The Debate Regarding Fantasy Sport Leagues Rages On: CBSI Sues the NFLPA
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February 2009 The Metropolitan Corporate Counsel Page 29 The Debate Regarding Fantasy Sport Leagues Rages On: CBSI Sues The NFLPA Scott L. Walker The Current Dispute: Fantasy market.10 and Matthew Savare Football The NFLPA denies that there has During oral argument before the been any anticompetitive activity and has moved to dismiss CBSI’s monopo- LOWENSTEIN SANDLER PC Eighth Circuit on the CBC case, Chief Judge James Loken suggested that lization claim. That motion raises sev- Advanced Media may have engaged in eral grounds for dismissal – including Fantasy sports products, spurred by anticompetitive activity, stating: the court’s alleged lack of personal juris- dictional over an indispensable party the Internet and mobile devices, have If your clients have the exclusive and CBSI’s failure to meet the height- enjoyed exponential growth in the last Scott L. Matthew rights to license the purveyors of ened Twombly pleading standards.11 But decade. Today, more than 27 million Walker Savare the billion and a half [dollar a year] the NFLPA’s principal substantive argu- people participate in fantasy sports fantasy sports world, we’re looking ment is that, under the Noerr-Penning- leagues in the United States and annual in connection with all interactive media. at concerted action by owners and ton Doctrine, it has rights under the First revenue for the industry approximates Under that agreement, Advanced Media players to monopolize a collateral 1 Amendment that render it immune from $1 billion. Such explosive growth has began providing fantasy baseball games market through conduct that’s not antitrust liability because of the brought with it disputes over the rights on its website, MLB.com. protected by the labor anti-trust NFLPA’s “objectively reasonable efforts to player statistics and profiles. After executing this exclusive exemption. to litigate intellectual property rights, In the latest battle, CBS Interactive license, Advanced Media elected not to Although antitrust issues were not and attendant efforts leading up to such (“CBSI”) sued the NFL Players Associ- renew CBC’s license to offer its own before the Eighth Circuit at that time, litigation.”12 More particularly, the ation (“NFLPA”) in Minnesota federal fantasy baseball products. CBC – claim- court on September 3, 2008 alleging, Judge Loken’s statement was – it seems NFLPA claims it is shielded from ing that it had a reasonable apprehension – an invitation for another party to raise antitrust liability because it had a rea- among other things, that the NFLPA it would be sued by Advanced Media if monopolized – or at least tried to such claims in the next fantasy sports sonable belief that it could prevail in a it continued to offer its unlicensed fan- monopolize – the fantasy football mar- legal dispute. Just 15 months later, CBSI suit against CBSI. tasy products – sued Advanced Media in ket by compelling CBSI to purchase a took up that invitation, bringing suit federal district court in Missouri for a against the NFLPA claiming, inter alia, Conclusion license to use NFL player statistics for Seemingly emboldened by CBC’s CBSI’s fantasy sports products. CBSI declaration that CBC was not infringing violations of the Sherman Act based on the players’ rights of publicity. The dis- the NFLPA’s alleged efforts to extract legal triumph, CBSI is employing the seeks a declaration that the NFLPA’s sports adage that the best defense is a conduct violates the Sherman Act and trict court granted CBC summary judg- nationwide monopoly royalty fees for ment, holding that CBC did not use the CBSI’s use of NFL player statistics. good offense. Having scored a victory that CBSI’s business does not violate regarding player’s publicity rights, pur- any player publicity rights that the players’ names as symbols of their iden- The background of the parties’ dis- tities and with an intent to obtain a com- pute is straightforward. CBSI – which veyors of fantasy sports products now NFLPA may own or control. seek to use antitrust law to chip away at mercial advantage, as is required under does business under the domain name Less than a week after CBSI filed rights claimed by professional sports suit, the National Football League Play- Missouri law. The district court also held “CBSSports.com” – refused to pay the NFLPA nationwide license fees for leagues and players’ associations. But ers Incorporated (“NFLPI”) filed a that even if CBC were infringing the given the procedural posture of these countersuit in the United States District players’ publicity rights, the First CBSI’s use of NFL player names and statistics; the NFLPA, in turn, threatened cases and the large sums of money Court for the Southern District of Amendment preempted those rights. involved, it is evident that we are only in Florida2 claiming that CBSI’s unautho- On appeal, the Eighth Circuit suit. But before