The United States Soccer Federation and Major League Soccer on Tuesday defeated an appeal by the North American Soccer League, which operated between 2011 and 2017, in a case that threatens more than $500 million in damages. NASL claims U.S. Soccer and MLS illegally conspired to refuse to recognize NASL as a Division II league.
In a summary order issued by Second Circuit Clerk Catherine O’Hagan Wolfe, and following review by Circuit Judges Dennis Jacobs, Barrington Parker and Raymond Lohier Jr., the Second Circuit rejected NASL’s argument that it was not required to prove a relevant market—meaning an area of competition subject to antitrust scrutiny—to sustain its antitrust claims. Wolfe wrote that NASL “waived” that argument at several points in the litigation and is thus barred from raising it on appeal.
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The appeal follows a federal jury in New York last year siding with U.S. Soccer and MLS. NASL insisted that USSF wrongly classified it as a Division III league, which is the lowest of three divisions and influences how fans, media and broadcasters regard a soccer league in terms of quality and prestige. U.S. Soccer disputed this argument. It maintained the classification was appropriate in light of various factors including minimum stadium seating capacity, number of teams and time-zone coverage.
During the trial, NASL offered several suggested relevant markets for antitrust analysis, but as Wolfe noted, “the jury found that NASL failed to prove any of them.” Wolfe added that NASL had to show “actual harm to consumers,” especially given precedent of antitrust litigation in sports leagues, and it came up short on that front.
“NASL,” Wolfe wrote, “did not present the type of direct evidence of actual, sustained anticompetitive effects on competition in the relevant market as a whole.”
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Other areas of NASL’s appeal also failed. NASL argued that the presiding judge, U.S. District Judge Hector Gonzalez, erred by admitting testimony from NASL officials and in his jury instructions. Wolfe reasoned those challenged evidentiary rulings don’t “bear on the jury’s relevant-market finding” and thus fail to advance NASL’s appellate argument.
U.S. Soccer was represented by Samir Deger-Sen, Christopher Yates and other attorneys from Latham & Watkins, while MLS was represented by Bradley Ruskin and colleagues from Proskauer Rose. NASL was represented by Jeffrey Kessler and other attorneys from Winston & Strawn and Pearson Warshaw.
The litigation has been going on for nine years but isn’t necessarily over. NASL could petition the Second Circuit for a rehearing en banc, which, if granted, would mean other judges on the Second Circuit review the arguments. If that fails, NASL could ask the U.S. Supreme Court for a review. But both types of appellate petitions are normally rejected, meaning U.S. Soccer and MLS are in the driver’s seat and maintain control in governing the soccer industry in the U.S. and Canada.
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