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Court Sacks Photographers’ Antitrust Claims Against the NFL and its Member Teams

Allegations of conspiracy to restrain trade and exclusive dealing may read like textbook antitrust claims, but if the allegations are made by a plaintiff who is not an “efficient enforcer” of the antitrust laws, the complaint is vulnerable to a motion to dismiss.  In Spinelli et al. v. Nat’l Football League et al., No. 13 Civ. 7398 (S.D.N.Y.), Judge Robert W. Sweet of the Southern District of New York applied the Second Circuit’s four factors to determine whether a plaintiff is an efficient enforcer (the directness or indirectness of the plaintiff’s alleged injury, the existence of a class of persons motivated to enforce the antitrust laws, the speculativeness of the alleged injury and the difficulty of apportioning damages among direct and indirect victims) and dismissed the antitrust claims of professional photographers against the NFL, its teams, and others.

Spinelli involved two sets of contracts.  Plaintiffs were photographers who licensed their sports photos to the photo agencies Getty Images and the Associated Press for commercial and editorial sublicensing.  The NFL contracted on behalf of its member teams with Getty (and later with the AP) to be the exclusive agent for licensing NFL-related photos to the NFL’s sponsors and to media organizations.  Plaintiff photographers alleged that the NFL demanded its exclusive licensing agents (first Getty and then the AP) provide NFL-related photos to the NFL and its teams on a complimentary basis—including the photos plaintiffs had licensed to Getty and AP.

Plaintiffs alleged a conspiracy of the NFL, its teams, Getty, and the AP to restrain trade in the alleged product market for commercial licensing of NFL-related photos.  They claimed lost revenues both because (1) the NFL had selected one exclusive licensing agent for all teams, reducing competition in the alleged market; and (2) Getty and the AP allowed complimentary use of plaintiffs’ photos.  Judge Sweet concluded that the alleged product market was not plausible (because the complaint failed to address the interchangeability for commercial uses of NFL-related photos and photos of other professional sports) but he made plaintiffs’ lack of antitrust standing the principal basis for dismissing the antitrust claims.

First, the court held that plaintiffs did not have an antitrust injury. They were neither direct competitors nor consumers in the alleged market for commercial licensing of NFL-related photos but merely supplied photos to market participants like Getty and the AP.  Suppliers generally cannot bring antitrust claims because their injuries are considered too indirect.  That was the circumstance here, the court observed, because the injury plaintiffs alleged was that they received insufficient royalties for their photos from the business conducted by Getty and the AP.  That injury to plaintiffs’ economic interest did not affect competition (price, output, quality) in the alleged product market.

Second, the court determined that there were directly affected market participants who were better situated to bring the claims alleged by the plaintiffs.  That entities such as the competitors of Getty and the AP had not brought suit themselves was “telling” for the court.

Third, the court rejected as “too speculative” plaintiffs’ theories that Getty and the AP would have negotiated better terms with individual teams rather than with the NFL, and that plaintiffs would have negotiated better terms for themselves with Getty and the AP if the NFL did not use an exclusive licensing agent.

Finally, the court noted that plaintiffs’ claims raised “complex and difficult” questions regarding damages, and that identifying and apportioning damages among direct victims (Getty, the AP, and their competitors) and indirect victims like plaintiffs would be “virtually impossible.”

Spinelli serves as a reminder to antitrust defendants to scrutinize the plaintiff as well as the plausibility of the alleged conduct and the alleged product market.  As the nexus between a plaintiff, her asserted injury, and the alleged antitrust violation becomes more attenuated, the less likely the plaintiff is to get past the pleading stage.