[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
AUG 2, 2006
THOMAS K. KAHN
No. 05-13255
CLERK
________________________
D. C. Docket No. 02–01585-CV-T-24-MAP
JES PROPERTIES, INC.,
a Florida corporation,
d.b.a. Cypress Trails Farm,
MICHAEL W. GALLAGHER,
Plaintiffs-Appellants,
versus
USA EQUESTRIAN, INC.,
f.k.a. American Horse Show Assoc., et al.,
DAVE BURTON,
a.k.a. Dave Burton, Sr.,
a.k.a. Dave E. Burton,
a.k.a. Dave E. Burton, Sr.,
BURTON & SONS, INC.,
LITTLEWOOD FENCES, INC.,
DAVID BURTON,
a.k.a. David Burton, Jr.,
a.k.a. David E. Burton,
a.k.a. David E. Burton, Jr.,
UNITED STATES EQUESTRIAN FEDERATION, INC.,
STADIUM JUMPING, INC., EUGENE R. MISCHE et al.,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________
(August 2, 2006)
Before EDMONDSON, Chief Judge BIRCH and ALARCÓN,* Circuit Judges.
ALARCON, Circuit Judge:
JES Properties, Inc. (“JES”) and Michael W. Gallagher appeal from the
District Court’s entry of summary judgment in favor of United States Equestrian
Federation (“USEF”); Thomas E. Struzzieri, Horse Shows in the Sun, Inc., and
Rose View Stables, Ltd (collectively, “HITS”); Eugene R. Mische and Stadium
Jumping, Inc. (collectively, “SJI”); and David E. Burton, Sr. David E. Burton, Jr.,
Burton and Sons, Inc., and Littlewood Fences, Inc. (collectively, the “Burtons”)
(HITS, SJI and the Burtons are referred to collectively as the “Promoter
Defendants”). The District Court concluded that JES and Mr. Gallagher had failed
to raise a triable issue of fact regarding their claim that the USEF and the Promoter
Defendants violated Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. We
affirm.
*
Honorable Arthur L. Alarcün, United States Circuit Judge for the Ninth Circuit, sitting
by designation.
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I
Since 1917, the United States Equestrian Federation (“USEF”) and its
predecessor the USA Equestrian, Inc. (“USAE”) have governed the sport of
amateur equestrianism in the United States. The rules that govern all American
equestrian competitions were promulgated originally by the USAE. In June 2004,
the United States Olympic Committee (“USOC”), pursuant to the Ted Stevens
Olympic and Amateur Sports Act, 36 U.S.C. § 220501 et seq. (“ASA”), officially
appointed the USEF as the sole national governing body for the sport (“NGB”).
When appointed as the NGB, the USEF’s Board of Directors adopted the same
rules promoted by USAE, but with some changes effective in 2006.
The USEF consists of private individuals such as professional and amateur
rider-athletes, trainers, judges, horse owners and officials; non-profit amateur
sports organizations such as the North Florida Hunter and Jumper Association,
Inc.; and promoters who profit financially by holding equestrian competitions.
The USEF maintains a fifty-four member Board of Directors to promulgate the
rules of the sport. The Board of Directors of the USEF contains ten members of
the hunter/jumper community and no less than twenty percent of the voting power
is allocated to “active equestrian athletes.” An “active athlete” is one who is
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engaged in equestrian competition or has represented the United States at an
amateur international competition within the past ten years.
The NGB rules sanction certain equestrian competitions called “recognized
competitions,” which provide particular benefits to riders and promoters.
Recognized competitions allow riders to collect points from wins. Wins lead to
invitations to more prestigious competitions. In addition, recognized competitions
award a total prize money amount of $10,000 or more for the “jumper” section of
the competition.
Recognized competitions that are considered “A” or “AA-rated” are the
highest rated competitions. They award the most points and in theory attract the
best riders. In order to represent the United States at an international level,
including the Olympic Games, athletes must compete in USEF-sanctioned
competitions and typically excel in the A or AA-rated competitions.
