The opinion of the court was delivered by: NEWCOMER
Findings of Fact and Conclusions of Law
NEWCOMER, J.: Topps Chewing Gum, Inc., is the sole significant manufacturer and seller of baseball cards in the United States. Fleer Corporation, a competing bubblegum manufacturer, has sued under the antitrust laws to obtain the right to sell baseball cards in competition with Topps, alleging that Topps and the Major League Baseball Players' Association have unlawfully restrained trade in baseball cards. After trial of the action, the Court has determined that Topps and the Players Association have restrained trade in the baseball card market in violation of § 1 and § 2 of the Sherman Act. The Court makes the following Findings of Fact and Conclusions of Law pursuant to Rule 52(a), F. R. Civ. P.
1. The plaintiff, Fleer Corporation, is a Delaware corporation whose principal place of business is Pennsylvania. The company manufactures bubble gum, candy, toys and novelties primarily for sale to children.
2. Topps Chewing Gum, Inc., one of the two defendants in this case, is a New York corporation with offices in New York City. Its principal manufacturing and distribution facility is in Duryea, Pennsylvania. Topps, like Fleer, manufactures bubble gum, candy and novelties primarily for sale to children.
3. Defendant Major League Baseball Players Association is a labor organization whose primary responsibilities are to negotiate, administer and enforce collective bargaining agreements reached with baseball team owners on behalf of the players.
4.This is an antitrust action brought by Fleer against Topps and the Players Association. Fleer alleges that Topps and the Association have monopolized and unlawfully restrained trade in baseball cards in violation of §§ 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2.
5. Topps is the only significant seller of baseball cards in the United States.It is the only company that sells baseball cards in the form with which the public is most familiar -- a package of about ten baseball cards containing one piece of bubble gum. (P-241).
6. Topps's best-known product is "Bazooka" bubble gum, but the company also produces a great variety of other products. Those products include "Garbage Candy" (candy sold in a miniature plastic garbage can); "Crunchy Lunch"; "Ring Pop"; "Krypton Gum"; and a variety of editorial (non-sports) trading cards such as "The Incredible Hulk", "Charlie's Angels", "Superman", and others.
7. Thpps also manufactures and sells football cards, basketball cards and hockey cards, which like baseball cards are sold only in the part of the year during which a given sport is played.
8. In 1978, Topps's total domestic and foreign sales were about 67 million dollars. Fleer's total sales were about 15.2 million dollars.
9. Fleer's best-known products are "Dubble-Bubble" bubble gum, and "Gatorgum", a soft chewing gum that is designed to help quench thirst. The company has also marketed products such as "Fireplugs", "Mr. Bones" (hard candies in a plastic coffin), and "Bubble Burger" (bubble gum shaped like a hamburger), among others.
10. Since 1966, Topps has entered into a baseball card contract with virtually every new player entering professional baseball at either the minor or major league level.
11. Every contract between Topps and a player is and has been on a standard form contract (P-54, P-55, P-56), which grants Topps the exclusive right to sell that player's name and picture "alone or in combination with chewing gum, candy and confection, or any of them", for the first five baseball seasons in which that player is in the major leagues, no matter when those seasons occur.
12. Topps's form contract forbids a player from granting to another any of the rights covered by the contract before that contract expires. As a result, competitors are not able to secure baseball card rights from players fora period beginning at the expiration of the Topps contract. The best that a competitor can do is to solicit an agreement that the player will not renew his contract with Topps, which would give the competitor an opportunity to make an offer for the rights at the expiration of the Topps agreement.
13. It has been and remains Topps's practice to renew its contracts with major league players every other year. Renewals are for two year periods, and are solicited by Topps sometime before opening day, whenever a player has less than five (i.e. four) seasons remaining on his contract with Topps. Virtually all major league players sign such renewals. As a result of the renewals, about 50% of the players (at the beginning of the season) are obligated to Topps for five playing seasons, and about 50% (at the beginning of the season) are obligated to Topps for six playing seasons.
14. In 1966, the Players Association hired Marvin Miller as its first full-time executive director. Mr. Miller's background is in labor relations, and he assumed his position primarily to organize the players' collective bargaining efforts. However, upon his arrival in 1966 he found that the Association was facing a temporary financial emergency.
15. The Association needed funds to pay for its new office space in New York City, and to pay the salaries of a small staff of three or four persons. The solution that Mr. Miller devised was to finance the Association's activities through a group licensing program with the Coca-Cola Company. Coca-Cola wanted to place a series of pictures of 500 major league players on the inside of its bottle caps, and it asked the Association to obtain the necessary authorizations from the players. The Association did so, Coca-Cola paid the Association for those rights, and the funding crisis was resolved.
16. After the Players Association began to collect membership dues, it decided to return licensing income to the players. TheCoca-Cola license was such a success that the Association decided to continue group licensing on a routine basis. Miller originally conceived the group licensing effort as a stop-gap funding effort, but the players were so pleased with the income that it generated, that they insisted on retaining it on a permanent basis.
