Antitrust Arguments Against NFL Relocation Take a Hit as Raiders, NFL Prevail Over City of Oakland

SLA Law Student Submission

Last week, Chief Magistrate Judge Joseph Spero of the United States District Court for the Northern District of California dismissed the City of Oakland’s case against the now-Las Vegas Raiders. The Court had already dismissed the case in July 2019, but granted Oakland leave to amend its original complaint against the Raiders, the National Football League (“NFL”), and the 31 other NFL teams. The Raiders are moving to Las Vegas, Nevada from Oakland, California.

Oakland asserted three claims against the defendants in its amended filing: (1) violation of the Sherman Antitrust Act, (2) breach of contract, and (3) unjust enrichment. Oakland was able to establish jurisdiction in federal court under its federal law Sherman Act claim, tacking on the state law breach of contract and unjust enrichment claims through the supplemental jurisdiction provision of 28 U.S.C. §1367(a). After Oakland submitted its new complaint, the Raiders moved to dismiss the suit again under Federal Rule of Civil Procedure 12(b)(6), contending that Oakland still failed to state a claim on which relief could be granted.

Oakland argued it was entitled to antitrust relief under a theory that but for the NFL’s 32-team limit, either the Raiders would have stayed in Oakland or another team would have moved there. A key question in the case was whether the NFL’s relocation fee—a one-time charge that the league levies on teams attempting to change cities—represented a key cog in an impermissibly anticompetitive machine. Oakland made the case that its injuries came in the form of lost investment value, lost income, lost tax revenue, and devaluation of the Oakland Coliseum (where the Raiders played their games).

Judge Spero remained unpersuaded by Oakland’s amended complaint. First, the Court opined that Oakland failed to articulate a credible alternative to the NFL’s 32-team structure, compelling dismissal of the city’s claim. Second, the Court found that while the possibility of receiving part of a relocation fee may persuade NFL owners to approve a relocation, this motivation only arises ex post a team’s decision to move (and, in any case, quick approval for relocation moves toward a more competitive market that presents less antitrust issues). In fact, as the Court held, the high relocation fee serves as an ex ante disincentive for relocation, thus providing host cities like Oakland with an advantage. As such, granting antitrust relief to Oakland for an aspect of the relocation process that actually protected the city’s interests did not logically follow. And third, the Court distinguished damages compensable under the antitrust laws from those that Oakland sought, concluding that none of the city’s alleged injuries fit into the statutory box of “injury to ‘business or property.’” In addition, the Court also quickly dismissed Oakland’s allegations of a group boycott by the NFL of the city.

With the antitrust claim thrown out, only the state law claims remained. At that point, given the lack of an anchoring federal claim to which the state law claims could attach in supplemental jurisdiction, and incomplete diversity of citizenship between the two parties through which subject matter jurisdiction could be alternatively established under 28 U.S.C. §1332, the Court also dismissed Oakland’s state law claims (this time, unlike the antitrust claim, without prejudice). 28 U.S.C. §1367(c) provides courts with the discretion to dismiss state law claims when the court dismisses the anchoring federal claim, and the Court followed its usual approach in doing just that here.

This is great news for the Raiders, who are not only contending with the uncertainty of the ongoing coronavirus pandemic, but also getting ready to play their first season in Las Vegas. The upshot for the City of Oakland is that it can refile the state law claims in state court if it likes or appeal the District Court’s decision to the U.S. Court of Appeals for the Ninth Circuit.

Perhaps most significant is the Court’s denial of numerous antitrust arguments made by a former NFL host city in relocation litigation. The antitrust laws, it seems, may not be the most effective weapon for former NFL cities to wield against teams and the league in the courts. In contrast, a relocation lawsuit brought by St. Louis’ dome authority, the City of St. Louis, and St. Louis County against the now-Los Angeles Rams, the NFL, and the league’s other 31 teams is proceeding in Missouri state court, with the plaintiffs asserting various contract law claims. Sports law enthusiasts will be keeping tabs on that case with the Raiders suit now out of court.

Eli can be reached at enachmany@jd22.law.harvard.edu