LIV v. PGA (legal analysis)
In the antitrust case of LIV v. PGA, the United States Circuit of Appeals for the Ninth Circuit should find the defendant liable due to a preponderance of evidence of violations of the Sherman Act, and the breach of contract by PGA to control independent contractors. The PGA has allegedly engaged in anti competitive behavior such as interfering with LIV player's sponsorships, threatening both players and agents with bans, and preventing LIV Golf from acquiring needed partnerships such as major television networks and tournament venues. This violates the Sherman Act because it has been deemed illegal to engage in restraint of trade or commerce in any territory of the United States or of the District of Columbia. This has significant implications as the plaintiff can recover up to three times the damages claimed for violation of the Sherman Act. This paper shall discuss why LIV Golf is entitled to injunctive relief from the PGA because of the harm caused to the plaintiff.
In the face of new competition from LIV Golf, it has been alleged that the PGA Tour has engaged in numerous anti-competitive activities that are in direct violation of the Sherman Act. This is not the first time the PGA has faced a threat of competition nor is it the first time Greg Norman has been in support of a rival tour with the formation of the World Tour in the late 1990s. Additionally, the tour has previously faced an exodus of star players, one of such being Jack Nicklaus over similar disputes, as the PGA had an abundance of control over its player's rights. The World Tour went from an outrage and a threat to the formation of the World Golf Championship series which was adopted by the PGA and other tours to create a series of events with elevated awards and the top players from all over the world competing. Similarly to today, in a charge led by Jack Nicklaus, many top players had issues with the control the PGA had over them. They were limited on sponsorships and not seeing newly driven revenue that the PGA was making from television. This dispute ultimately led to more power and financial benefits for the tour players and also created the split between the PGA Tour and the PGA of America. These changes paved the way for the PGA Tour as we know it today. Once again the PGA finds itself in competition with a rival tour led by Greg Norman. With the actions taken in response to the competition by the PGA, there is a preponderance of evidence that the defendant is in violation of the Sherman Act. The PGA tour has engaged in a restraint of trade such as threatening players and their agents as well as interfering with the plaintiff's ability to acquire assets needed to truly compete with the PGA. By threatening bans to players and agencies combined with interference in sponsorships, television networks, and tournament venues, not only is it risky for anyone else to do business with LIV, but it is near impossible for LIV to properly push their product. This is a significant offense of the Sherman Act as it is illegal to engage or conspire to engage in restraint of trade or commerce in any territory of the United States. This interference is where the PGA crosses the line from protecting its own success to interfering with a rival's opportunity to grow into real competition. This could result in substantial punishment to the defendant as the plaintiff can recover up to three times the damages claimed.
The PGA is in violation of attempting to control independent contractors by threatening bans for anyone who competes in a LIV Golf event despite it being the player's individual choice where they play their events. A major difference between employees and independent contractors is the amount of control the employer has over them. Independent contractors should have the choice of where they want to take their business. In the case of the PGA Tour’s attempt to prevent players from competing in LIV events, it is an overstep by the defendant. Previously, if a tour player wanted to compete in a non PGA sanctioned event they would have to request permission from the commissioner and it would be his decision whether or not they could play in the event. Now that the PGA tour faces competition, commissioner Jay Monahan has threatened lifetime bans for any player who competes in a LIV event. The PGA does not ban players from playing in other events that they do not view as direct competition. This is purely an anti competitive move and an attempt at control. This is not only a violation of the Sherman Act as previously mentioned, but an infringement on allowing independent contractors to exercise their rights to choose where they want to play. If players face extreme penalties for choosing to play on a rival tour it has a substantial effect on the player's ability to choose as well as further the overall control of the PGA Tour. This control has a substantial cause and effect because if the top players cannot or will not leave due to penalties, then the PGA Tour does not face true rival competition from LIV. Monahan and the tour can continue to maintain control over their players without real fear of their competition surpassing them. This control of independent contractors and the effects it has on furthering the growth of LIV Golf further validates the claims made by the plaintiff.
