A federal judge surprisingly overturned a previous ruling of a case involving the National Football League (NFL) and a subscription package known as the “Sunday Ticket”. The reversal would temporarily free the institution from having to pay a $4.7 billion settlement that would have undermined its finances.
On Thursday, US District Judge Philip Gutierrez ruled in favor of the NFL after reviewing the testimonies of two expert witnesses that the judge claimed used “flawed methodologies” to favor the plaintiff’s cause.
“Without the testimonies of Dr. [Daniel] Rascher and Dr. [John] Zona, no reasonable jury could have found class-wide injury or damages,” Judge Gutierrez stressed in his 16-page ruling.
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The Judge questioned the models used by Dr. Daniel Rascher – one of the experts who were summoned by the plaintiffs – and said that they could not be considered “sound economic methodology” to assess the complex dynamics of out-of-market broadcasts like those offered by the “Sunday Ticket” package.
In addition, Zona’s models were also criticized as they relied on assumptions that made no sense to the Judge.
“Without knowing what ‘direct-to-consumer’ meant, it is impossible to determine if it would have been economically rational for consumers to purchase ‘Sunday Ticket’ from an alternative distributor at a higher price,” Gutierrez wrote.
Background on the Sunday Ticket Lawsuit
This legal proceeding started back in 2015 when a San Francisco bar called the Mucky Duck sued the NFL for allegedly violating antitrust laws as they imposed unfair restrictions and prices on consumers through its premium subscription package “Sunday Ticket”.
The controversial part of the package is that cable companies typically broadcast regional games only. This practice forced subscribers who rooted for teams outside of their state to pay for Sunday Ticket or they would have no chance to watch their games.
The plaintiff argued that cable companies and the NFL conspired to exert monopolistic powers over football games as they controlled who watched what and where and there was no other (legal) alternative that customers could turn to.
The high price charged for Sunday Ticket was also a heated topic of discussion in the lawsuit as the subscription costs $300 per season – a price that many NFL fans can’t afford. The plaintiff stressed that the NFL was able to charge an inflated price for the service as there was no other option for consumers.
What started as a small case rapidly evolved into a class-action lawsuit 7 years later as the subscription package was bought by over 2 million residential consumers and nearly 50,000 businesses across the United States between June 2011 and February 2023.
In late June, the jury favored the plaintiffs and ordered the NFL to pay $4.7 billion as compensation for damages.
Judge Gutierrez Deems the Jury’s Damages Calculation as “Irrational”
Apart from questioning the feasibility of the claims made by these two experts, the Judge also criticized the amount of the settlement proposed by the jury and the method used to calculate the damages that the situation caused to consumers.
The jury awarded the plaintiffs with a mind-blowing amount of $4.6 billion that would be divided among residential subscribers and nearly $100 million to commercial clients. Judge Gutierrez highlighted that this amount did not come from a comprehensive estimation based on the models provided by Zona and Rascher. Instead, the jury came up with its own formula against the Judge’s own counsel on this matter.
Gutierrez said that this calculation resulted from “guesswork or speculation” rather than being based on evidence and reasonable inferences as required by the law. He noted that even if he had not ruled for the NFL as a matter of law, he would have vacated the jury’s damages verdict and conditionally granted a new trial “based on the jury’s irrational damages award.”
NFL’s Response and Legal Strategy
The NFL opted to contest the jury’s verdict and calculations and referred it to the Judge so Gutierrez had the power to make a final decision on the matter.
The NFL has consistently maintained that its media distribution model is pro-consumer and provides fans with multiple options to watch games though critics strongly disagree. In a statement released after Judge Gutierrez’s ruling, the league said:
“We are grateful for today’s ruling in the Sunday Ticket class action lawsuit. We believe that the NFL’s media distribution model provides our fans with an array of options to follow the game they love, including local broadcasts of every single game on free over-the-air television. We thank Judge Gutierrez for his time and attention to this case and look forward to an exciting 2024 NFL season.
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Legal experts had anticipated the NFL would appeal the verdict all the way to the Supreme Court if necessary. However, this ruling at the district court level represents a major victory for the league without the need to resort to what would be a lengthy appeals process.
Plaintiffs Can Still Appeal to the Decision
If the plaintiffs do appeal, they will likely challenge Judge Gutierrez’s exclusion of the expert testimony and his determination that the jury’s damages calculation was improper. The appeals court would then have to decide whether to uphold Gutierrez’s ruling or potentially reinstate the jury verdict.
This is not necessarily the end of the road for the plaintiffs as they can still turn to the 9th US Circuit Court of Appeals to contest Judge Gutierrez’s decision on the case.
This is not the first time that Gutierrez rules in favor of the NFL as he dismissed the case entirely in 2017. The plaintiffs managed to bring it back in 2019 after the 9th Circuit reinstated the proceeding.
If the plaintiffs appeal, the 9th Circuit Appeals Court would have to decide if they will hold up Gutierrez’s ruling or uphold the jury’s calculations, forcing the NFL to pay billions to affected consumers.
Gutierrez’s Ruling Favors Current Bundling Practices in the Streaming Industry
While the immediate impact of this ruling is specific to the NFL and Sunday Ticket, the case has broader implications for subscription services, streaming platforms, and their bundling and pricing practices.
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The lawsuit challenged the practice of licensing premium sports content, arguing that it limits competition and harms consumers. Similar arguments have been made about other sports leagues’ out-of-market packages and exclusive streaming deals.
If Gutierrez had ruled in favor of the jury’s verdict, his decision could have encouraged other parties to file similar legal proceedings against other subscription services that implement similar pricing practices.
This latest win from the NFL marks another pivotal moment in this long-running antitrust case. Gutierrez has once again ruled in favor of the association and it is unclear if the plaintiffs will march onward to the Appeals Court or if they will finally back down after having their cause overthrown for a second time.