Plaintiffs, promoters of “A” Hunter-Jumper Competitions on the Florida Winter Horse Show circuit, filed an action against USA Equestrian, Inc., (“USAE”), United States Equestrian Federation Inc. (“USEF”), an affiliate, and incumbent horse show promoters, granted exclusive rights to produce “A” horse shows within a 250 mile radius (“mileage rule”), of the incumbant venue. USEF is the successor of the American Horse Show Association.
Plaintiffs brought a three count complaint alleging claims of unreasonable restraint of trade under Section 1 of the Sherman Act, monopolization and attempt of monopolization under Section 2 of the Sherman Act, and claims of substantially lessening competition under Section 7 of the Clayton Act.
Amended complaints added claims for violation of Florida’s Antitrust Act, and violation of its Deceptive and Unfair Trade Practices Act. Subsequent amended complaints added additional defendants, including the North Florida Hunter & Jumper Association, Inc.
In the amended complaint before the court upon its granting of motion for summary judgment on implied antitrust immunity grounds, plaintiffs had alleged that the rules of USEF, specifically its mileage rule violated Section 1 of the Sherman Act, and raised claims of monopolization, attempted monopolization and conspiracy to monopolize in violation of Section 2 of the Sherman Act. Defendant USEF is the current “National Governing Body” (“NGB”) for equestrian sport in the United States. It has been so designated under the Ted Stevens Olympics and Amateur Sports Act (“Amateur Sports Act”), 36 USC Section 220501, et seq. USEF has over 80,000 members in 27 horse breeds and disciplines. It is not a promoter, operator or manager of horse shows. The mileage rule was first implemented in 1975. Pursuant to the mileage rule, an incumbent promoter of an “A” show is insulated from competition by competing promoters, in that USEF will not sanction a competing show within a 250 mile radius during the dates of the incumbent show.1 Plaintiffs allege that the relevant product market is “Hunter & Jumper Equestrian Competitions recognized by USEF as Hunter & Jumper Competitions “A” rated and above.” The relative geographic market is defined as the “state of Florida, between December 1 and March 31 of each year.” (“Winter Months”).
Of significance, is that until January, 2004, the USEF left it to the incumbent promoter to waive or require adherence to the 250 mileage rule. In January 2005, USEF promulgated a rule change that granted USEF ultimate control over granting or denying waivers under the mileage rule.2
On a motion for summary judgment by defendants, the United States District Court, Middle District of Florida held that the mileage rule was exempt from antitrust liability pursuant to the doctrine of implied antitrust immunity, under the Amateur Sports Act. 36 USC Section 220501, et seq. (JES Properties, Inc., et al. v. USA Equestrian, Inc., Case No. 8:02-cv-1585-T-24 MAP, United States District Court, Middle District of Florida, Tampa Division, May 9, 2005.)
The court held that the Amateur Sports Act was enacted “to correct the disorganization and serious factional disputes that seem to plague amateur sports in the United States”.3 Under the Amateur Sports Act, the United States Olympic Commission is authorized to recognize one “National Governing Body”, or “NGB” for each sport included in the program of the Olympic Games. As the recognized NGB for equestrian sport in the United States, USEF has a mandate to regulate the sport, pursuant to 36 USC Section 220523(2). As the Amateur Sports Act confers upon USEF an obligation to minimize scheduling conflicts, USEF is entitled to implied antitrust immunity with respect to its mileage rule. The court noted that “the monolithic control exerted by an NGB over its amateur sport is a direct result of a congressional intent expressed in the Amateur Sports Act.”4 In the case before the court, USEF, as the NGB for equestrian sport, specifically approved the mileage rule, and was aware that it may preclude a promoter from obtaining a recognized competition approval on a desired date.
In the alternative, the court found that there was no agreement under Section 1 of the Sherman Act and that even if there were, it was not unreasonable, and assuming that it had anti-competitive effects in a definable relevant market, it was justified by lawful pro-competitive purposes for the improvement of horse show competition, by pitting the best horses and riders against each other on a given show date, rather than reducing the level of competition by disbursal of better horses and riders in additional venues.
In addition, the court found that the plaintiffs had waived any right to bring an action by participating in USEF activities, and by participating in the promulgation of the mileage rule. Finally, the court found that the plaintiffs had failed to show “antitrust injury” or that there was injury to the competitive process, as opposed to mere injury to the plaintiffs themselves as individual competitors.
But in a nutshell, the initial and controlling holding of the court, in dismissing the amended complaint is that USEF enjoys implied antitrust immunity in promulgating rules that reduce scheduling conflicts, as the NGB for equestrian sports.
- There are different mileage rules applicable to other states. For example, states in New England and Middle Atlantic are subject to a 125 mile radius prohibition. Lesser mileage distances apply for “B” and “C” rated horse shows.
- USEF also enacted a “license agreement” regime under which it retained the right to refuse to renew applications of incumbent competitions in they failed to satisfy certain objective standards.
- Citing San Francisco Arts & Athletics, Inc. v. United States Olympic Community, 483 U.S. 522, 544 (1987).
- See, Slip Opinion at 17.
Don T. Hibner, Jr.