United States District Court, N.D. Illinois, Eastern Division
November 22, 2004.
JAMSPORTS AND ENTERTAINMENT, LLC, Plaintiff,
PARADAMA PRODUCTIONS, INC., d/b/a AMA Pro Racing; CLEAR CHANNEL COMMUNICATIONS, INC.; SFX ENTERTAINMENT, INC., d/b/a Clear Channel Entertainment; and SFX MOTOR SPORTS, INC., d/b/a Clear Channel Entertainment Motor Sports, Defendants.
The opinion of the court was delivered by: MATTHEW KENNELLY, District Judge
MEMORANDUM OPINION AND ORDER
The defendants in this antitrust/breach of contract/tortious
interference case have moved in limine to bar the plaintiff
from presenting lost profits claims. For the reasons stated
below, the Court denies the defendants' motions.
Familiarity with the Court's decision on the parties' summary
judgment motions, see JamSports and Entertainment, LLC v.
Paradama Productions, Inc., 336 F. Supp. 2d 824 (N.D. Ill.
2004), is presumed, and thus we will forego detailed discussion
of JamSports' remaining claims. For present purposes, it will
suffice to say that what remains are a claim against the Clear
Channel defendants of monopolization in violation of
15 U.S.C. § 2; a claim against AMA Pro for breach of contract; claims against
AMA Pro for breach of contract or promissory estoppel; and claims against the Clear Channel defendants for
tortious interference with contract or prospective advantage.
1. Antitrust claims
The Clear Channel defendants have moved to bar JamSports from
presenting evidence regarding the profits it says it lost as a
result of Clear Channel's anticompetitive conduct. In particular,
Clear Channel seeks to preclude JamSports' damages expert Stephen
Siwek from testifying. Though certain aspects of Clear Channel's
attack on Siwek consist of a challenge to admissibility of
evidence, the motion as a whole amounts to a request for summary
judgment (as Clear Channel itself has suggested at prior court
Damages in an antitrust market exclusion case consist of the
amount that the plaintiff would have made but for the defendant's
anticompetitive conduct. "In economic terms, the amount of
damages is the difference between what the plaintiff could have
made in a hypothetical free economic market and what the
plaintiff actually made in spite of the anticompetitive
activities." Dolphin Tours, Inc. v. Pacifico Creative Service,
Inc., 773 F.2d 1506, 1510 (9th Cir. 1985) (citing Bigelow v.
RKO Radio Pictures, Inc., 327 U.S. 251, 264, (1946)). Clear
Channel argues that Siwek's lost profits analysis derives from an
assumption that had JamSports not been improperly excluded from
promoting a supercross series, JamSports would have had the field
to itself, without competition by Clear Channel. According to
Clear Channel, this assumption is contrary to a key premise upon
which the Court sustained JamSports' single remaining antitrust
claim, and in any event is unsupported by the evidence. We deal
with each of these arguments in turn.
In addressing Clear Channel's summary judgment motions on the
antitrust claims, the Court rejected Clear Channel's argument that JamSports was
claiming only that it was prevented from replacing Clear Channel
as the monopolist in the market for promotion of supercross a
theory that, Clear Channel contended, was insufficient as a
matter of law. In this regard, the Court stated that
[t]hough JamSports certainly would have liked for
Clear Channel to stop promoting supercross entirely
if JamSports won the AMA contract, a jury could find
that Clear Channel would have promoted a supercross
series to compete with JamSports' AMA-sanctioned
series. More pointedly, a reasonable jury could find
that had Clear Channel not prevented JamSports from
promoting the AMAsanctioned supercross series, both
firms would have promoted competing series, resulting
in increased output and, potentially, decreased
JamSports, 336 F. Supp. at 836-37 (footnote omitted). Clear
Channel argues that Siwek's lost profits analysis abandons, and
is completely contrary to, the "ongoing competition" theory upon
which the Court relied in denying summary judgment. Specifically,
Clear Channel contends that Siwek ruled out any possibility of
competition by Clear Channel.
Even were this so, it would not by itself require exclusion of
Siwek's testimony. As JamSports notes, it has an alternative
theory of antitrust injury which the Court has not precluded.
JamSports contends that under the Seventh Circuit's decision in
Fishman v. Estate of Wirtz, 807 F.2d 520 (7th Cir. 1986),
injury to the competitive process can give rise to a cognizable
antitrust claim even if the plaintiff, had it not been excluded
from the market, simply would have displaced a monopolist
defendant, and even if the defendant's conduct had no measurable
effect on consumers. Clear Channel has argued that Fishman is
no longer good law and that the views of the dissent in that case
now carry the day in the Seventh Circuit. But as this Court noted
in the summary judgment ruling, "the Seventh Circuit has never
explicitly overruled Fishman, and we are reticent to find that
it has done so sub silentio." JamSports, 336 F. Supp. 2d at 836. For this reason, and to avoid the need to
retry the case were we to guess wrongly that the Seventh Circuit
would not today follow Fishman, the Court will permit JamSports
to present its Fishman theory at trial.*fn1 Thus even if
Clear Channel were correct that Siwek's analysis assumes away the
possibility of competition, that would not require excluding the
The Fishman theory aside, Siwek's report arguably can be read
as indicating that he assumed Clear Channel would not have
competed with JamSports in the "but for" world in which antitrust
damages are assessed. Specifically, Siwek stated that
[t]he damage calculations also assume that, but for
the conduct of the defendants, the plaintiff would
have promoted the AMA Pro Racing Supercross Series
with little likelihood of additional competitive
entry into Supercross by Clear Channel during the
term of the contract. For this reason, the damage
calculations have not been reduced to reflect some
assumed level of Supercross business that would have
switched from the AMA Supercross Series to a
hypothetical Clear Channel series.
