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From Antitrust Law Daily, October 1, 2015

Rooftop businesses’ monopolization claims strike out against Chicago Cubs

By Greg Hammond, J.D.

The Chicago Cubs have obtained dismissal of rooftop businesses’ attempted monopolization claims. In granting the Cubs’ motion to dismiss with prejudice, the federal district court in Chicago concluded that the Major League Baseball antitrust exemption applies; the rooftop businesses failed to adequately allege a relevant market; and the Cubs could not monopolize its own product (Right Field Rooftops, LLC v. Chicago Cubs Baseball Club, LLC, September 30, 2015, Kendall, V.).

Wrigley Field is a baseball stadium that serves as the home of the Chicago Cubs professional baseball team. Right Field Properties, LLC and Rooftop Acquisition, LLC own two buildings that are located across the street from Wrigley Field, and Right Field Rooftops, LLC and 3633 Rooftop Management, LLC own and operate businesses that allow spectators to view professional baseball games and other events at the stadium on the rooftops of the two buildings. The Rooftop companies claimed that the Cubs attempted to monopolize the “Live Cubs Game Product” and “Live Rooftop Games Product” markets, and breached a contract in which the parties agreed that the Rooftops would provide the Cubs 17 percent of their profits in exchange for the Cubs promise to not block the view of Wrigley Field from the rooftops. In addition, the Rooftops claim that the owner of the Cubs made false statements that were defamatory and constituted deceptive practices. The Cubs moved to dismiss the Rooftops’ attempted monopolization, defamation, deceptive practices, and breach of contract claims.

Attempted monopolization. The Major League Baseball exemption to the antitrust laws applies to the “business of baseball” in general, according to the court, and the public display of baseball games is integral to that business. Consequently, by attempting to set a minimum ticket price, purchasing rooftops, threatening to block rooftops that did not sell to the Cubs, and beginning construction at Wrigley Field, as the plaintiffs alleged, the Cubs directly engaged in the business of publicly displaying baseball games, the court determined. The Cubs’ conduct therefore fell into the baseball exemption, warranting the dismissal with prejudice of the attempted monopolization claims.

The court found two alternative reasons for dismissing the attempted monopolization claims with prejudice: (1) the Rooftops failed to allege a plausible relevant market, because both of the markets identified by the Rooftops depended on the Cubs’ presentation of live professional baseball, and a single brand product like live-action Cubs games could not be a relevant market; and (2) the Cubs could not monopolize its own product when there were economic substitutes for live Cubs games, including other baseball games, sporting events, or live entertainment.

Defamation, deceptive practices. The Rooftops additionally alleged that the owner of the Cubs made false statements of fact that were defamatory and violated the Lanham Act and the Illinois Uniform Deceptive Trade Practices Act (IUDTPA). The owner allegedly stated, “It’s funny—I always tell this story when someone brings up the rooftops. So you’re sitting in your living room watching, say, Showtime. All right, you’re watching ‘Homeland.’ You pay for that channel, and then you notice your neighbor looking through your window watching your television.”

The court dismissed with prejudice both the defamation and IUDTPA claims, finding that, “There is nothing criminal alleged; there is nothing false alleged; and no reasonable person could interpret his statement as anything other than the frustrations of an individual who has litigated the same issue in different fora and in various forms for years.”

Breach of contract. Lastly, the court dismissed with prejudice the Rooftops’ breach of contract claim, which involved the construction of a video board that blocks the view of Wrigley Field from the rooftop businesses. The Rooftops had alleged that the License Agreement at issue, which stated “any expansion of Wrigley field approved by governmental authorities shall not be a violation of this Agreement, including this section,” referred only to expansion in the form of increased seating capacity. The court rejected this construction, noting that if the term “any expansion” were limited to construction projects that increased Wrigley Field’s seating capacity, it would have been unnecessary to specify later in the agreement that windscreens and other barriers were subject to the governmental approval exception. The Cubs’ construction of a video board therefore constituted an “expansion” under the agreement, and because the Cubs received governmental approval for installing the board, they did not breach the license agreement.

The case is No. 15 C 551.

Attorneys: Abraham Brustein (Dimonte & Lizak) for Right Field Rooftops, LLC, Right Field Properties, LLC, 3633 Rooftop Management, LLC, and Rooftop Acquisition, LLC. Andrew A. Kassof (Kirkland & Ellis LLP) for Chicago Cubs Baseball Club, LLC, Wrigley Field Holdings, LLC and Chicago Baseball Holdings, LLC.

Companies: Right Field Rooftops, LLC; Right Field Properties, LLC; 3633 Rooftop Management, LLC; Rooftop Acquisition, LLC; Chicago Cubs Baseball Club; Wrigley Field Holdings, LLC; Chicago Baseball Holdings, LLC

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