Mega retailer Fanatics, the NFL and MLB want a federal court to toss out antitrust lawsuits centered on web-based sales of branded merchandise that have been filed against them.
The latest movement in the cases came this week when an attorney representing Fanatics requested the court to hold a conference to discuss an anticipated motion by the retailer to dismiss a lawsuit brought by Casey’s Distributing, a Nebraska-based licensed merchandise seller, against Fanatics, MLB and MLB teams.
Filed in June, the suit accuses MLB, its teams and Fanatics of imposing unfair restrictions on how licensed products are distributed to other wholesalers and retailers.
The restrictions amount to collusion that enables Fanatics, which MLB partly owns, to establish an unassailably dominant position in the e-commerce market for sales of professional baseball merch, asserts the suit filed in US District Court for the Southern District of New York.
“MLB, Fanatics, and certain horizontally competing licensees and retailers have entered into various agreements that serve to severely limit Fanatics’ and defendants’ competition,” the suit states. “These agreements violate the antitrust laws. … Fanatics now dominates Amazon’s, Walmart’s, and others [third-party online marketplaces] as a result of the agreements.”
Similar claims are made in a separate suit against the NFL, its teams and Fanatics. Casey’s Distributing is also the plaintiff in that lawsuit against the NFL/Fanatics.
In the Nov. 21 filing in the MLB case, Fanatics attorney Christopher S. Yates of firm Latham & Watkins LLP laid out reasons the lawsuit against MLB and Fanatics should be dismissed. Yates is also representing Fanatics in the NFL case, and he says there is overlap in erroneous “legal claims and theories” from Casey’s in both cases.
“Like the NFL case, [Casey’s] lawsuit is an attempt to turn a presumptively lawful vertical distribution policy – where the owner of intellectual property decides who may sell its licensed products online – into a supposed group boycott,” the filing asserts.
Yates continues: “Online distribution policies are commonplace, procompetitive, and rarely raise antitrust concerns. … The [suit] should be dismissed because [Casey’s] lacks antitrust standing to challenge these lawful, vertical distribution agreements, and the [suit] fails to plead: a plausible antitrust conspiracy that results in harm to competition, or market power in any proper relevant market.”
Related reasons Yates gives for dismissal include that MLB’s grant of limited exclusivity to Fanatics is lawful. “A property owner may license that property to whomever it wants,” Yates states. As the trademark owner, MLB “has the right to exclude everyone and handle distribution entirely itself. The fact that it chose Fanatics to handle certain aspects of this business does not harm competition and fails to state a claim under the Sherman Act.”
Back in October, a judge in the Southern District of New York granted a request from Fanatics and the NFL to file a motion to dismiss the suit in that case, but opted to delay a briefing schedule to review further consideration until a motion to compel arbitration in another lawsuit involving anti-trust claims in online sales of NFL merchandise is resolved.
Filed in March by Saul Maldonado and other individual plaintiffs, that third lawsuit claims that the NFL and Fanatics have conspired to dominate the retail market for online sales of NFL-licensed merch. The plaintiffs want a judge to declare the NFL and Fanatics’ alleged actions illegal and to enjoin the retailer and league from ever engaging in such activities again.
According to court records, the NFL/Fanatics believe that the plaintiffs in the Maldonado case are subject to binding arbitration agreements and that claims in the case must be brought in individual arbitrations rather than as a class action. A ruling has not yet been made relative to arbitration as of this writing, records showed.
.