The 6th U.S. Circuit Court of Appeals has affirmed a district court ruling dismissing the claim of a race track, which had alleged that NASCAR and International Speedway Corporation violated antitrust laws by preventing the track from obtaining one of NASCAR’s coveted Sprint Cup races.
Among the key findings by the court was that the trial court acted appropriately in excluding expert testimony, which prevents the Kentucky Speedway from defining the relevant markets, a prerequisite for success on an antitrust claim. Second, it found that NASCAR and ISC did not prevent the plaintiff from purchasing other tracks that hosted Sprint Cup races.
Kentucky Speedway sued in 2005, alleging specifically that that NASCAR and the International Speedway Corporation violated Sections 1 and 2 of the Sherman Antitrust Act. Specifically, it claimed (1) unlawful monopolization of the Sanctioning Market by NASCAR under § 2, (2) illegal conspiracy in restraint of trade by NASCAR and ISC under § 1 (involving an alleged conspiracy between themselves and “other companies that control tracks hosting NASCAR-sanctioned events”), (3) conspiracy to monopolize the Hosting and Sanctioning Markets under § 2 (based on the same allegations as the § 1 conspiracy), and (4) attempted monopolization of the Hosting Market by ISC under § 2.
After the defendants moved for summary judgment, the court held that “there was insufficient evidence supporting KYS’s definitions of the hosting and sanctioning markets because the reports and deposition testimony of KYS’s experts could not withstand scrutiny under the Supreme Court test laid out in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Alternatively, the court concluded that KYS’s suit was indistinguishable from a straightforward ‘jilted distributor’ case, meaning that KYS could not survive summary judgment because KYS had failed to establish an antitrust injury.”
The plaintiff appealed the ruling. The panel of judges looked first at the decision to exclude the expert testimony. Once it found that there had been no abuse of discretion, the plaintiff’s appeal had been effectively crippled.
“In short, without (the expert’s) testimony, KYS lacks the ability to define the relevant markets necessary to succeed on its claims. See Verizon Commc’ns., Inc. v. Law Offices of Curtis Trinko, LLP, 540 U.S. 398, 407 (2004) (holding that a claim under Section 2 of the Sherman Act requires “the possession of monopoly power in the relevant market”) (emphasis added); Worldwide Basketball, 388 F.3d at 959 (listing the requisite elements for a claim under Section 1 of the Sherman Act, the second being unreasonable restraint of trade “in the relevant market”) (emphasis added); see also NHL Players’ Assoc. v. Plymouth Whalers Hockey Club, 325 F.3d 712, 719-20 (6th Cir. 2003) (“Failure to identify a relevant market is a proper ground for dismissing a Sherman Act claim.”).
Another key finding was that the plaintiff had failed to show that “NASCAR and ISC are legally capable of conspiring with each other. Courts have barred antitrust actions against companies under common ownership or companies that exhibit a unity of interest,” held the panel.
Finally, the plaintiff failed to show that “its failure to obtain a Sprint Cup race constitutes an antitrust injury.”
“We question KYS’s allegation that NASCAR’s refusal to grant KYS a Sprint Cup race constitutes an antitrust injury because there are many considerations relevant to the quintessential business judgment of whether expanding the Sprint Cup to northern Kentucky makes economic sense in developing the NASCAR brand on a national basis,” wrote the court, citing Expert Masonry, Inc. v. Boone County, Ky., 440 F.3d 336, 347 (6th Cir. 2006)
“KYS has also failed to put forth persuasive evidence that NASCAR and ISC are colluding to drive KYS out of business, especially in light of the healthy source of revenue that KYS reaps from NASCAR continuing to sanction both the Craftsman Truck races and the Busch series at the KYS facility.
“Likewise, KYS’s contention that its inability to purchase an independent racetrack because NASCAR, ISC, and SMI have colluded against it is unsupported by the record. KYS does not appear to have been hampered in its efforts to bid for an independent track, and even if KYS should have won the bid, antitrust law does not require that sellers of independent tracks make good business decisions. See id.
“In this regard, there is a serious question as to whether KYS is simply a ‘jilted distributor’ that NASCAR bypassed as a host for a Sprint Cup race in favor of its competitors. See, e.g., Care Heating & Cooling, Inc. v. Am. Standard, Inc., 427 F.3d 1008, 1014-15 (6th Cir. 2005) and Dunn & Mavis, Inc. v. Nu-Car Driveaway, Inc., 691 F.2d 241, 243 (6th Cir. 1982)).
“These cases strike us as analogous to the circumstances faced by KYS in the present case, and they cast doubt on whether KYS’s failure to obtain a Sprint Cup through NASCAR’s application process is ‘an injury of the type the antitrust laws were intended to prevent.’ See Brunswick Corp., 429 U.S. at 489.”
Attorneys for the defendants were quick to celebrate the victory.
“The court’s ruling asserts what we and our client have believed all along,” said Fulbright & Jaworski Partner Guy Wade, who co-led the Fulbright team with Partner Rodney Acker in representing ISC. “This case lacked legal and factual merit.”
“We are pleased with the Sixth Circuit’s decision which confirms that NASCAR, like other sports leagues, is legally permitted to make business decisions about the locations of its events,” said Helen Maher of Boise, Schiller & Flexner.
Kentucky Speedway, LLC v. NASCAR et al.; 6th Cir.; No. 08-5041; 12/11/09
Attorneys of Record: (for eppellant) Charles Frederick Rule of Cadwalader, Wickersham & Taft LLP, Washington, D.C.. (for appellees) David Boise of Boise, Schiller & Flexner LLP, Armonk N.Y.