Siwek 9/14/04 Report ¶ 106 (emphasis in original).
But if one reads on, Siwek's report is best read as indicating
not that there would be no competition at all, but rather that
there would be no effective competition that would have
affected JamSports' profits in the "but for" world:
Facing these facts [support of a JamSports AMA Pro
series by original equipment manufacturers, or OEMs],
it is clear that a decision by Clear Channel to
compete in an alternative, head-to-head Supercross
series would be fraught with financial peril. The
Clear Channel Series would be compelled to showcase
inferior riders who had not been selected for the
factory teams. The Clear Channel Series' riders would also be compelled to
compete using inferior (nonfactory) motorcycles. The
Clear Channel Series would also need a new
sanctioning body, such as the FIM, that would not
likely have substantial experience in US Supercross.
. . .
For these reasons, it is far more likely that if
Clear Channel were to have competed at all in
Supercross during the term of the agreement, that
competition would likely have sought to capitalize on
Clear Channel's relationship with FIM and would have
focused heavily if not entirely on non-US markets.
Id. ¶¶ 109, 112.
Likewise, when he was deposed, Siwek made it clear that he had
not completely ruled out the possibility of competition by Clear
Q: . . . You've assumed for purposes of your damages
model, that there would be no competing Clear Channel
series, is that correct?
A: I haven't explicitly said there would be none. I
said there was very unlikely that there would be a
competing series to the point that this would have to
be reflected in my model.
. . .
Q: And you doubt that they [Clear Channel] would do
it all, correct?
A: I doubt that they would do it at all, but it's not
impossible that they would do it.
Q: And you didn't account for them doing it at all in
A: I assumed that whether they had done it or not
there would be no need to offset the damage
calculations for that possibility.
Q: So you assumed that even if Clear Channel had run
an event or two, it would not have caused any decline
in attendance or revenues [for JamSports], correct?
A: Based on the assumptions in the but-for world,
Siwek Dep. 109, 111-12. In sum, though Siwek's report arguably can be read as including
an assumption contrary to JamSports' non-Fishman theory, that
is not the best reading of the report. The Court therefore
rejects Clear Channel's contention that Siwek's report is
inconsistent with the primary theory upon which we upheld
JamSports' remaining antitrust claim.
Clear Channel's primary argument for excluding the lost profits
evidence is that Siwek's purported assumption that Clear Channel
would not compete is unsupported by the evidence. The testimony
of an expert may be excluded if it lacks a foundation in the
evidence or is based on unwarranted assumptions. See MCI
Communications Corp. v. AT&T Corp., 708 F.2d 1081, 1161, 1166
(7th Cir. 1983); see also, e.g., Group Health Plan, Inc. v.
Phillip Morris USA, Inc., 344 F.3d 753, 760 (8th Cir. 2003);
Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039, 1056 (8th
Cir. 2000). As the Court has noted, we do not read Siwek as
having assumed that Clear Channel would not have competed at all.
But that aside, the evidence forwarded by Clear Channel does not
undermine Siwek's conclusions as a matter of law. There is, to be
sure, a good deal of evidence that Clear Channel planned to
attempt to compete with JamSports even if JamSports had been able
to promote the AMA Pro Supercross series. But there are numerous
disputed issues regarding whether, and the extent to which, Clear
Channel would have been able to do so, and how, if at all, this
would have affected JamSports' profits from the AMA series. Clear
Channel has not provided the Court with a sufficient basis to
take the evaluation of these matters, and thus the consideration
of JamSports' lost profits evidence, out of the hands of the
Clear Channel also argues that the evidence establishes that
JamSports lacked the necessary preparedness to enter the market.
To recover damages in a market exclusion case, the plaintiff must show it was prepared to enter the market. See,
e.g., Grip-Pak, Inc. v. Illinois Tool Works, Inc., 694 F.2d 466,
475 (7th Cir. 1982) ("Grip-Pak I"). This is partly a question
of standing the plaintiff's ability to prove an injury and
partly a question of whether damages can be proved with
reasonable certainty. See Grip-Pak, Inc. v. Illinois Tool Works,
Inc., 651 F. Supp. 1482, 1501 (N.D. Ill. 1986) (decision
following remand) ("Grip-Pak II").
