A federal judge from the Northern District of California dismissed a lawsuit brought by a “professional wrestling company,” which alleged that World Wrestling Entertainment, Inc. (“WWE”) violated antitrust laws.
Specifically, the court found that MLW Media LLC’s (“MLW”) allegations were “insufficient to plausibly allege a relevant product market.”
By way of background, MLW claimed it is in “the business of promoting sporting events, particularly live events, programming, and digital content related to professional wrestling.” The plaintiff also alleged that it competes with WWE and non-parties All Elite Wrestling (“AEW”) and Impact Wrestling (“Impact”) for distribution channels—e.g., television networks, cable, and streaming services—for professional wrestling content.
WWE is the dominant player in the wrestling content industry. According to MLW, WWE has used its media rights contracts with major networks and distribution channels to lock in those networks so that they only offer WWE content, which gives WWE content more favorable time slots and marketing opportunities.
“MLW alleges that WWE used its stature to harm MLW’s business prospects on at least two occasions,” wrote the court. Thus, it alleges “intentional interference with contractual relations; intentional interference with prospective economic relations; violation of Section 2 of the Sherman Antitrust Act; and violation of California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200, et seq. Compl. ¶¶ 53-81.”
In response to MLW’s lawsuit, the defendant moved to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6).
The court noted that the only claim over which it has original subject matter jurisdiction is the alleged violation of Section 2 of the Sherman Act. Compl. ¶ 15; 28 U.S.C. § 1337.
“WWE argues that MLW’s Sherman Act claim should be dismissed because MLW does not plausibly allege (1) a relevant market; (2) monopoly power; or (3) antitrust injury,” wrote the court.
“Antitrust law requires [an] allegation of both a product market and a geographic market.” Newcal Indus., Inc. v. Ikon Office Sol., 513 F.3d 1038, 1045 n.4 (9th Cir. 2008). “[T]he plaintiff must allege both that a ‘relevant market’ exists, and that the defendant has power within that market.” Id. at 1044; see also Tanaka v. Univ. of S. Cal., 252 F.3d 1059, 1063 (9th Cir. 2001) (“Failure to identify a relevant market is a proper ground for dismissing a Sherman Act claim.”).
Moreover, the court noted that “although the definition of a relevant market for antitrust purposes is typically a factual inquiry, an antitrust claim may be dismissed under Rule 12(b)(6) if the plaintiff’s relevant market definition is ‘facially unsustainable.’ Newcal, 513 F.3d at 1045 (citing Queen City Pizza, Inc. v. Domino’s Pizza, Inc., 124 F.3d 430, 436-37 (3d Cir.1997)); see also Apple, Inc. v. Psystar Corp., 586 F. Supp. 2d 1190 (N.D. Cal. 2008).”
“A relevant product market must ‘encompass the product at issue as well as all economic substitutes for the product.’ Newcal, 513 F.3d at 1045. ‘Where the plaintiff fails to define its proposed relevant market with reference to the rule of reasonable interchangeability and cross-elasticity of demand, or alleges a proposed relevant market that clearly does not encompass all interchangeable substitute products even when all factual inferences are granted in plaintiff’s favor, the relevant market is legally insufficient and a motion to dismiss may be granted.’ Queen City Pizza, 124 F.3d at 436; see also Reilly v. Apple Inc., 578 F. Supp. 3d 1098, 1109 (N.D. Cal. 2022) (‘[W]here the plaintiff fails to define its proposed relevant market with reference to the rule of reasonable interchangeability and cross-elasticity of demand, . . . the relevant market is legally insufficient.’)”
“MLW alleges that the relevant antitrust market is the ‘the national market for the sale of broadcasting rights for professional wrestling programs to networks, cable and streaming services.’ WWE does not dispute the geographic market of the United States. WWE does, however, argue that MLW has not plausibly alleged facts supporting its proposed product market, particularly due to the lack of allegations about the structure of the television and streaming industries, the production of professional wrestling programming, and the unavailability of reasonably interchangeable alternatives to professional wrestling content. In response, MLW asserts that it is not required to include express allegations regarding the cross-elasticity of demand or the absence of reasonably interchangeable products, that products with potentially interchangeable substitutes can nonetheless constitute a relevant antitrust submarket, and that WWE’s arguments ‘at most raise factual issues that cannot be decided on a
motion to dismiss.’”
The court found that MLW’s argument need not allege cross-elasticity of demand and the absence of “reasonably interchangeable alternatives” to professional wrestling programming is “unavailing.”
The court elaborated, noting that MLW “has not included sufficient facts to plausibly allege a relevant antitrust product market. Regarding the proposed market, the complaint alleges only that there are four competitors in the ‘United States professional wrestling market;’ that the ‘business of promoting professional wrestling as sports entertainment is fundamentally a media industry, with revenues and business valuations driven largely by fees obtained from broadcasting rights deals;’ and that corporations such as NBCUniversal and Fox Sports ‘purchase broadcasting rights in the (proposed market) for their various distribution channels such as broadcast networks, cable and satellite services, streaming networks, and film production companies.’”
“These facts, as pled,” according to the court, “are not sufficient to provide an understanding of the characteristics of the relevant market, including the existence or lack of substitutes.”
The Attorneys of Record are as follows: For MLW Media LLC, Plaintiff: Jason Takenouchi, LEAD ATTORNEY, Kasowitz Benson Torres LLP, Ste 3000, San Francisco, CA; Nicholas Rendino, PRO HAC VICE, Christine Montenegro, Kasowitz Benson Torres LLP, New York, NY; Marc Elliot Kasowitz, PRO HAC VICE, Kasowitz Benson Torres and Friedman LLP, New York, NY.
For World Wrestling Entertainment, Inc. Defendant: Daniel William Fox, LEAD ATTORNEY, K&L Gates LLP, San Francisco, CA; Jerry S McDevitt, LEAD ATTORNEY, PRO HAC VICE, K&L Gates LLP, Pittsburgh, PA; Christopher S. Finnerty, PRO HAC VICE, KL Gates LLP, State Street Financial Center, Boston, MA; Derek Kelley, PRO HAC VICE, K&L Gates LLP, Washington, DC; Morgan T. Nickerson, PRO HAC VICE, K&L Gates LLP, State Street Financial Center, Ste 17, Boston, MA.
MLW Media LLC v. World Wrestling Ent., Inc.; N.D. Cal.; Case No. 22-cv-00179-EJD; 2/13/23