Finally, PGA should be held liable because there is a preponderance of evidence of real harm to the plaintiff. The defendant has caused significant financial harm as well as threatened LIV Golf’s ability to compete with the PGA as they look to find potential sponsors, venues, and major television networks to properly build their brand. The PGA controls and has several media contracts with major television networks such as CBS, ESPN, and NBC (which also owns the Golf Channel). These networks are all unable to cover LIV due to their contracts with the PGA tour. This leaves LIV fighting for scraps to find a subpar media outlet to broadcast their events. Without proper coverage, LIV will be unable to acquire the proper attention and popularity necessary to generate revenue through viewership and sponsorships. This lack of coverage and attention due to the defendant’s actions could prove to be detrimental to the plaintiff’s ability to succeed. In a similar case, United States v. Paramount Pictures, Inc. 334 U.S. 131 (1948), it was found that Paramount and the Hollywood studio system were engaging in a variety of anti competitive practices that violated the Sherman Act. At the time Hollywood film studios had a large amount of control over what was played and sold as the studios also owned the majority of theaters as well as had exclusive contracts with actors and directors. Paramount and other large studios were able to manipulate the sales and viewership of what benefited their personal agenda as well as prevent their top actors and directors from making films with any other studio. This is largely similar to the PGA tour’s control over its players as well as its control over the media that allows only their tournament coverage to be broadcasted across major stations. The United States Supreme Court is a precedent based system, when there is one case that is substantially similar to another the same law applies. With substantially similar violations of restrictions and interference by the defendants that caused substantial harm to the plaintiff, the verdict should ultimately be the same.
A counterpoint for the PGA would be that while there have been bans and restrictions, the LIV players were not banned from the majors. The major championships are run by Augusta National Golf Club, The PGA of America, the USGA, and the R&A which are all separate entities from the PGA Tour. While the PGA has not conspired with these organizations to ban players from the majors directly, they have made it much more difficult to qualify in other aspects. Two of the biggest ways to qualify for major championships are by winning PGA Tour events, and earning points for a higher world ranking. Due to the restrictions in place LIV players not only cannot qualify by winning tour events, but they cannot even earn points for the Official World Golf Rankings. Currently, this is not a huge issue as many LIV players still have status from past success or lifetime exemption for winning majors, but if the tour looks to grow then this could prove to be a serious issue down the road. Players would be even more reluctant to leave for a spot with LIV because it could potentially mean forfeiting a chance at the majors or at least make the road to them much harder. It could also be argued that it was the LIV player's choice to leave and most knew they would be banned. Although this is true, the PGA has still interfered, extending beyond the ban of just the players. The extent of the restrictions cause significant reputational harm to the plaintiff for both the players and the Tour itself leading to a loss in current sponsorships and prevention of future sponsorships or assets. Players may have chosen to leave, but PGA ultimately forced the hands of entertainment networks, player sponsors, and agencies to not provide business for any LIV Golf players. Another relevant case to examine would be Flood v. Kuhn, 407 U.S. 258. (1971). This was an antitrust suit against professional baseball that came about when Flood was traded to another team without being consulted first. He wanted to become a free agent so he could pick whatever team he wanted to play for. The Supreme Court ruled in favor of professional baseball due to the fact that baseball, unlike other professional sports, was exempt from federal antitrust laws. Although the ruling was not in Flood’s favor it later paved the way for free agency. Combined with the fact that the PGA Tour is not immune to federal antitrust laws, Flood v. Kuhn is not substantially similar enough to the case of LIV v. PGA for the precedent based system to take over and rule in favor of the PGA Tour by default. Despite the fact that LIV golfers have not been banned from majors and the ruling of Flood v. Kuhn the PGA Tour is still liable for its actions against the plaintiff.
In conclusion, the United States Circuit of Appeals for the Ninth Circuit should find the defendant liable in the case of LIV v. PGA. The preponderance of evidence proves that the PGA has engaged in activities directly violating the Sherman Act such as threatening players and conspiring to interfere with LIV Golf's ability to acquire the necessary assets and attention to compete with the PGA Tour. The attempt to control players who are independent contractors is a further violation by the PGA. The harm caused by the PGA’s actions as well as the result of United States v. Paramount Pictures further supports the claim of the plaintiff. The overall interference by the PGA Tour has hindered LIV Golf’s ability to grow and succeed. Due to this the court should grant the plaintiff injunctive relief and hold the PGA Tour liable for its actions.
William Milligan
Work Cited
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