Morris Communications Corp. filed a lawsuit against PGA Tour, Inc., alleging violations of section 2 of the Sherman Act by monopolizing the markets for real-time golf score publication and syndication, as well as refusing to deal with Morris. The district court granted summary judgment in favor of PGA, citing a valid business justification for its actions.
Morris, a media company, claimed that PGA’s Real-Time Scoring System (RTSS), which transmits scores via trained volunteers and advanced technology during tournaments, restricted access to golf scores. The RTSS is the sole source for compiled scores, as PGA prohibits the use of cell phones on the course. Access to the scores is limited to the PGA media center, where media entities must acquire press credentials and adhere to PGA's On-Line Service Regulations (OLSR). The OLSR mandate a delay in publishing scores on media websites until either thirty minutes post-occurrence or after scores are available on PGA's official site. The appellate court affirmed the district court's decision.
Credentialed media organizations are restricted by the OLSR from selling or syndicating compiled scoring information obtained in the media center to non-credentialed third-party publishers without a license from PGA. Morris argues that this grants PGA an unfair monopoly on real-time golf score publication. PGA defends the OLSR as a necessary measure to protect its investment in developing RTSS and to maintain website competitiveness. Morris filed suit against PGA with four antitrust claims: monopolization, unlawful refusal to deal, monopoly leveraging, and attempted monopolization.
After pre-trial discovery, the district court granted PGA's motion for summary judgment, determining that the OLSR served a valid business purpose and did not violate antitrust laws, even if it created a monopoly. Morris later filed a Rule 60 motion, claiming that PGA's new terms of service further violated the Sherman Act by prohibiting commercial use of information from its website without a license. The district court denied this motion, ruling the new terms were outside the scope of the initial lawsuit, which focused solely on the OLSR. It concluded that Morris failed to substantiate any antitrust claims, emphasizing that the media center was not an essential facility and that PGA had no unlawful intent to harm competition.
Morris appealed the summary judgment and Rule 60 denial, which were consolidated. The court will review the summary judgment de novo and the Rule 60 motion for abuse of discretion. It clarified that the case is strictly an antitrust matter, not involving copyright law, constitutional issues, or press freedoms, and will be decided based on the presented facts.
The central issue is whether the PGA's restrictions on Morris's ability to sell real-time golf scores to third parties infringe upon section 2 of the Sherman Act. The court does not consider Morris's rights to access and distribute scores internally, which the PGA permits. Morris asserts that this matter is purely an antitrust issue, not a First Amendment one. During a hearing, the district court emphasized its focus on the presented issues without issuing advisory opinions or altering established facts.
The PGA's counsel indicated that the PGA supports the press's role in disseminating news and previously allowed Morris to access real-time scores for free for media purposes. The conflict arises only when Morris seeks to enter the news syndication business.
Under section 2 of the Sherman Act, monopolization involves possessing monopoly power in a relevant market and willfully maintaining that power, as established in case law. Morris contests the district court's ruling on its monopolization claims, noting that proving attempted monopolization requires demonstrating intent to acquire monopoly power, alongside evidence of anticompetitive conduct and a dangerous probability of success. As Morris failed to survive summary judgment on its monopolization claim, it cannot pursue its attempt claim. The elements of monopoly power include the ability to control prices or exclude competition, alongside predatory actions that limit competitive practices within the market.
For a practice to be deemed exclusionary under Section 2 of the Sherman Act, it must harm the competitive process and consumers, not merely competitors. The focus is on whether the ability to exclude competitors results in significant adverse effects on competition. Two theories underpin unilateral refusal to deal claims: the intent test and the essential facility test.
Under the intent test, monopolists cannot extend their power through unnecessary exclusion of competitors. The essential facility test prohibits a company with exclusive control over a critical facility from denying reasonable access to competitors if such denial would bolster its monopoly power. The plaintiff must prove the existence of an essential facility that is not practically or economically replicable.
