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From Antitrust Law Daily, April 3, 2015

Rooftop owners unlikely to succeed in monopoly claims against Chicago Cubs

By Linda O’Brien, J.D., LL.M.

In an action against the Chicago Cubs baseball club and its team chairman for attempted monopolization and breach of contract, the federal district court in Chicago has denied a motion for preliminary injunction by the owners of rooftop businesses across from Wrigley Field seeking to stop the installation of outfield signage obstructing their views of the field. The rooftop owners failed to demonstrate a likelihood of success on the merits of their attempted monopolization claims based on the antitrust exemption for the “business of baseball” and their failure to establish a plausible relevant market (Right Field Rooftop, LLC v. Chicago Baseball Holdings, LLC, April 2, 2015, Kendall, V.).

Since the stadium’s construction in 1914, several apartment buildings existed across from Wrigley Field from which spectators could view Chicago Cub games and other events taking place inside Wrigley Field. In 2004, the Cubs’ previous owners filed suit against the rooftop businesses for misappropriation of the Cub’s property by charging admission fees to watch Cubs games from their rooftops. The parties entered into an agreement under which the rooftop businesses were granted licenses to sell these tickets in exchange for a percentage of each rooftop’s gross revenues.

In 2009, the Ricketts family purchased the Chicago Cubs and Wrigley Field, subject to the rooftop license agreement. In April 2013, the Cubs announced plans to renovate Wrigley Field, including the installation of new outfield signage. In January 2015, two neighboring rooftop businesses and property owners filed suit, alleging that the Cubs baseball club and team chairman Tom Ricketts violated the terms of the revenue-sharing contract by planning the installation of outfield signage that would block views from their businesses. In February 2015, the court denied a motion by the rooftop businesses for a temporary restraining order.

To obtain a preliminary injunction, the movant must demonstrate a likelihood of success on the merits, irreparable harm absent injunctive relief, and the absence of an adequate remedy at law, the court explained.

Antitrust claims. In denying the motion for a preliminary injunction, the court determined that the rooftop businesses did not demonstrate a likelihood of success on their antitrust claims. The plaintiffs argued that the Cubs’ conduct in attempting to set minimum ticket prices, attempting to purchase all rooftop businesses, and threatening to block the views of rooftops with outfield signage constituted monopolistic behavior. The U.S. Supreme Court in a series of decisions, such as Fed. Baseball Club of Baltimore v. Nat’l League of Prof’l Baseball Clubs, 259 U.S. 200 (1922), exempted Major League Baseball from the reach of antitrust laws. The plaintiffs argued that the baseball exemption applied only to the league and not to individual franchises and was not expanded past matters pertinent to putting on a game. The court rejected these contentions as unsupported by relevant law. It noted that the exemption was well established, Congress never altered the exemption legislatively, both the U.S. Supreme Court and Seventh Circuit have taken a broad reading of the exemption, and the Cub’s business and conduct was central to “the business of providing public baseball games for profit.” Thus, the Cub’s business and the rooftops’ business of selling tickets to watch Cubs games were within the scope of the exemption.

Moreover, the rooftop owners failed to establish a plausible relevant market. The proposed product market—the market for watching live Cub games—could not stand because it comprised a single brand product. Since the Cubs compete with other Major League Baseball teams, sporting events, and other live entertainment for revenue, the relevant market could not restricted to only live Cub games. Consumer preferences for watching live Cubs games, instead of on television, and not patronizing another team’s live games fell short of rendering it plausible that there were no reasonable substitutes for live Cubs games.

Breach of contract claims. The rooftop businesses also failed to establish a likelihood of success on the merits of their anticipatory breach of contract claims. The license agreement prohibits the Cubs from erecting any barriers to obstruct the rooftops’ views, but stated that any expansion of Wrigley Field with government approval did not violate the agreement. In reading the provision as a whole, the court found that the term “any” meant “every or all” and did not limit the expansion to projects that added seating capacity. In rejecting the rooftops’ argument that extrinsic evidence of intent should be considered, the court declined to read ambiguity into the terms where there was none.

Irreparable harm. The plaintiffs’ arguments that their businesses would be destroyed without a preliminary injunction and that the destruction of their businesses constituted irreparable harm were rejected. The court found that there was no evidence showing the businesses would become insolvent immediately upon installation of the outdoor signage, since numerous restaurants and bars operate in the neighborhood without live views of the game. Moreover, the Cubs presented evidence that the property owners and rooftop businesses appeared to have substantial assets that minimized the likelihood that the businesses would not be able to operate until the resolution of the litigation.

Finally, the plaintiffs failed to show an inadequate remedy at law, since any harm is entirely financial in nature, ascertainable, and calculable. The dispute between the parties concerned a fixed-length contract, and the plaintiffs had no expectation that they would be able to maintain their businesses after the contract expiration. Because the contract end date was identifiable and the rooftops had at least ten years of data showing revenues, the loss amount would be simple to calculate, the court concluded.

The case is No. 15 C 551.

Attorneys: Abraham E. Brustein (DiMonte & Lizak) for Right Field Rooftops, 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 Baseball Holdings, LLC; Chicago Cubs Baseball Club, LLC; Wrigley Field Holdings, LLC

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