Class-Action Lawsuit Against NFL Faces Judicial Scrutiny

Class-Action Lawsuit Against NFL Faces Judicial Scrutiny

The federal judge presiding over the class-action lawsuit filed by "Sunday Ticket" subscribers against the NFL expressed his frustration with the plaintiffs' attorneys on Tuesday. U.S. District Judge Philip Gutierrez, overseeing the case in Los Angeles, emphasized that the underlying premise was straightforward.

Frustration Among Fans and Business Subscribers

Judge Gutierrez highlighted the plight of a Seattle Seahawks fan living in Los Angeles who cannot watch their favorite team without purchasing a subscription for all the Sunday afternoon out-of-market games. This lawsuit covers 2.4 million residential subscribers and 48,000 businesses who paid for the package of out-of-market games from the 2011 through 2022 seasons.

The plaintiffs claim that the NFL violated antitrust laws by selling its package of Sunday games broadcasted on CBS and Fox at inflated prices. Additionally, they argue that the league restricted competition by offering "Sunday Ticket" exclusively through a satellite provider.

The NFL maintains that it has the right to sell "Sunday Ticket" under its antitrust exemption for broadcasting. However, the plaintiffs counter that this exemption only applies to over-the-air broadcasts and not pay TV.

Potential High Stakes

If the NFL is found liable, a jury could award up to $7 billion in damages, a figure that could balloon to $21 billion due to the potential for triple damages in antitrust cases.

This week was not the first time Judge Gutierrez voiced dissatisfaction with the plaintiffs' side. On Monday, he admonished their attorneys for repeatedly describing past testimony, which he considered a waste of time.

Before Dallas Cowboys owner Jerry Jones resumed his testimony, Judge Gutierrez questioned the relevance of the plaintiffs' attorneys referencing Jones’ 1995 lawsuit against the NFL, which challenged the league's licensing and sponsorship procedures. That case was ultimately settled out of court.

Witnesses Take the Stand

When asked on Tuesday if teams should be able to sell their out-of-market television rights, Jones argued that they should not, as it "would undermine the free TV model we have now." Retired CBS Sports chairman Sean McManus also testified, reiterating his opposition to "Sunday Ticket" and the NFL's Red Zone channel. McManus contends that "Sunday Ticket" infringes on CBS's exclusivity in local markets.

During negotiations, both CBS and Fox requested that "Sunday Ticket" be sold as a premium package. DirecTV, not the NFL, set the prices during the class-action period. The NFL has clauses in its television contracts with CBS and Fox that state "resale packages (Sunday Ticket) are to be marketed as premium products for avid league fans that satisfy complementary demand to the offering of in-market games." Additional language prohibits selling individual games on a pay-per-view basis.

Shifting Rights and Revenue

From 1994 through 2022, the NFL received a rights fee from DirecTV for the package. Last year, Google's YouTube TV acquired "Sunday Ticket" rights for seven seasons. During a deposition, DirecTV marketing official Jamie Dyckes stated that MLB, the NBA, and the NHL had a suggested retail price for their out-of-market packages. Dyckes added that there was revenue sharing between the leagues and the carriers, as their packages were distributed across multiple platforms.

Testimony will resume on Thursday, with closing statements scheduled for early next week. Judge Gutierrez also mentioned he would consider invoking a rule that allows the court to find that a jury lacks sufficient evidence to rule for a party in a case.

Judicial Critique

Judge Gutierrez candidly admitted, "I'm struggling with the plaintiffs' case." Throughout the proceedings, his comments have reflected his mounting frustrations. He stated, "The way you have tried this case is far from simple." He also remarked, "This case has turned into 25 hours of depositions and gobbledygook," adding, "This case has gone in a direction it shouldn't have gone."

As the case progresses, all eyes will remain on the courtroom, anticipating whether the plaintiffs' attorneys can present a compelling argument that aligns with the straightforward premise Judge Gutierrez initially outlined. The outcome could have significant implications for how professional sports leagues package and sell broadcasting rights in the future.