All recognized competitions are subject to General Rule 214.7 (“Mileage
Rule”), which was promulgated in 1975 by USAE (known at that time as the
American Horse Shows Association) and adopted by the USEF.1 The Mileage
1
The Mileage Rule provides:
New competitions offering “A” rated hunter or jumper divisions or
sections will not be recognized on dates conflicting with those of any other
Recognized Competition within the applicable distance specified by this
rule which offers A rated hunter or jumper divisions or sections, regardless
of class scheduling. . . . The mileage restrictions . . . will not prevent two
4
Rule requires that any A-rated recognized competitions held on the same date
must be held at least 250 miles away from each other. This is true for all but some
Northeastern states, which are subject to a 125-mile radius distance for A-rated
competitions. The required distance diminishes as the rating decreases. Unrated
or local competitions on the same date can be held within fifty miles of each other.
Under the Mileage Rule, an A-rated competition that was held on a certain
date in the previous year receives priority. A promoter may nevertheless obtain
USEF recognition if all “affected competition managements” agree in writing to
permit the additional recognized competition. This written agreement is referred
to as a “waiver.” Stricter still for hunter/jumper competitions, the USEF requires a
waiver for each year and an additional competition can never be closer than ten
miles from an established one. However, a promoter may hold an A-rated
competition elsewhere or on a different date without obtaining a waiver.
Similarly, a promoter may hold B- or C- level competitions. The purpose of the
Mileage Rule appears to be twofold. First, it aims to concentrate elite riders into
fewer competitions in order to yield the most competitive international equestrian
Hunter/Jumper competitions from being approved if the two competitions
have different competition managements and the competition with priority
gives written permission, to be renewed annually, and the mileage distance
between competitions is at least 10 miles.
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team possible. Second, the rule intends to promote equestrianism nationwide by
forcing promoters to hold recognized competitions in more diverse locations.
JES and Mr. Gallagher are among those USEF members who gain
financially from promoting equestrian competitions. The Promoter Defendants
also hold competitions for profit. JES, Mr. Gallagher, and the Promoter
Defendants have conducted USEF sanctioned competitions throughout the state of
Florida. JES, Mr. Gallagher, HITS, and the Burtons have also held unrecognized
competitions in Florida.
In Florida, the weather is desirable for equestrian competition in the winter
months, December through March. Because of the weather, the most lucrative and
profitable winter season competitions occur in Florida. For the winter seasons of
2003-2004, 2004-2005, and 2005-2006, the Promoter Defendants planned every
weekend to hold A-rated competitions in Florida. The Promoter Defendants
secured these dates and facilities in Florida before JES and Mr. Gallagher. Due to
the Mileage Rule, JES and Mr. Gallagher were unable to secure a date between
December and March on which to hold A or AA-rated competitions in Florida. As
provided by the rule, JES and Mr. Gallagher requested waivers from the “affected
competition managements,” the Promoter Defendants. The Promoter Defendants
denied JES’s and Mr. Gallagher’s requests for waivers.
6
In 1982, HITS and SJI granted each other waivers that have been renewed
each subsequent year. The reciprocal agreement permitted each promoter to hold
USEF sanctioned A-rated competitions within the 250 mile restriction.
JES and Mr. Gallagher filed a complaint challenging the Mileage Rule as a
violation of the Sherman Antitrust Act. They also alleged that the Promoter
Defendants committed antitrust violations by granting each other waivers while
refusing to grant waivers to JES and Mr. Gallagher. The District Court entered
summary judgment in favor of the USEF and the Promoter Defendants. It
concluded that (1) each defendant was entitled to implied immunity from antitrust
liability; (2) JES and Mr. Gallagher lacked antitrust standing; (3) JES and Mr.
Gallagher failed to present evidence of concerted action; and (4) the Rule of
Reason applied to the USEF’s and the Promoter Defendants’ actions, and their
actions were not an unreasonable restraint of trade. JES and Mr. Gallagher timely
appeal each of those conclusions. We conclude that the USEF and the Promoter
Defendants are entitled to implied immunity. We address standing briefly, but we
do not reach the other issues raised by JES and Mr. Gallagher.
