Analysis of Trade and Professional Association Horizontal Restraints Under Section 1 of the Sherman Act

• Pages: 25-50

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CHAPTER II

ANALYSIS OF TRADE AND PROFESSIONAL

ASSOCIATION HORIZONTAL RESTRAINTS

UNDER SECTION 1 OF THE SHERMAN ACT

A. Proof of Contract, Combination, or Conspiracy

To prevail un der Section 1 of the Sherman Act, a plaintiff first must

establish a “contract, combination . . . or conspiracy.”

1

There are two

notable aspects of this r equirement in the contex t of lawsuits involving

associations.

First, a plaintiff must show that there was an agreement between

independent actors, because Section 1 does not reach unilateral conduct.

Defendants have invoked the Supreme Cour t’s decision in Copperweld

Corp. v. Independence Tube Corp.

2

to argue that a trade association is a

single economic entity, the members of which are incapable of

conspiring with each other. When faced with this argument, courts have

asked whet her the defendants have common goals and a unity of

economic interests, or whether the assoc iation “bring[s] together

economic power that was previously pursuing divergent goals.”

3

For

example, in Jack Russell Terrier Net work of Northern California v.

American Kennel Club,

4

the court held that the defendant association

and its regional affiliates were incapable of conspiring because they

were not competitors of one another and instead shared common goals.

5

Similarly, in JES Properties, Inc. v. USA Equestrian,

6

the court held that

the defendant association and individual promoters did not conspire.

7

By contrast, in Gregory v. For t Bridger Rendezvous Association,

8

the

court held that the defendant association “represent[ed] a plurality of

actors necessary to establish concerted action under the Sherman Act”

1. 15 U.S.C. § 1.

2. 467 U.S. 752 (1984).

3. Id. at 769.

4. 407 F.3d 1027 (9th Cir. 2005) .

5. Id. at 1034-36.

6. 2005 U.S. Dist. LEXIS 43122 (M.D. Fla. 2 005).

7. Id. at *40-44.

8. 448 F.3d 1195 (10th Cir. 2006 ).

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Antitrust and Associations Handbook

because the members of the association had a direct economic interest in

limiting the number of entities, members, and nonmembers that could

sell goods at the association’s rendezvous.

9

This question often a rises in

cases involving sports leagues.

10

The second significant aspect of the concerted act ion question in the

association context is which actions of association representatives can be

said to be the product of an agreement. While associations consist of

separate entities, they are not simply “continuing conspiracies,” and a

blanket rule that any action by an association member or representative

was concerted action “would seriously undermine the standards

articulated by the Supreme Court in Matsushita and Monsanto.”

11

Instead, “an associ ation’s actions satisfy the concerted action

requirement only when taken in a group capacity” and when they can be

9. Id. at 1201; see also Freeman v. San Diego Ass’n of Rea ltors, 322 F.3d

1133, 1147-50 (9th Cir. 2003) (analyzing “single-entity” prece dents and

holding that because defendant associations were not a single entity their

joint venture could be challenged under Section 1).

10. See, e.g., Nat’l Hockey League Players Ass’n v. Plymouth Whalers

Hockey Club, 419 F.3d 462, 469-70 (6th Cir. 2005) (member teams of

hockey league constituted plurality of a ctors when they adopted eligibility

rules); Fraser v. Major League Soccer, 284 F.3d 47, 55-58 (1st Cir. 2002)

(court of appeals declined to hold that sports leagues are always single

entities, and held that it need not determine whether soccer league

constituted single entity for antitrust purposes in light of plaintiff’s failure

to define relevant market); Chicago Prof’l Spor ts v. NBA, 95 F.3d 593

(7th Cir. 1996) (when acting in broadcast market, professional b asketball

league was more like a single firm than a group of competitors); Am.

Needle, Inc. v. New Orleans Louisiana Saints, 496 F. Supp. 2d 941 (N.D.

Ill. 2007) (members of pro fessional football league were a single entity

and incapable of conspiring to violate the antitrust laws), aff’d, 538 F.3d

736 (7th Cir. 2008).

11. AD/SAT v. Associated Press, 181 F.3d 216, 234 (2d Cir. 1999) (“every

action by a trade association is not conce rted action by the association’s

members”); see also Viazis v. Am. Ass’n of Orthodontists, 314 F.3d 758,

764 (5th Cir. 2002) (concerted action not shown where plaintiff was

unable to show there had been a membership vote or o ther formal

decisionmaking process by the a ssociation, nor did plaintiff show that

individual members took action with apparent authority of the

association); Wilk v. Am. Med. Ass’n, 895 F.2d 352, 374 (7th Cir. 199 0)

(“a tr ade association is not, just because it involves collective action by

competitors, a ‘walking conspiracy’”) (citing Consol. Metal P rods. v. Am.

Petroleum Inst., 846 F.2d 284, 293-94 ( 5th Cir. 1988)).