In the wake of the NFL agreeing to pay $790 million to St. Louis over the Rams’ move to Los Angeles, a federal appeals court has ruled the league owes nothing to Oakland over the Raiders’ move to Las Vegas. The ruling highlights the impact of two different strategies to resolve the same type of legal controversy.
On Thursday, a three-judge panel on the U.S. Court of Appeals for the Ninth Circuit affirmed the dismissal of Oakland’s lawsuit, which labels the NFL and its teams as an illegal “cartel.”
Oakland argues the league and its teams engaged in insider dealing. The alleged plot: facilitate the move of the Raiders in 2020. The Raiders’ paying a $378 million relocation fee to the 31 other teams, Oakland insists, was tantamount to a bribe. It also, allegedly, did not advance goals contained in the league’s relocation policy. “In order to further line the pockets of NFL Club owners with millions of dollars paid by their billionaire competitors,” Oakland’s complaint charged, the league and owners orchestrated a “rigged process.”
Writing for the panel, Judge Wallace Tashima bluntly rejected Oakland’s theories.
First, he held there was no group boycott. Oakland insists the Raiders refused to honestly deal with city officials in efforts to keep the team there. Whether or not that is true, Judge Tashima stressed, a group boycott requires multiple parties refusing to sell goods or services. In this instance, the Raiders’ alleged refusal could not constitute a group boycott since the Raiders are one entity. “Other NFL teams,” the judge wrote, “simply supported the Raiders’ refusal to deal with the City, but did not themselves refuse to do business with the City.”
Second, Oakland lacked standing to allege price-fixing. Oakland asserts the NFL and the 32 ownership groups had unlawfully fixed the price for a city to keep a team to an artificially high level. Instead of having a credible chance to retain the team, Oakland contends, cities with NFL teams are forced to accept outrageously expensive “demands for new and renovated stadia” or else they’ll lose their team.
Judge Tashima found this theory at odds with viable price-fixing claims. Oakland, the judge concluded, was simply “priced out of the market” for the Raiders. He explained that in a traditional price-fixing claim, members of a cartel are accused of colluding on prices or output as a means of maximizing profits. Consumers then must “pay an overcharge . . . a supracompetitive price” to purchase those members’ goods or services. Consumers who paid those higher prices were financially injured and have standing to sue.
Yet consumers who claim they “would have paid” had the price reflected competition, but who didn’t actually pay, lack standing, Judge Tashima stressed. Their injury from the cartel price is “speculative” since they didn’t pay it. Oakland falls into this second category: The city didn’t pay exorbitant NFL prices—it lost the Raiders to Las Vegas, which instead paid the prices.
Oakland can petition for a “rehearing en banc,” where a panel of 11 Ninth Circuit judges would rehear the case, and it could then petition the U.S. Supreme Court. Both petitions would face long odds, as en banc and Supreme Court petitions are usually denied.
Although the legal outcomes for the NFL in the Rams and Raiders cases are different, it’s important to note the litigations were also different.
St. Louis’s theory of liability was premised on contract law, namely that it was a third-party beneficiary of the NFL’s relocation policy. Oakland, in contrast, focused on antitrust law. Oakland also sued in federal court whereas St. Louis sued in state court. The presiding judges in the Oakland case have lifetime appointments and thus have more independence, whereas those in Missouri state court were subject to retention elections by voters. Timing mattered as well. The NFL agreed to settle with St. Louis only after repeated efforts to defeat the case failed and only with a trial scheduled six weeks out. Meanwhile, Oakland’s case hasn’t advanced past the early stage of litigation.
For future cities that lose teams, the St. Louis litigation approach appears to be the better bet.