MLW Media LLC v. World Wrestling Entertainment, Inc.

Background

MLW Media LLC sued World Wrestling Entertainment, Inc. (WWE) under Section 2 of the Sherman Act for monopolization and attempted monopolization. MLW also asserted claims for intentional interference with contractual relations, intentional interference with prospective economic advantage, and violation of California’s Unfair Competition Law.

MLW alleged that the relevant market was the sale or licensing of media rights for professional-wrestling programming in the United States. It alleged that the market generated about $725.3 million annually, that WWE received about $670 million, or 92 percent, and that the next largest competitor received about 6 percent. MLW further alleged that WWE used exclusive agreements with media companies, including Fox and NBC, to limit competitors’ access to distribution channels. It also alleged that WWE interfered with potential MLW agreements involving VICE TV and Tubi, threatened performers who worked with MLW, and affected competitors’ access to arenas.

WWE moved to dismiss all five claims under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a legally valid claim. The court had previously dismissed MLW’s original complaint while allowing MLW to amend it. This order addressed WWE’s challenge to the First Amended Complaint.

Sherman Act claims

The court held that MLW adequately alleged a relevant product and geographic market. It found that the complaint plausibly distinguished professional-wrestling programming from other types of programming and alleged facts supporting a United States market. The court stated that whether the proposed market was factually correct could be tested later through summary judgment or trial, but the market definition was not legally defective on the face of the complaint.

The court also found that MLW adequately alleged WWE’s monopoly power. Monopoly power is the ability to control prices or exclude competition. The court relied on MLW’s allegation that WWE received 92 percent of the revenue from professional-wrestling media rights, while the next largest competitor received 6 percent. The court further found that alleged restrictions on access to distributors and arenas plausibly constituted barriers to entry. Because the allegations were sufficient to plead monopoly power, the court found them sufficient for both monopolization and attempted-monopolization claims, which require a dangerous probability of obtaining monopoly power rather than actual monopoly power.

The court found that MLW adequately alleged anticompetitive conduct. It concluded that the alleged exclusive agreements with Fox, NBC, and NBC’s Peacock streaming platform plausibly foreclosed competitors from major distribution channels. Combined with WWE’s alleged 92 percent revenue share, those allegations made a sufficient initial showing that the agreements substantially restricted competition in the professional-wrestling media-rights market. The court did not address the separate arguments concerning foreclosure of wrestling talent and arenas because the distribution-channel allegations were sufficient at the pleading stage.

The court also found that MLW adequately alleged antitrust injury. Antitrust injury means harm of the type the antitrust laws are intended to prevent and harm caused by conduct that makes the defendant’s actions unlawful. The court relied on allegations that WWE’s conduct harmed competitors beyond MLW and restricted consumer choice. The court concluded that the alleged effects on consumers and competitors, considered together, were sufficient to survive dismissal.

State-law claims

WWE argued that the state-law claims should also be dismissed, but it did not present new legal arguments in the motion. Instead, it referred to arguments from its earlier briefing. The court held that the Ninth Circuit does not allow a party to incorporate legal arguments from an earlier brief in that manner. The court therefore did not consider WWE’s earlier arguments concerning the state-law claims.

Disposition

Judge Edward J. Davila denied WWE’s motion to dismiss the First Amended Complaint. This was a pleading-stage ruling: the court decided that MLW’s allegations were sufficient to proceed, not that MLW had proven its claims or that WWE had violated the antitrust or state laws.