7
I
A
JES and Mr. Gallagher argue that the District Court erred in its
determination that they lacked antitrust standing. Whether a plaintiff has standing
to prosecute an antitrust claim is a question of law. Todorov v. DCH Healthcare
Auth., 921 F.2d 1438, 1448 (11th Cir. 1991). “Standing in an antitrust case
involves more than the ‘case or controversy’ requirement that drives constitutional
standing.” Id. (citing Flast v. Cohen, 392 U.S. 83, 94-101 (1968)). Rather,
antitrust standing “involves an analysis of prudential considerations aimed at
preserving the effective enforcement of the antitrust laws.” Id.
Because we conclude that the USEF and the Promoter Defendants are
immune from antitrust liability, we need not determine whether JES and Mr.
Gallagher have standing. Levine v. Central Fla. Med. Affiliates, Inc., 72 F.3d
1538, 1545 (11th Cir. 1996). In Levine, this Court noted:
When a court concludes that no [antitrust]
violation has occurred, it has no occasion to consider
standing . . . . An increasing number of courts,
unfortunately, deny standing when they really mean that
no violation has occurred. In particular, the antitrust
injury element of standing demands that the plaintiff’s
alleged injury result from the threat to competition that
underlies the alleged violation. A court seeing no threat
to competition in a rule-of-reason case may then deny
8
that the plaintiff has suffered antitrust injury and dismiss
the suit for lack of standing. Such a ruling would be
erroneous, for the absence of any threat to competition
means that no violation has occurred and that even suit
by the government–which enjoys automatic
standing–must be dismissed.
Id. (quoting 2 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law, ¶ 360f, at
202-03 (rev. ed. 1995) (footnotes omitted)). This Court has previously “ruled on
the merits of an antitrust claim without ever deciding whether the plaintiff has
antitrust standing.” Id.
We see no difference between the example offered in Levine–a court seeing
no threat to competition in a rule-of-reason case–and our conclusion in this case
that the USEF and the Promoter Defendants are immune from antitrust liability
because the ASA impliedly repeals the antitrust laws to the extent the USEF was
acting pursuant to authority conveyed by the ASA. A defendant is entitled to
implied immunity when its actions are necessary for the effective operation of a
law enacted by Congress. See infra, Part IB; Silver v. New York Stock Exch., 373
U.S. 341, 357 (1963). No party is able to establish an injury to competition under
such circumstances because implied repeal of the antitrust laws represents a policy
decision by Congress to tolerate that level of threat to competition. See id. at 359
(concluding that New York Stock Exchange regulation did not impliedly repeal
9
antitrust laws when, inter alia, it produced “competitive injury . . . when the
imposition of such injury [was] not within the scope of the great purposes of the
Securities Exchange Act.”). We therefore turn to the merits of JES and Mr.
Gallagher’ antitrust claim.
B
JES and Mr. Gallagher next argue that the District Court erred in concluding
that the ASA impliedly repeals the antitrust laws, thus giving the USEF and the
Promoter Defendants immunity from antitrust liability. A district court’s decision
to grant summary judgment is reviewed de novo. Holloman v. Mail-Well Corp.,
443 F.3d 832, 836 (11th Cir. 2006). Summary judgment is appropriate if the
moving party demonstrates that there are no genuine issues of material fact and the
moving party is entitled to judgment as a matter of law. Id.
In Silver, the Supreme Court held that under certain circumstances, a
defendant is immune from antitrust liability because his or her actions are
permitted by overriding federal law. Silver, 373 U.S. at 357. “Repeal of the
antitrust laws by implication is not favored and not casually to be allowed. Only
where there is a ‘plain repugnancy between the antitrust and regulatory provisions’
will repeal be implied.” Gordon v. New York Stock Exch., Inc., 422 U.S. 659, 682
(1975) (quoting United States v. Philadelphia Nat’l Bank, 374 U.S. 321, 350-51
10
(1963)). “Repeal is to be regarded as implied only if necessary to make [another
federal law] work, and even then only to the minimum extent necessary. This is
the guiding principle to reconciliation of . . . two statutory schemes.” Silver, 373
U.S. at 357.
