‘distinct’ products for purposes of his Sherman Act claim.”
However, the plaintiff failed “to satisfy the first element of his tying claim. As a preliminary matter, Plaintiff does not allege any facts, which demonstrate that renewal rights and season tickets are distinct products. Without these necessary facts, the “plaintiff’s allegations amount to nothing more than a legal conclusion insufficient to state a claim.” The court added that the plaintiff’s tying claim “must also be dismissed because Plaintiff has not pled any plausible restraint on trade.”
The court also determined that the second alleged violation of the Sherman Act is unpersuasive. “It is not enough to simply conclude that an agreement exists. The plaintiff offers no facts of any alleged agreement. In fact, the only facts alleged appear to actually contradict the suggestion of an agreement.”
Harold Oshinsky v. New York Football Giants, Inc. et al.; D.N.J.; Civil Action No. 09-cv-1186 (PGS); 11/17/09
Attorneys of Record: (for plaintiffs) Andrew D. Friedman, Glancy Binkow & Goldberg LLP, New York, NY, James V. Bashian, Law Office of James V. Bashian, PC, Hoboken, NJ. (for defendants) Maritza Braswell, Richard Hernandez, Richard Patrick O’Leary, William J. O’Shaughnessy, McCarter & English, LLP, Newark, NJ, Anthony Thomas Wladyka, Elizabeth Anne Figueira, Proskauer Rose LLP, New York, NY.
