Shields v. Federation Internationale De Natation

Background

Thomas A. Shields, Michael C. Andrew, and Katinka Hosszú, identified as the individual plaintiffs, are professional swimmers. They brought claims under Sections 1 and 2 of the Sherman Act and a California claim for interference with contractual relations against Fédération Internationale de Natation (FINA). The swimmers sought damages for themselves and represented a class seeking injunctive relief. In the related case, International Swimming League, Ltd. (ISL), a rival organizer of swimming competitions and buyer of swimmers’ services, brought Sherman Act claims and a California claim for interference with prospective economic relations.

FINA is described in the opinion as a Swiss organization recognized by the International Olympic Committee as the governing body for international and Olympic aquatic sports. Its rules required member federations to obtain FINA approval for certain international competitions and, at the relevant time, prohibited member federations from having relationships with non-affiliated or suspended bodies unless FINA authorized them. A related rule provided for suspending individuals or groups who violated those restrictions. FINA later amended the rule to repeal the suspension provision, and the opinion states that FINA never suspended a swimmer under it.

ISL sought to organize international competitions and negotiated with FINA member federations in 2018. FINA sent memoranda to member federations stating that ISL was not recognized or affiliated with FINA, that ISL’s competitions were not approved or sanctioned, and that FINA would consider consequences under its rules. The Italian Swimming Federation eventually cancelled a planned December 2018 event in Turin because of the risk that athletes would receive sanctions. ISL later hosted competitions, including one without affiliating with FINA or a member federation.

Summary judgment on Sherman Act Section 1

The swimmers and ISL argued that FINA’s restrictions constituted an unlawful horizontal group boycott. The court held that the record could support findings that FINA and its member federations were separate economic actors capable of conspiring and that FINA’s written rules constituted concerted action. The record also could support a finding that the rules created a horizontal restraint because member federations agreed not to do business with ISL without FINA’s approval.

The court rejected applying the per se or “quick look” antitrust approaches. It instead applied the rule of reason, which generally requires a plaintiff to define the relevant market and show that the challenged restraint had a substantial anticompetitive effect. The court found that the plaintiffs and ISL had not offered sufficient evidence to define the relevant market. In particular, no merits expert provided evidence about the geographic boundaries of the market or the interchangeability between top-tier international swimming competitions and possible substitutes such as college swimming, other sports, or entertainment.

The court also rejected the argument that direct evidence excused defining the market. It found no evidence that FINA prevented ISL from holding competitions without a member federation, and noted that ISL had held such competitions and that the number of its competitions increased from 2019 through 2021. The court therefore concluded that no reasonable jury could find that FINA’s rule was an unreasonable restraint of trade and granted FINA summary judgment on the Section 1 claims.

Summary judgment on Sherman Act Section 2

Section 2 addresses independent anticompetitive conduct. To prevail, a plaintiff had to show monopoly or monopsony power in a relevant market, willful acquisition or maintenance of that power, and antitrust injury. The court found insufficient evidence from which a reasonable jury could define the relevant market or determine which products were interchangeable with international swimming competitions.

The court also found that the plaintiffs and ISL had not presented sufficient direct evidence of monopoly power. Evidence that FINA’s conduct restricted ISL’s output did not establish direct evidence of monopoly power, and there was no evidence that FINA could raise prices for international swimming competitions without losing business to competitors. The court granted FINA summary judgment on the Section 2 claims and did not reach antitrust injury.

State-law tort claims

ISL’s claim for interference with prospective economic relations relied on the Sherman Act violations as the independently wrongful conduct required for that claim. Because the court granted FINA summary judgment on the antitrust claims, it held that those claims could not supply the required wrongful act and granted FINA summary judgment on ISL’s tort claim.

The individual swimmers asserted a California claim for intentional interference with contractual relations concerning the planned Turin event. FINA argued that the court lacked specific personal jurisdiction over FINA for that claim. The court agreed. It found that the swimmers had not made the required showing that FINA’s conduct was expressly aimed at the United States or that their claims arose from FINA’s contacts with the United States. The court concluded that the alleged interference involved a Swiss entity, contracts with another Swiss entity, and an event in Italy, and granted FINA summary judgment on the swimmers’ tort claim.

Sealing and other motions

The court denied in part the administrative motions to file documents under seal. Many documents were found not sealable because the party seeking protection failed to submit the statement or declaration required by the Northern District of California’s local rule. One group of ISL filings remained pending further submission, and the court allowed ISL five days to submit an updated statement. The court stated that material found not sealable would be made publicly available unless a renewed motion to seal was filed within five days.

In the conclusion, the court granted FINA’s motions for summary judgment, denied the swimmers’ and ISL’s joint motion for summary judgment, and denied FINA’s Daubert motions and motion to strike as moot. The order did not state that any motion or claim was dismissed with or without prejudice.