In this case, the USEF and the Promoter Defendants argue that the ASA
impliedly repeals the antitrust laws. The ASA was enacted “to correct the
disorganization and serious factional disputes that seemed to plague amateur
sports in the United States.” San Francisco Arts & Athletics, Inc. v. United States
Olympic Comm’n, 483 U.S. 522, 544 (1987) (citations and internal quotations
omitted). Under the ASA, the United States Olympic Commission (“USOC”) is
authorized to recognize one national governing body (“NGB”) for each sport
included in the program of the Olympic games.
The NBG must satisfy a number of requirements,
including the ability to “demonstrate[] that it is
autonomous in the governance of its sport, in that it
independently determines and controls all matters central
to such governance, does not delegate such
determination and control, and is free from outside
restraint.
Behagen v. Amateur Basketball Ass’n of the United States, 884 F.2d 524, 528
(10th Cir. 1989) (quoting 36 U.S.C. § 391(b)(4)).
The ASA provides:
11
(a) Authority—For the sport that it governs, a national governing
body may—
(1) represent the United States in the appropriate
international sport federation;
(2) establish national goals and encourage attainment of those goals;
(3) serve as the coordinating body for amateur
athletic activity in the United States; . . .
(6) recommend to the [USOC] individuals and teams
to represent the United States in the Olympic Games . . .
36 U.S.C. § 220523.
For the sport that it governs, a national governing body
shall—
(1) develop interest and participation throughout the
United States and be responsible to the persons and
amateur sports organizations it represents;
(2) minimize, through coordination with other amateur
sports organizations, conflicts in the scheduling of all
practices and competitions[.]
36 U.S.C. § 220524 (emphasis added). “The [ASA] provides for ongoing review
of the NGB by the USOC in order to ensure compliance with the [ASA].”
Behagen, 884 F.2d at 528.
The USEF is the NGB for equestrian sports in the United States. The USEF
and the Promoter Defendants argue that the ASA confers on the USEF the
authority to promulgate the Mileage Rule and that application of the antitrust laws
to the enforcement of the Mileage Rules is plainly repugnant to that authority.
12
In Behagen, the Tenth Circuit considered whether the ASA impliedly
repealed the antitrust laws. Id. In that case, Ronald Behagen, a basketball player,
was deemed ineligible to play amateur basketball by the Amateur Basketball
Association of the United States of America (“ABA/USA”), the NGB for
basketball. Id. at 525-26. The ABA/USA had an eligibility rule that stated that
once a player had played professionally, he or she could return to amateur
basketball only once. Id. at 526. Mr. Behagen had played professionally, returned
to amateur play, returned to professional play, and again sought to return to
amateur play. Id. The ABA/USA, based on its eligibility rule, would not permit
Mr. Behagen to play. Id.
Mr. Behagen alleged that the refusal to permit him to play constituted a
violation of § 1 of the Sherman Antitrust Act. Id. at 527. Section 1 reads in
relevant part, “Every contract, combination in form of trust or otherwise, or
conspiracy, in restraint of trade or commerce among the several States, or with
foreign nations, is declared to be illegal.” 15 U.S.C. § 1. Mr. Behagen alleged that
the refusal constituted an illegal group boycott. The jury agreed and awarded him
treble damages. Behagen, 884 F.2d at 527.
The court held that
13
the antitrust issue should not have gone to the jury. The
defendants’ actions in this case were clearly within the
scope of activity directed by Congress, and were
necessary to implement Congress’ intent with regard to
the governance of amateur athletics. We therefore hold
that the defendants’ allegedly violative actions here are
exempt from the coverage of the federal antitrust laws.
Id. The court reasoned that the ASA conferred “monolithic control” on the NGB
to regulate “its particular amateur sport, including . . . controlling amateur
eligibility for Americans to participate in that sport.” Id. at 529. Although the
ASA did not explicitly repeal the federal antitrust laws as they pertain to the
actions of an NGB, “the directives of the [ASA made] the intent of Congress
sufficiently clear.” Id. Mr. Behagen complained of “exactly that action which the
[ASA] directs—the monolithic control of an amateur sport by the NBG for that
sport . . . .” Id.