the NFLPA could make good on that threat, CBSI initiated its the early innings of a protracted battle. rized use of player “names, images, like- rejected the district court’s principal own action in a Minnesota federal dis- nesses, photographs, statistics and bio- analysis,3 but still affirmed the outcome, trict court. CBSI’s complaint sets forth graphical information” in connection holding that the First Amendment super- four claims, three of which seek declara- with its fantasy football games, violates seded the players’ publicity rights. In so NFL players’ publicity rights, which are tions regarding the publicity rights that holding, the court emphasized that the the NFLPA has asserted (i.e., that those exclusively licensed by the NFLPI. The information CBC used was in the public 1 Ben Klayman, at Technology Spurs Growth of Fan- rights are preempted by the First tasy Sports in U.S., REUTERS, (Sept. 25, 2008), NFLPI seeks damages, an injunction domain, that fantasy games are pro- Amendment and federal copyright law http://www.reuters.com/article/sportsNews/idUS- preventing CBSI from using the dis- tected entertainment speech, and that “it puted items in connection with its fan- and that CBSI has not violated whatever TRE48O02L20080925. would be strange law that a person 6 2 The NFLPI claims that venue is proper in the tasy football business, and a declaration rights the NFLPA may have). The would not have a [F]irst [A]mendment Southern District of Florida based on, among other that it is not violating the Sherman Act. fourth claim alleges that the NFLPA things, CBSSports.com’s headquarters being based The Minnesota and Florida actions right to use information that is available monopolized and/or attempted to in Ft. Lauderdale, Florida. See complaint filed in NFLPI v. CBSI, No. 08-22504-civ (“Florida Com- are the latest lawsuits involving the to everyone.” The court also reasoned monopolize the market for “[t]he cre- that CBC’s use of the players’ names ation and maintenance of NFL fantasy plaint”) at ¶ 5. rights to player profiles and statistics. 3 The Eighth Circuit ruled that CBC’s use of names What differentiates these litigations and performance data would in no way football games, and the provision of alone was sufficient to establish players’ identity from prior ones, however, is the antitrust diminish the players’ economic incen- related information services” in the under Missouri law and that since CBC used the United States (the “NFL Fantasy Foot- names for purposes of profit, it was using the iden- component. tives to play professional sports or hin- tities for commercial advantage. 505 F.3d 818 (8th 7 der their ability to earn lucrative ball Market”). Cir. 2007), cert. denied, 2008 WL 512723 (Jun. 2, Background: The MLB Litigation endorsement deals. Advanced Media CBSI’s monopolization claim raises 2008). From 1995 through late 2004, C.B.C. appealed the Eighth Circuit’s decision to issues that do not appear to have been 4 Florida Complaint at ¶ 67. Distribution and Marketing, Inc. the United States Supreme Court, which squarely addressed by any federal court. 5 Id. (“CBC”) licensed from the Major CBSI claims that the NFLPA wrongfully 6 CBSI has moved for partial summary judgment on denied certiorari. its publicity rights claim asserting First Amendment League Baseball Players Association Although the Eighth Circuit’s ruling “seeks to extract monopoly profits from preemption, which the NFLPA has opposed. The (“MLBPA”) the right to use the names and the Supreme Court’s refusal to hear the entire industry by charging licensing NFLPA has also brought several motions, including ones to transfer venue to Florida, for lack of per- and statistics of major league baseball the appeal arguably provided some clar- fees for the use of publicly available i.e sonal jurisdiction, and to dismiss CBSI’s antitrust players in connection with CBC’s fan- ity on the rights of fantasy leagues to use information [ ., the names and statis- claim. Those motions were scheduled to be argued tics of NFL players] and . threatening on January 28, 2009. tasy baseball league. In 2005, after player names and performance informa- objectively baseless litigation against 7 See complaint filed in CBSI v. NFLPA, No. 08-cv- CBC’s license agreement expired, the tion, the NFLPI claims in its Florida MLBPA licensed to Major League Base- businesses that do not succumb to its 5097 (D. Minn.) (“Minnesota Complaint”) at ¶¶ 31- action that the ruling in the CBC case 32. demands.”8 CBSI also alleges that the ball Advanced Media, L.P. (“Advanced 8 Id. at ¶ 33. does not apply to its dispute with CBSI. NFLPA threatened to exclude CBSI Media”) the exclusive right to the play- 9 Id. at ¶ 34. Specifically, the NFLPI notes that the from the NFL Fantasy Football Market – ers’ names and performance information 10 Id. at ¶ 40. CBC holding is not binding on the which, CBSI claims, and the NFLPA Florida district court and that the 11 NFLPA’s Memorandum of Law in Support of Scott L.