A panel of judges from the Second U.S. Circuit Court of Appeals has affirmed the ruling of a district judge that the North American Soccer League, LLC (NASL) is not entitled to a preliminary injunction in its antitrust litigation against the United States Soccer Federation (USSF).
Is so ruling, the panel agreed with the district judge that the NASL had not “demonstrated a clear likelihood of success on the merits of its antitrust claim against USSF under 15 U.S.C. § 1.
By way of background, the appeals court noted that the USSF is the regional governing body for soccer in the United States and Canada. It designates leagues as Division I, II, or III according to USSF’s Professional League Standards (Standards). The Standards establish requirements that a league must meet to gain a divisional designation—also called a sanction—for a season of play. The more competitive the division, the higher the bar. For example, the 2008 Standards required that a Division I league have a minimum of 10 teams distributed in at least three time zones; a Division II league have a minimum of eight teams in at least two time zones; and a Division III league have a minimum of eight teams, with no time-zone requirement.
Soccer leagues apply to USSF to receive annual designations for the upcoming season of play by submitting reports demonstrating their compliance, or plans for compliance, with the Standards. Leagues may submit requests for waivers from compliance with the Standards’ requirements. The USSF Board votes on divisional designations after reviewing the recommendations of USSF’s Professional League Task Force (Task Force). The Board is composed of 15 directors, two of whom are chosen by the professional leagues.
The same process applies for revising the Standards; the USSF Board works in conjunction with a Professional League Standards Task Force (Standards Task Force). Unchanged from 1996 to 2008, the Standards for all divisions were revised in 2008 and 2014, and for only Division II in 2010.
The three most prominent men’s professional soccer leagues have historically occupied their respective divisions in isolation. Major League Soccer, LLC (MLS) has been the only Division I men’s soccer league since MLS’s start in 1995. NASL has existed since 2009 and has operated as a Division II league since 2011. The United Soccer Leagues, LLC (USL) ordinarily has filled the Division III slot. According to NASL, it long has harbored aspirations to compete against MLS in Division I. In contrast, USL has been content as an MLS feeder league.
Like the other leagues, NASL annually applies to USSF for a divisional designation. It operated as a Division II league for the 2011-2017 seasons, receiving compliance waivers for all but one season. Although NASL made a play for a Division I designation for 2016, its application was denied, and NASL operated as a Division II league (with waivers) for that season. For the 2018 season, NASL applied for a Division II designation, requesting waivers for the minimum-team and time-zone requirements. The USSF Board rejected NASL’s Division II application but gave NASL additional time to file for Division III status.
“The NASL then sued the federation contending that it conspired with its membership and related entities in adopting, amending, and applying its standards in an anticompetitive manner to preclude the league and others from competing in the particular division, in violation of § 1 of the Sherman Act, 15 U.S.C.S. § 1,” according to the appeals court.
“The league was properly denied a preliminary injunction because it did not sufficiently show its clear likelihood of success of the merits on its § 1 antitrust claim. In particular, it failed to show a conspiracy from this organizational decision, without more, and in any event, there was no showing of an unreasonable restraint since the federation’s standards could be found to have a net pro-competitive effect or no competitive effect at all.”
North American Soccer League, LLC v. United States Soccer Federation, INC.; 2d Cir.; Docket No. 17-3585, 2018 U.S. App. LEXIS 4343;; 2/23/ 17
Attorneys of Record: (for Plaintiff-Appellant) JEFFREY L. KESSLER, Winston & Strawn LLP, New York, NY (David G. Feher, New York, NY; Steffen N. Johnson, Heather L. Kafele, Christopher E. Mills, Washington, D.C., on the brief), (for Defendant-Appellee) GREGORY G. GARRE, Latham & Watkins LLP, Washington, D.C. (Lawrence E. Buterman, New York, NY; Christopher S. Yates, San Francisco, CA, on the brief).