The question whether the ASA impliedly repeals antitrust laws was again
considered in Eleven Line, Inc. v. North Texas State Soccer Ass’n, Inc., 213 F.3d
198 (5th Cir. 2000). In Eleven Line, the owner of an indoor soccer facility brought
suit against the North Texas State Soccer Association (“NTSSA”), alleging it
violated the antitrust laws in enacting a rule that forbade its members from playing
at any non-NTSSA sanctioned facility. Id. at 199. The court concluded that the
actions of the NTSSA were not immune from antitrust liability because it was the
14
state association, not the NGB, that promulgated the rule. Id. at 204. However, it
concluded that Behagen was correctly decided. It explained,
Although the facts of this case do not support an implied
exemption from the antitrust laws, an implied exemption
would be appropriate in many other situations. For
example, if the national state associations all over the
country had a similar rule, one could infer that the rule
was necessary to the management of the sport.
Id.
As Behagan and Eleven Line demonstrate, when properly exercised, the
“monolithic control” a NGB has over its particular support may excuse actions
that would otherwise violate antitrust laws. Therefore, the question for this Court
is whether the application of the antitrust laws to the facts of this case would
“unduly interfere” with the “operation” of the ASA. Gordon, 422 U.S. at 686.
Congress has specifically required NGB’s to minimize conflicts in the
scheduling of competitions and to “develop interest and participation throughout
the United States” in their particular sport. 36 U.S.C. § 220524. The Mileage
Rule functions to minimize conflicts and encourages interest in equestrian sports.
It forbids competitions of the same rating from being held on the same days within
250 miles of each other. The USEF and the Promoter Defendants adduced
evidence that the rule enables the best athletes to compete against each other. If
two competitions of the same rating were in close proximity, top athletes may
15
avoid competition against each other and go to different competitions. The USEF
and the Promoter Defendants also produced evidence that the rule protects horses
from being overworked. If two competitions were very close by on the same
dates, horses may be taken from one competition to the next without sufficient
rest. Additionally, the rule encourages the spread of equestrian sports throughout
the country. If a competition cannot be held in one locality, a promoter may
decide to hold a competition in a region in which competition has never been held.
Therefore, the Mileage Rule is an exercise of the “monolithic control” Congress
conferred on the USEF.
JES and Mr. Gallagher argue that the USEF and the Promoter Defendants
should not enjoy implied immunity because the Mileage Rule is not “necessary”
for the USEF to perform its functions under the ASA. They focus on language in
Behagen: “defendants’ actions in this case were clearly within the scope of
activity directed by Congress, and were necessary to implement Congress’ intent
with regard to the governance of amateur athletics.” Behagen, 884 F.2d at 527
(emphasis added). JES and Mr. Gallagher contend that if the USEF and equestrian
sports can function without the Mileage Rule, the USEF and the Promoter
Defendants are not entitled to immunity.
16
JES’s and Mr. Gallagher’s arguments regarding why the Mileage Rule is not
necessary focus on whether the rule is an effective or wise way of implementing
the power given the USEF to minimize conflicts in scheduling and develop
interest in equestrian sports throughout the United States. They argue, in effect,
that the rule is underinclusive because it can be waived in various circumstances.
They argue that the rule is counterproductive because it impedes JES and Mr.
Gallagher from entering the sport and competing with other promoters to enhance
the quality of competitions. They also argue that because the rule was not
promulgated until 1975, it must not be necessary (or else it would have been
promulgated earlier). They argue that because in the Northeast, the required
distance between competitions is only 125 miles, the 250-mile restriction must not
be necessary.
