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MID-SOUTH GRIZZLIES v. NFL

November 5, 1982

MID-SOUTH GRIZZLIES, et al.
v.
NATIONAL FOOTBALL LEAGUE, et al.



The opinion of the court was delivered by: MCGLYNN

 McGLYNN, District Judge.

 Pending before the court is Defendants' Motion for Summary Judgment. Although the submissions regarding the motion are voluminous, they in essence address one issue: does a professional sport league's refusal to accept for membership a qualified applicant for a franchise in an area where no current league team is located violate Sections 1 or 2 of the Sherman Act? Based on the undisputed material facts and the reasons set forth below, I believe not. Therefore, Defendants' Motion for Summary Judgment is granted.

 The Team Rosters

 The offensive team (plaintiffs) is the Mid-South Grizzlies, a joint venture established on November 1, 1975 consisting of the Mid-South Grizzlies, a Tennessee limited partnership, *fn1" Consolidated Industries, Inc., a California corporation, and John Edward Bosacco, an individual. The defensive lineup (defendants) is composed of the National Football League ("NFL"), the twenty-eight individual NFL football teams, and calling the signals, Pete Rozelle, the NFL Commissioner.

 Plaintiffs' Game Plan

 In the fall of 1975, plaintiffs applied to the NFL in the hope of obtaining a franchise for the Memphis, Tennessee area. Along with their application, they submitted an application fee as required by the NFL Constitution and By-Laws. This fee was returned to the plaintiffs a few weeks later. In December 1975, plaintiffs met with the NFL Expansion Committee. This committee was responsible for the investigation and planning for the addition of new NFL teams. Its members at the time of plaintiffs' application were Daniel M. Rooney, President of the Pittsburgh Steelers, Gerald H. Phipps of the Denver Broncos, Louis Spadia of the San Francisco '49ers and Texas Schramm of the Dallas Cowboys. At this meeting plaintiffs were told that further expansion of the NFL at that time was in their opinion unwise and that they would recommend to the full membership of the league that no further expansion be considered for the moment.

 Plaintiffs met with defendants on at least two more occasions. One of these meetings was with the entire NFL membership. A few months after their presentation to the full membership, the NFL passed on March 17, 1976 the following resolution:

 
RESOLVED, after thorough review of the major problems presently confronting the NFL, that the member clubs do not believe they can formally commit to specific expansion arrangements at this time. The clubs do, however, reaffirm their desire to bring total League membership to thirty teams as soon as possible after resolution of current problems and assimilation of the new Tampa Bay and Seattle teams. At that time, Memphis and Birmingham, which have most actively sought admission in recent months, will be among the cities receiving strongest consideration for NFL franchises.

 The problems referred to in the resolution were many. Around the time of plaintiffs' application, no collective bargaining agreement with the Players Association had been in effect for two seasons. In addition a district court in California had held several player restrictions to be unlawful. *fn2" A few months later another district court in California enjoined application of the "Rozelle rule" by the NFL. Pending in a third district court was a case attacking the NFL college draft. *fn3" Near the end of 1975, another district court found the "Rozelle rule" unlawful. *fn4" Also during this time period efforts were afoot to make permanent legislation which prevented the practice of blacking out television coverage of sold out home games in the area surrounding the home team's stadium. In addition, the NFL Players Association threatened to challenge the procedures the NFL implemented to man the new Tampa Bay and Seattle teams. *fn5" The players filed suit in March 1976. *fn6"

 Because defendants had already decided expansion anywhere at the time of plaintiffs' application was not prudent, they never fully considered plaintiffs' application on the merits. *fn7" Defendants did, however, tell plaintiffs they would receive serious consideration in the future when definite expansion plans were formulated.

 Plaintiffs finally filed this lawsuit in December 1979. In their Complaint, plaintiffs allege that part of defendants' motive in rejecting plaintiffs' application was to retaliate against plaintiffs for their past involvement in the now defunct rival of the NFL, the World Football League ("WFL"). *fn8" The WFL was formed in 1973 and played games in the entire 1974 football season and in the 1975 season until October 1975. Several of its teams had competed directly with NFL teams for fan support and revenue.

 In any event plaintiffs assert that defendants' actions constitute an unlawful group boycott and an unreasonable restraint of trade in violation of Section 1 of the Sherman Act. *fn9" Moreover, they allege that defendants' behavior constitutes monopolization violative of Section 2 of the Sherman Act. *fn10"

 The Defensive Strategy

 Defendants respond with several defenses. First they deny their actions were motivated by animus towards plaintiffs because of their WFL involvement. Defendants also contend that their behavior was neither a group boycott nor an unreasonable restraint of trade. In addition they assert there was no contract, combination or conspiracy as required by Section 1 because the NFL, in this case, acted as a single entity. Moreover, they assert they have performed no act of monopolization proscribed by Section 2. Lastly, they contend that plaintiffs Bosacco, Consolidated and the joint venture are not real parties in interest and thus lack standing to sue. Because I find that defendants' conduct is neither an unlawful group boycott, an unreasonable restraint of trade nor an act of monopolization, I will not make a call on defendants' remaining contentions. *fn11"

 The Pregame Show

 The NFL is well known to any football fan. It is an unincorporated association comprised of twenty-eight teams located throughout the United States. All but one team are privately owned and operated. Although these teams "compete" with one another on the playing field and for the top players, they act jointly in many aspects of their enterprise as the term league necessarily implies. For example, they set rules for the games, schedule contests, provide for joint marketing of national broadcast rights and, of importance here, decide the locations and owners of new franchises. *fn12" The rules which govern the awarding of new franchises are contained in the NFL's Constitution and By-Laws. *fn13" Each team derives a great deal of its revenue through jointly generated income. For example, money resulting from national broadcasting contracts is shared among league members on agreed upon formulae. Other revenue, such as the sale of team paraphernalia and local advertising, is individually generated and not shared with other NFL members.

 The NFL has its roots early in this century. Throughout the years several other leagues appeared usually only for a short time and without much success. One entry, however, did succeed. In the early 1960's the American Football League ("AFL") was formed with eight teams. The two leagues were run separately until 1966 when the two agreed to a merger to be fully implemented by 1970. *fn14" At the time they entered the merger agreement, the NFL had fifteen teams and the AFL had nine.

 Expansion beyond these twenty-four teams has been sporadic. In 1967, the NFL awarded a franchise to New Orleans. A year later, the AFL added Cincinnati. By the time the merger was completed, the NFL consisted of twenty-six teams and stayed at that number for several years. In 1974, a year before plaintiffs' application, plans were made to add two more franchises in Tampa Bay and Seattle. These two teams first became active in 1976, shortly after plaintiffs' application. Each new team was manned by taking a maximum of three players from each previously established team. No new NFL franchise has been awarded to anyone since the time of plaintiffs' application. Although the NFL does expect to award two more franchises in the foreseeable future, they have not decided when, where or to whom.

 No current NFL franchise operates in the Memphis area. The closest NFL team location is St. Louis, Missouri, which is two hundred and eighty-one miles from Memphis. ...


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