A federal judge has granted in part The National Hockey League’s motion for summary judgment in a case in which it was sued by Madison Square Garden L.P., the owner of the New York Rangers, for antitrust violations.
Specifically, the court found that while a release and limitation of liability signed by MSG mitigates the scope of its lawsuit, the portion pertaining to new media should survive the release.
Nevertheless, it wrote that “MSG faces a tall order in making its case. This Court has already observed that agreements among parents of a joint venture not to compete in the market in which a joint venture operates have generally been upheld.”
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 in the fall of 2007 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 “the NHL’s New Media Strategy is not a ‘naked restraint’ and that it has pro-competitive virtues, the quick look doctrine is inapplicable.”
The 2nd U.S. Circuit Court of Appeals then affirmed that ruling in early 2008. Emboldened by that decision, the NHL moved to dismiss the plaintiff’s claim or at least for partial summary judgment.
Central to the NHL’s motion was a consent agreement with the club in which it agreed “to be bound by the NHL Constitution, By-laws, and all League Rules and Regulations and to honor the League’s territorial allocations and restrictions, including as they relate to MSG’s cable operations.
“The Consent Agreements also contained a ‘Release and Limitation of Liability.’ Specifically, the 2005 Agreement provided:
“‘As partial consideration for the NHL providing the consents contained herein, each of the Transaction Parties . . . hereby forever releases and discharges the NHL, each of the other NHL Entities, [and] all of the Member Clubs . . . from any and all claims, demands, causes of action, and liabilities of any kind whatsoever (upon any legal or equitable theory, whether contractual, common-law, statutory, decisional, Canadian, United States, state, provincial, local or otherwise) . . . , which, to the best knowledge of such Transaction Party, exist as of the date of execution of this Consent Agreement by reason of any act, omission, transaction or occurrence taken or occurring at any time up to and including the date of the execution of this Consent Agreement, relating to, or arising from, any hockey operations or any NHL activity, including without limitation, the performance, presentation or exploitation of any hockey game or hockey exhibition or in respect of the Proposed Transactions . . . .’
Madison Square Garden, L.P. v. National Hockey League et al.; S.D.N.Y. ; 07 CV 8455 (LAP), 2008 U.S. Dist. LEXIS 80475; 10/10/08
Attorneys of record: (for plaintiff) Meir Feder, Robert W. Gaffey, William J. Hine, LEAD ATTORNEYS, Jones Day (NYC), New York, NY; Glen D. Nager, PRO HAC VICE, Jones, Day, Reavis & Pogue, Washington, DC; Joe Sims, Thomas F. Cullen, Jr., Jones Day (DC), Washington, DC; Thomas Demitrack, Jones Day, Cleveland, OH. (for defendants) Shepard Goldfein, LEAD ATTORNEY, Skadden, Arps, Slate, Meagher & Flom LLP (NYC), New York, NY.