X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
A federal judge has rejected a proposed settlement of an antitrust suit against the National Football League and its member teams over the pricing structure of the “Sunday Ticket” on satellite television after finding that consumers weren’t getting enough money and that the plaintiffs’ lawyers were getting too much. In a 48-page opinion in Schwartz v. Dallas Cowboys Football Club, Judge Eduardo C. Robreno of the U.S. District Court for the Eastern District of Pennsylvania also found that the NFL was getting too much in the settlement by promising a new pricing structure for just one year in which consumers could purchase the Sunday Ticket on a weekly basis, but reserving the right to revert to the old pricing structure if its revenues dropped by more than $10 million. Under the proposed settlement, up to 1.8 million consumers would have shared a pool of $7.5 million in cash and would have been entitled to coupons for discounts on merchandise from the NFL Shop. Plaintiffs’ lawyers would have been paid $3.7 million in fees and expenses, and the NFL had promised to foot the $2.3 million costs of notifying the class. Plaintiffs’ lawyers argued that the settlement was the best they could get considering the risks the case still faces. The NFL could win the case, they said, if the court employs a “rule of reason” analysis and accepts the NFL’s argument that its policy of jointly selling the games in one satellite package is part of an overall business strategy that leads to a high-quality product on the field as well as financially successful teams which would be undermined if those games were available on a more accessible medium, like cable. The plaintiffs’ lawyers also conceded that current technology makes it unfeasible to provide individual games on any given Sunday for the millions of potential consumers. Finally, they said, the NFL might successfully argue that the class members are not entitled to any damages at all since they are not the “direct purchasers.” But Robreno found that the weaknesses in the case couldn’t justify court approval of a settlement that doesn’t provide enough to consumers while paying hefty fees to the lawyers. Instead, Robreno said, courts have a duty to reject such settlements so that plaintiffs’ lawyers will be discouraged in the future from bringing weak cases. “Courts faced with the prospect that class claims may fail at the crucible of motion practice or trial have permitted recovery based on the argument that, in essence, the case is so weak that any recovery is better than no recovery at all after further litigation. Yet, even assuming that the instant claims would be denied on summary judgment or at trial, the sound alternative is not approval of an infirm compromise between the parties, but rejection of the settlement agreement,” Robreno wrote. Rejecting such a settlement “serves important public policy objectives,” Robreno found, because it “works as a prophylactic providing a powerful incentive to class counsel to exercise in the future a high degree of care in the selection and prosecution of class actions.” By contrast, Robreno said, public policy would not be served by paying the lawyers nearly 100 percent of their fees and expenses “for bringing about little benefit to the class or to the public.” And court rejection also “protects defendants from having to fund the settlement of unmeritorious claims simply because the claims have been joined and aggregated with equally unmeritorious claims,” Robreno wrote. Finally, Robreno said, rejection of the settlement will reassure the public “that the large amount of judicial resources spent on the superintending of class action litigation does not unjustly recompense plaintiffs asserting unmeritorious claims and their lawyers.” In the opinion, Robreno discussed six reasons that the settlement is either inadequate or unfair: � It fails to provide sufficient and non-final prospective relief. � The amount of the settlement fund is too low. � The merchandise discounts do not ameliorate the antitrust violation alleged and are not convertible to cash. � The release clause bars later claims for future conduct which was not the subject of the litigation and provides defendants broad protection for inadequate compensation. � The attorneys’ fees are too large and are not commensurate with the limited success achieved in the litigation. � By failing to properly balance the interests of the class with those of counsel and the defendants, it offends sound notions of public policy. � Looking first to the NFL’s promises to restructure the pricing of the Sunday Ticket, Robreno found that consumers weren’t getting enough. “The relief provided through the temporary requirement that the defendants sell Single Sunday Ticket is extremely limited and non-final,” Robreno wrote. Under the settlement, the NFL had promised to provide, as an alternative to NFL Sunday Ticket, a “Single Sunday Ticket,” which would allow consumers to purchase on a weekly basis, rather than on a seasonwide basis, all NFL regular season Sunday afternoon games. “Still, under this arrangement, the consumer may not view any one single game of his or her choice but rather he or she must purchase a package of all NFL regular season games played on Sunday afternoons if the consumer wants to view a particular game on that Sunday afternoon,” Robreno found. And the NFL had promised to provide the new package for just one NFL season. As a result, Robreno concluded that the settlement “provides limited additional consumer choice to the members of the class.” When compared to the “ambitious goals” the plaintiffs’ lawyers set out in the complaint — which sought to declare the bundling of NFL regular season games through NFL Sunday Ticket unlawful and allow consumers to view any one game of their choosing without the need to purchase a package of games — Robreno concluded that “the relief obtained is minimal at best.” The merchandise discounts, Robreno said, “are not a satisfactory mechanism for settling this antitrust action” because they “do nothing to ameliorate the alleged antitrust violation asserted by the plaintiffs against the defendants.” And the “real value” of the coupons “is questionable,” Robreno said, since they are transferable but are not redeemable for cash and expire on Dec. 31, 2001. “Given these infirmities, the court concludes that the coupons in this case are simply a sales promotion for the defendants’ products which the class members neither have sought nor are likely to benefit from their use,” Robreno wrote. Robreno also found that the monetary value of the settlement was simply too low since it provides just $7.5 million in cash and estimated savings of $12 million — a figure that Robreno found was “based on numbers that are mere guesses.” The NFL would also be getting too broad a release, Robreno said, since the settlement bars future claims related not only to satellite television, but also “the Internet or any form of technology.” The release is also too broad, he found, because it bars later claims based on future conduct. “Although the law permits a release to bar future claims based on the past conduct of the defendant, this release would bar later claims based not only on past conduct but also future conduct,” Robreno wrote. “Because public policy prohibits a release from waiving claims for future violations of antitrust laws, and given that under the proposed release class members would be releasing unlitigated future claims, the releases are too broad.” Finally, Robreno found that the plaintiffs’ lawyers would be paid too much. “It is true that plaintiffs’ counsel in this case enjoys a fine reputation in the field of complex civil litigation. It is also true that counsel proceeded upon a novel theory, conducted diligent discovery and ultimately decided, in good faith, and upon the exercise of professional judgment that, settlement rather than further litigation constituted the better part of valor,” he wrote. “Yet, Chevrolet-type results do not warrant Cadillac-size, legal fees. Even assuming the accuracy of the expenses incurred and the lodestar reported by counsel, a matter not before the court at this time, the proposed payment of $3.7 million would compensate counsel for nearly 100 percent of counsel’s reported lodestar and expenses.” Attorney Howard J. Sedran of Levin Fishbein Sedran & Berman and Dennis Stewart of Milberg Weiss Bershad Hynes & Lerach in San Diego served as co-lead counsel for the plaintiffs. They were joined by attorneys Donald E. Haviland Jr. and Austin Cohen of Levin Fishbein; Roberta Liebenberg of Fine Kaplan & Black; Ira Neil Richards of Rodriguez & Richards; and David T. Shulick of Frank & Rosen. The NFL was represented by attorney Richard P. McElroy of Blank Rome Comisky & McCauley, along with Peter J. Nickles, Timothy C. Hester, Neil K. Roman and Amy-Kelley Kemper of Covington & Burling in Washington, D.C.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.