Phil Mickelson, Bryson DeChambeau and nine of their fellow golfers filed a lawsuit against the PGA Tour. The 101 page Complaint alleges, among other things, that the PGA Tour violated the Antitrust Laws of the United States by acting as a monopoly to crush competition. The competition that the PGA Tour is allegedly attempting to crush is, of course, the upstart Saudi Arabia-backed LIV golf tour. The lawsuit is pending in Federal Court in the Northern District of California.
Unless some settlement is reached (which seems highly unlikely), this lawsuit promises to be both entertaining and precedent setting for possible future lawsuits against professional sports leagues. Given the behemoth law firms that will be involved on both sides, it is also likely that this case could impact antitrust law in other industries for years to come.
The antitrust laws in this country are found in the Sherman Act (15 U.S.C. § 1, et seq.). These laws provide, among other things, that it is illegal to acquire or maintain a monopoly through anticompetitive conduct. In order to establish a violation of Section 2 of the Sherman Act, Phil Mickelson and his fellow golfers will have to show (1) the possession of monopoly power in the relevant market, and (2) the willful acquisition or maintenance of that power. Stated in layman’s terms, Phil’s attorneys are arguing that the PGA Tour is, essentially, the only game in town and that the PGA Tour is using its power to quash competition (namely the LIV tour). This is a highly complex area of the law.
One of the benefits of an antitrust lawsuit is that the statute permits the prevailing plaintiff to receive trebled damages. This means that any award the plaintiff is able to obtain for violation of antitrust laws entitles the plaintiff to three times what is awarded. The prevailing plaintiff also receives attorney’s fees and costs.
Interestingly, the Sherman Antitrust Act is not necessarily designed to just protect the plaintiff golfers here. The golfers will need to focus their arguments on establishing that the PGA Tour’s alleged anti-competitive behavior somehow harms consumers (the public that views these golf tournaments). The argument will have to be that the PGA’s actions restrict competition to such an extent that the quality of the product is diminished for the viewing public. This will undoubtedly be a focus of the PGA’s defense. The PGA will also likely assert that there is no monopoly as the plaintiff golfers are permitted to play in other tours.
The allegations in the Complaint go beyond the alleged violations of the Antitrust Act. The Complaint also charges the PGA with unlawful restraint of trade and breach of contract. The contract in question is the agreement that all players enter into when they agree to be members of the PGA.
While the lawsuit could potentially go on for years, we could have an early indication of the Court’s thinking on plaintiffs’ case as three of the golfers are seeking an immediate injunction. These three golfers want an early ruling so that they may be permitted to take part in the very lucrative FedEx Cup playoffs, set to begin shortly after the filing of the Complaint.
This is by no means the first antitrust action brought with regards to professional sports. In 1986, the upstart USFL filed an antitrust lawsuit against the NFL. The USFL alleged (similar to the golfer plaintiffs here) that the NFL engaged in anticompetitive behavior to crush the upstart league. After an extended Court battle, the USFL actually won a jury verdict against the NFL. The NFL was found to have violated the antitrust laws. But this result shouldn’t give Phil and his friends comfort. Unfortunately for the USFL, the jury famously (or infamously) awarded only $1.00 in damages. But with the treble damages provision of the Sherman Act, the award was increased to $3.00. After years of litigation and millions spent in legal fees, the final award (with interest) was a whopping $3.76.
We will follow the Mickelson v. PGA case closely. Stay tuned …!
*Robert A., Burke is a trial attorney and a Partner in MacElree Harvey’s Commercial Litigation Department