JES’s and Mr. Gallagher’s reading of Behagen is inconsistent with Supreme
Court authority. In Gordon, the Supreme Court considered a challenge to
commission rates fixed by the New York Stock Exchange (“NYSE”). Gordon,
422 U.S. at 661-62. It concluded that the NYSE had immunity from antitrust
liability because the power to fix commission rates was specifically conferred by
the Securities Exchange Act. Id. at 668, 691. The United States, as amicus,
argued that whether a defendant is entitled to implied immunity was a question of
17
fact to be decided after a trial on the merits. Id. at 686. The Court concluded that
this argument “confused two questions.” Id. at 688. The Court explained:
On the one hand, there is a factual question as to whether
fixed commission rates are actually necessary to the
operation of the exchanges as contemplated under the
Securities Exchange Act. On the other hand, there is a
legal question as to whether allowance of an antitrust
suit would conflict with the operation of the regulatory
scheme which specifically authorized the SEC to oversee
the fixing of commission rates. The factual question is
not before us in this case. Rather, we are concerned with
whether antitrust immunity, as a matter of law, must be
implied in order to permit the Exchange Act to function
as envisioned by Congress. The issue of the wisdom of
fixed rates becomes relevant only when it is determined
that there is no antitrust immunity.
Id.
Additionally, JES’s and Mr. Gallagher’s understanding of what makes a rule
“necessary” according to Behagen is too restrictive. In Behagen, the court did not
consider whether the particular eligibility rule was necessary or otherwise
examine the wisdom of the rule. It simply concluded that promulgating eligibility
rules was necessary in order for the NGB to carry out its role as defined by the
ASA. See generally Behagen, 884 F.2d 524-30. Similarly, in Eleven Line, the
court concluded that the NTSSA rule was not necessary. Eleven Line, 213 F.3d at
204-05. However, the court then listed a whole host of rationales that may have
18
justified the NTSSA rule. It did not delve into an analysis of whether the rule
would be wise or indispensable under any of those circumstances. Id.
This Court will not substitute its own judgment for that of the USEF
regarding the optimum way to fulfill its obligations. Cf. Brookins v. Int’l Motor
Contest Ass’n, 219 F.3d 849, 853 (8th Cir. 2000) (stating that regarding antitrust
challenges to rules defining professional sports activities, authorities have been
given considerable discretion to achieve their sporting objectives, absent any
demonstrated market foreclosure). If this Court were to apply the test that JES and
Mr. Gallagher suggest–determining whether the Mileage Rule is necessary–it
would threaten the national uniformity Congress envisioned in enacting the ASA.
San Francisco Arts & Athletics, Inc., 483 U.S. at 544 (discussing need for ASA to
eliminate factions in amateur sports). This inability to engage in the analysis JES
and Mr. Gallagher suggest without disrupting the ASA illustrates why implied
immunity is called for in this case. The question before this Court is whether the
application of antitrust laws to the actions of the USEF and the Promoter
Defendants is “plainly repugnan[t]” to the ASA. Gordon, 422 U.S. at 682.
Because the ASA requires an NGB to promulgate rules to minimize conflicts in
schedules, the imposition of antitrust liability for the promulgation of such a rule
is “plainly repugnan[t]” to the ASA.
19
JES and Mr. Gallagher also argue that this Court should apply a multi-factor
test enunciated by the Second Circuit in Billing v. Credit Suisse First Boston Ltd.,
426 F.3d 130 (2d Cir. 2005) to the question whether the ASA impliedly repeals the
antitrust laws. In Billing, the court held that when a “potential specific conflict”
exists between a regulatory rule and antitrust laws courts
will apply immunity if [they] determine that Congress
contemplated the specific conflict and intended for the
antitrust laws to be repealed. That determination is
informed by considering (1) congressional intent as
reflected in legislative history and a statute’s structure;
(2) the possibility for conflicting mandates; (3) the
possibility that application of the antitrust laws would
moot a regulatory provision; (4) the history of agency
regulation of the anticompetitive conduct; and (5) any
other evidence indicating that the statute implies a
repeal.
Id. at 164-65.
JES’s and Mr. Gallagher’s arguments applying Billing in substance repeat
the arguments pertaining to whether the Mileage Rule is necessary. They argue
that the Mileage Rule, as a particular exercise of power by the USEF, is not what
Congress had in mind when it enacted the ASA and granted NGB’s authority.
Regardless of whether Billing would require a more searching scrutiny of the
Mileage Rule, this Court follows the more closely analogous holdings in Behagen
and Eleven Line.
20
AFFIRMED.
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