17. The commercial authorization is a contract by which each player grants the Players Association the exclusive right to use his picture, name and signature with other players in a group. In turn, the Association grants exclusive group licenses to various merchandisers. (P-8).
18. Virtually every player now in the major leagues is a party to a commercial authorization. The standard commercial authorization is distributed to the players in spring training with an Association dues check-off authorization. The commercial authorization has a three year term. Renewals are obtained by a team's player representative, i.e. the player on a team who acts as the union's "shop steward". The record is silent as to how often renewals are obtained, but it is apparent, first, that many players sign at the same time, as part of a group; second, that the player representative determines when renewals are appropriate; and third, that renewals are not necessarily obtained near the end of a player's three-year term.
19. The standard commercial authorization reads in pertinent part as follows:
[The]undersigned hereby exclusively authorizes the Major League Baseball Players Association to market rights, together with other Major League players as a group, to the use of his name, picture (still photographs, motion pictures or television, except for Club publicity purposes) and signature. It is understood that such rights will be sold for the players as a group on an exclusive basis and shall not involve a personal endorsement by any individual.
It is also understood that monies received by the Major League Baseball Players Association for the sale of such group rights will be used to defray the cost of operation of the Players Association and that such monies will be credited to the undersigned individuals as dues paid to the Association.
Any monies earned from the sale of such group rights which exceed the budget of the Association shall be distributed among all members of the Association who have authorized the sale of such rights.
Any group licensing contract entered into with an individual company for the promotion of its products, shall exclude players who are committed by contract to competitive products. In the event any such company is interested in securing a personal endorsement, it is understood that such endorsement will require the personal approval of the individual involved and a separate payment directly to him.
This authorization shall be for a three year period.
20. The Players Association construes its commercial authorizations to mean that a merchandiser cannot negotiate individually with players to obtain a group of contracts. Topps and bat and glove manufacturers are not subject to that interpretation because they contract individually with players for endorsement or marketing rights while the players are still in the minor leagues. Virtually all players therefore sign their first commercial authorizations after they are already under contract to Topps and the glove and bat companies.
21. On many occasions between 1971 and 1976 the Players Associationadvised persons or companies who engaged in direct solicitation of marketing rights from players that the Association is the exclusive agent for group licenses for all major league players, and that those persons or companies should desist from direct solicitation of the players. (Miller Dep. 346).
It has come to [our] attention that you have been soliciting major league players, coaches and managers to grant permission to have their pictures used in connection with a baseball card collector set.
The Major League Baseball Players Association is the exclusive assignee of the players, coaches and managers with regard to their property rights in connection with group promotions and group commercial endeavors. A project such as yours cannot be undertaken without a license to do so from the Players Association. In any event, however, a license cannot be granted to you since Topps Chewing Gum, Inc. is by contract our exclusive licensee for baseball cards either sold alone or together with confectionery products. In addition, the individual players, managers and coaches have contracts with Topps granting that company the exclusive rights noted above.
You are hereby instructed to cease and desist from all your activities in this regard. Should you fail to do so immediately, we will bring an appropriate action for damages and injunctive relief. (P-62).
23. The Players Association holds all of the rights that are available to license a non-confectionary baseball card product, since the Association's contracts with its members prevent a competitor from engaging in direct solicitation of contracts from the players. Moreover, the Association has an extraordinary degree of cooperation from its members in the licensing area, and is able to enforce its rights.
24. The major leagues are an open shop. Major league players are not required to join the Players Association. Nevertheless, only three active major league players have declined to join the Association in the past 13 years.
25.In late 1966, Marvin Miller met with the president of Topps, Joel Shorin, to discuss the terms of Topps's contracts with the players. Miller was concerned that the players were not receiving sufficient compensation for the rights they were granting.
26. At that time, Topps paid each minor league player $5.00 for his signature on an initial contract, and $125.00 for each season he was in the major leagues for 31days, or for any year in which his picture was used in a baseball card series. Topps paid no royalty. Miller told Shorin that Topps's contracts were unfair to the players; Shorin disagreed.
27. Miller and Shorin continued their discussions, but Topps was unwilling to give up any of its rights. During a meeting among Marvin Miller, Joel Shorin and a prospective licensee of the Players Association, Shorin refused even to define the limits of Topps's rights. Topps nevertheless threatened legal action if those rights were infringed. (P-15)
28. In February of 1968, Miller related the difficulties he had been having with Topps to the Executive Board of the Players Association. (The Executive Board is the Association's governing body. It consists primarily of designated player representatives). The Executive Board voted to recommend that Association members -- virtually all major league baseball players -- cease renewing their individual contracts with Topps. That recommendation was accepted, and very few players signed renewals with Topps. Realizing that Topps faced a formidable opponent in the Association, Shorin contacted Miller to determine if an end to the dispute could be negotiated.
29. As negotiations began, the Players Association demanded a uniform expiration date for all of Topps's contracts; an agreement that the Association would at some point offer the rights on a bid basis; a limitation on Topps's rights to ...