Friday, May 29, 2009

Very brief snippets from the TYR ruling

Snippet about USA Swimming Coach Mark Schubert:

"... But there is more. The Complaint alleges that Schubert went beyond criticism and threatened athletes who chose to wear the TYR product:

• “I would strongly advise them to wear the [Speedo] at trials, or they may end up at home watching [the Olympics] on NBC.” (Complaint, ¶ 16(l).

• “Schubert has gone so far as to suggest that he will use his authority as Head Coach to mandate use of SPEEDO equipment.” (Id., ¶ 16(e).) He was reported as stating that he will tell his team to wear Speedo at the U.S. Trials. (Id.)

• “Some athletes (including Defendant VENDT) have followed through on SCHUBERT’s recommendation that they breach contracts with their equipment providers in order to avoid ‘staying home’ during the Olympic Games.” (Id., ¶ 33.)

Read in the light most favorable to TYR,7 these allegations support a claim that Schubert used his position to coerce swimmers to wear Speedo swimsuits or face being left home for the Olympics. To be sure, the facts here are different from Hyrdolevel where a trade group’s standard had the de facto force of law. But the same impermissible element of coercion is present where Schubert sets the standard (Speedo) and then enforces it by threatening to remove swimmers from the Olympics. The exclusionary anticompetitive effect on TYR directly parallels the effect on the plaintiff cut-off valve manufacturer in Hydrolevel. [ Hydrolevel was a legal precedence - Tony]

Court finds that TYR properly pleads that the disparaging statements are “provably false” (Compl. ¶ 23); that Schubert essentially told the national team that the Speedo LZR could be the difference between making the Olympic team or staying home (id. ¶ 16(l)); that the swimmers who heard Schubert were likely persuaded (id. ¶ 17); that athletes had no way of knowing that Schubert’s claims of a “2% advantage” were false (id. ¶¶ 16(k), 17-18); that Schubert’s disparaging statements began at least in September 2007 and continued at least through April 2008 (id. ¶¶ 16(a)-(I)); and that Schubert’s position as Olympic team head coach gives his statements “a degree of credibility that would never attach to statements made by equipment manufacturers” (id. ¶ 17).

Therefore, the Court cannot dismiss TYR’s federal and state antitrust claims based ..."

Regarding USA Swimming having Immunity like the NFL

USA Swimming next contends that it has implied immunity under the Sports Act, as applied to federal and state antitrust laws. To establish its implied immunity in this case, USA Swimming primarily relies on persuasive authority from the Eleventh Circuit in JES Properties, Inc. v. USA Equestrian, Inc., 458 F.3d 1224 (11th Cir. 2006). But JES Properties is not controlling.

To begin with, implied immunity is strongly disfavored in the antitrust context. In Carnation Co. v. Pac. Westbound Conference, the Supreme Court made clear that

[r]epeals of the antitrust laws by implication from a regulatory statute are strongly disfavored, and have only been found in cases of plain repugnancy between the antitrust and regulatory provisions. We have long recognized that the antitrust laws represent a fundamental national economic policy and have therefore concluded that we cannot lightly assume that the enactment of a special regulatory scheme for
particular aspects of an industry was intended to render the more general provisions of the antitrust laws wholly inapplicable to that industry.
... Therefore, implied immunity cannot be extended from the face of the pleading.10

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