A jury in Los Angeles federal court sided with plaintiffs in a class action lawsuit against the National Football League last month, leading to an order for the league to pay approximately $4.7 billion in damages. The lawsuit, which was filed on behalf of over 2.4 million residential subscribers and more than 48,000 commercial establishments, alleged that the league violated antitrust law through its out-of-market NFL Sunday Ticket product. The jury vote claims that the league colluded with DirecTV, the former primary home of the service, along with broadcast networks CBS and FOX to raise the price of subscriptions in order to watch out-of-market contests.
There could be extensive repercussions and reverberations with this lawsuit depending on what happens within the appeals process. In a statement released shortly after the jury vote was announced, the league stated that it will appeal the decision. Since the class action suit pertains to federal antitrust law, the damages would be tripled and equate to more than $14 billion. The jury ordered the league to pay $96.9 million in damages to the commercial class and $4.61 billion in damages to the residential class within the lawsuit. John Ourand, sports correspondent for Puck News, recently appeared on The Tony Kornheiser Show where he articulated the scenario surrounding the seminal decision.
“This is a colossal failure by the NFL in that they took a basically $14 billion risk and put it in front of a jury,” Ourand said, “and when you get a jury, specifically in southern California, to decide, ‘Would you rather rule for a small bar or a small business owner or would you rather rule for the big NFL where Roger Goodell came in and was a witness?,’ almost always they’ll side with the NFL.”
The NFL filed a motion last week where the league levied criticism against U.S. District Judge Philip Gutierrez in permitting a juror to remain within the case who admitted that they had paid for a “household member’s Sunday Ticket subscription.” Moreover, the league conveyed that the jury, including the aforementioned juror who was a foreperson in the deliberations, chose to issue damages representative of “the sum total of discounts that class members received.”
The plaintiffs in the case delineated that the lack of competition between the league’s 32 teams as it pertains to media rights resulted in higher prices for consumers, whereas the league outlined that it guarantees access to games anywhere in the United States and makes them free for local fans.
“It was explained to me by one lawyer,” Ourand said, “[that] it would be akin to like if all the soda companies got together and [went], ‘You know what? We’re going to sell soda at this price,’ and there are antitrust laws that are against pooling those resources like that if they’re competing against each other.”
Once Kornheiser found out that the trial had been going on for nearly a decade, he gave an incredulous reaction and wondered why the league had been “so stupid” that it did not attempt to settle the case before reaching trial. Ourand listened to some of the testimony within the case and gathered that Guttierez was siding with the NFL because it was the way the league had enacted its media business for a long time.
“They’ve pooled their media rights and they’ve sold them to networks exclusively,” Ourand said of the league. “Once it got in front of a jury, yeah, they just took a big risk, and the big risk blew up in their face.”
The appeal for the case, Ourand explained, would likely take a long time because the league would have to go to the United States Court of Appeals for the Ninth Circuit and potentially to the United States Supreme Court from there. Gutierrez will hold a hearing on July 31 reviewing the motion filed by the league that could result in deeming the jury’s decision irrational or ordering a new trial altogether. The outcome of this hearing could also result in retaining the verdict but reducing the damages or denying the NFL’s motion altogether. A ruling could either be released that day or issue it through a written filing in the weeks thereafter.
Major League Baseball and the National Hockey League negotiated settlements for class action lawsuits regarding blackouts of games and having to subscribe to a service that included the breadth of regional sports networks within those leagues. Consumers were essentially not given a choice to subscribe to one regional sports network; rather, they were coerced to purchase a package containing games on networks they were not interested in watching.
Both leagues agreed to settlements of their respective cases in providing options to purchase single-team packages at a discount while also retaining blackout policies. Ourand believes the decision in this case could result in a maelstrom of derivative lawsuits pertaining to deals that leagues have agreed on in this regard and is looking into who pushed the NFL to continue its defense in the case rather than settling. Kornheiser presumed that one of the league’s lawyers must have been behind the decision, a sentiment with which Ourand concurred.
“Certainly their lawyers, and ultimately it comes down to Roger Goodell who makes the decision whether to go or not,” Ourand explained, “but who was the real force between saying like, ‘Let’s just draw a hard line here. We’re tired of these class action suits,’ and what this has caused is they’re going to be a billion class action suits filed against every single league and every single deal that they’ve done.”
Kornheiser replied that Ourand was correct in his prognostication about what would happen next. Earlier in the segment, he suggested that all the league had to do was lower the price for bars from $349 to $275 and that they would collectively be content with the outcome. Kornheiser stated that he still subscribes to cable and watches NFL RedZone rather than subscribing to NFL Sunday Ticket during the football season as well.
“If I was the commissioner of hockey, if I was the commissioner of basketball [or] if I was the commissioner of baseball, I’d have my lawyers in there today and I’d say, ‘Let’s get out of these things that we’ve been doing because we don’t want this to happen to us,’ right?,” Kornheiser said.
“And I’d be furious at the NFL for taking such a risk in this case – absolutely, yeah,” Ourand replied.
NFL Sunday Ticket is currently available through YouTube and YouTube TV as part of a media rights deal reportedly valued at $2 billion annually over seven years. The broadcast package was previously distributed by DirecTV since its inception 1994, which is said to have paid $1.5 billion per year. DirecTV is not involved in the NFL Sunday Ticket trial after a judge permitted the company to send customer claims against it into closed-door arbitration.