A company is free to refuse to deal unless there is a purpose to create or maintain a monopoly. Even monopolists have no obligation to cooperate with rivals if valid business reasons exist for their refusal. In assessing Section 2 violations, the relevant market and the defendant's monopoly power are typically evaluated, but in this case, the court determined that even if the defendant, PGA, held monopoly power, it had valid business justifications for its actions, thereby not violating Section 2.
The Sherman Act aims to prevent unlawful monopolization and refusals to deal. Unlawful monopolistic conduct must lack a legitimate business purpose and primarily exist to eliminate competition. Conversely, refusals to deal that serve legitimate business interests, even if they harm competition, are permissible under antitrust laws.
Once the defendant demonstrates a valid business justification, the burden shifts to the plaintiff to prove that this justification is a pretext. In this case, PGA has shown a legitimate business justification by aiming to prevent Morris from 'free-riding' on PGA's proprietary RTSS technology. The prevention of 'free-riding' is recognized as a legitimate business purpose. PGA has denied Morris access to its tournaments unless Morris agrees not to sell PGA's proprietary real-time golf scores to unauthorized third parties. Morris contends it has the right to sell these scores, but this is rejected because the scores are a derivative product of PGA's RTSS, which PGA owns exclusively. The court supports PGA's right to sell or license its products, including championship golf and derivative scores, in a manner similar to its existing licensing agreements with television stations.
Morris argues against PGA's restrictions on score dissemination, claiming PGA's lack of prior restrictions undermines its current position. However, the court finds that PGA retains the right to control its property interests regardless of past practices. Morris acknowledges PGA's property right but insists that real-time scores would not exist without PGA's comprehensive system. Morris must purchase PGA's product to sell it, as the antitrust laws do not require PGA to provide its competitive advantages for free. PGA is willing to sell its products to credentialed media, including Morris, which allows them to syndicate scores after paying a licensing fee. Consequently, PGA has met its burden to show a valid business justification, shifting the responsibility to Morris to present evidence that this justification is merely pretextual, thereby establishing genuine issues of material fact.
Morris contends that PGA's refusal to engage with him under his terms is solely economically motivated, which he argues is not a valid business justification and thus constitutes pretext. He cites LePage’s to support that an economic interest alone does not suffice as a defense against monopolization claims under section 2. Morris contrasts his case with several antitrust precedents where plaintiffs were denied the opportunity to sell their own products or services, emphasizing that those plaintiffs had made significant investments or efforts to create or procure their offerings. He refers to this concept as PGA’s "sweat of the brow" defense, which he argues is irrelevant in this context.
Despite acknowledging the differences between his case and those he cites, Morris maintains that the case law still supports a summary judgment in favor of PGA. He notes that while Aspen Skiing is considered at the outer limits of section 2 liability, it involved a defendant refusing to accommodate a competitor in ways that contradicted its own economic interests. Other cases cited, such as Otter Tail Power and Lorain Journal, involved refusals to deal that violated the Sherman Act, while Starter Sportswear found a valid business justification for refusal. Overall, Morris asserts that PGA’s economic rationale does not meet the necessary legal standards for a legitimate defense under antitrust law.
Morris's argument lacks merit as the law recognizes PGA's valid business justification of preventing free-riding, which is fundamentally economic. Summary judgment in favor of PGA was appropriate since Morris did not present any material facts to dispute this justification. The court referenced Int’l Railways of Cent. Am. v. United Brands Co., asserting that a company's reasonable measures to protect its business interests do not create genuine factual disputes under antitrust law. Regarding Morris's Rule 60(b) motion for relief based on newly discovered evidence, the court emphasized that such relief is only granted if the evidence could change the trial's outcome. The district court's review is for abuse of discretion, and it found that the new evidence would not have impacted the trial due to PGA's valid business rationale. Additionally, the case is not about copyright law, as the district court ruled the golf scores are not trade secrets. PGA has made efforts to accommodate Morris, including offering to sell its product, and Morris's demand for free access to PGA's proprietary RTSS to profit from it exemplifies free-riding, which antitrust law addresses as a legitimate reason for restrictions. The court affirmed both the summary judgment for PGA and the denial of Morris's Rule 60(b) motion.