The fact that JamSports was never able actually to promote a
supercross tour does not preclude it from recovering damages.
"There would be a big gap in the damage remedies of the antitrust
laws if [section 4 of the Clayton Act] were read to prevent the
recovery of damages by all would-be entrants." Grip-Pak I,
694 F.2d at 475. The key problem involves "quantifying lost hopes.
While damages for loss of future earnings and profits are
familiar items in tort and contract cases, the problem of
measurement is greater when the loss occurs in a market that the
plaintiff is not yet in." Id. To "balance the interest in
deterrence against the concern with measurement," courts,
including the Seventh Circuit, have required a plaintiff that has
not yet entered the market "to show that it intended to enter and
was prepared to do so within a reasonable time" as a prerequisite
to collecting lost profits for being excluded. Id. (citing
As the intent and preparedness requirement is generally
interpreted, "only a plaintiff who takes demonstrable steps to
enter an industry can recover projected lost profits as antitrust
damages." Grip-Pak II, 651 F. Supp. at 1501. The plaintiff's
preparedness to enter the market is determined by assessing its
ability to finance the business; consummation of the requisite
contracts; affirmative action to enter the business; and
background and experience in the prospective business. See,
e.g., In re Dual Deck Video Cassette Recorder Antitrust
Litigation, 11 F.3d 1460, 1465 (9th Cir. 1993); Hayes v.
Solomon, 597 F.2d 958, 973 (5th Cir. 1979); see also, Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100,
First, JamSports took affirmative steps to enter the business
among other things, by signing the letter of intent with AMA Pro.
Second, in terms of contracts, JamSports thus had, at least until
its AMA deal was allegedly undermined by Clear Channel, the key
contract it needed to enter the industry, that is, a deal with
AMA Pro to promote the AMA Pro-sponsored supercross series. There
is also evidence that JamSports had taken other steps in
preparation to promote the series, including booking venues and
forging a partnership with Speedvision for television coverage.
Third, though JamSports obviously had no experience in promoting
supercross the market having been allegedly monopolized by
Clear Channel for several years before it had significant
experience in promoting entertainment events,*fn2 and AMA
Pro likewise believed that JamSports was fully qualified to
promote the series.
JamSports' evidence of financial backing may be the weakest
link in its claim of "intent and preparedness." But a jury
reasonably could find, based on the evidence JamSports has
offered, that it had sufficient financial wherewithal from its
principals to fund operations until outside financing was
obtained, and that it was well on the way to obtaining outside
funding, until the rug was pulled out as a result of Clear
Channel's allegedly anticompetitive activity. The Court finds no
support in the law for a hard-and-fast rule that full financing,
signed on the bottom line, must be proven as a prerequisite to
recovery of damages for exclusion from a market. If such a rule
existed, it would effectively immunize a monopolist that was an
efficient enough violator of the antitrust laws to quickly nip in
the bud any nascent competitive efforts. This would undermine the deterrence rationale cited by the
Seventh Circuit in Grip-Pak I as part of the underpinning for
the intent-and-preparedness test. See Grip-Pak I,
694 F.2d at 475. As the court said in that case, "[t]he whole purpose of the
`intention and preparedness' test is to allow recovery of damages
in cases where the plaintiff has not entered the business in
which he is seeking lost profits." Id.
For these reasons, the Court denies Clear Channel's motion in
limine with regard to lost profits on the antitrust claim.
2. State law claims
Both Clear Channel and AMA Pro seek to preclude JamSports'
recovery of lost profits on its state law claims. They argue that
the lost profits claim is overly speculative and is barred by a
rule of Illinois law that restricts the recovery of lost profits
by new businesses.
Speculative damages are not recoverable under Illinois law.
See, e.g., Midland Hotel Corp. v. Reuben H. Donnelley Corp.,
118 Ill. 2d 306, 316, 515 N.E.2d 61, 66 (1987). And as a general
rule, a start-up company that has not yet begun to operate is not
entitled to recover lost profits. See, e.g., Drs. Sellke &
Conlon, Ltd. v. Twin Oaks Realty, Inc., 143 Ill. App. 3d 168,
174, 491 N.E.2d 912, 917 (1986). But there is no "inviolate rule
that a new business can never prove lost profits." Milex
Products, Inc. v. Alra Laboratories, Inc., 237 Ill. App. 3d 177,
192, 603 N.E.2d 1226, 1237 (1992). Where there is concrete
evidence from which the lost profits for a new venture can be
determined to a reasonable degree of certainty, they may be
recovered. See id. (allowing profits to be proven by evidence
of an established market for the plaintiff's new product);
Malatesta v. Leichter, 186 Ill. App. 3d 602, 621-22,
542 N.E.2d 768, 782 (1989) (allowing profits to be proven by evidence of
profits earned by another person who operated the same business). See also, Fishman, 807 F.2d at 555-58 (similar
to Malatesta); Rhodes v. Sigler, 44 Ill. App. 3d 375, 380,
357 N.E.2d 846, 850 (1976) (same)
JamSports has provided a sufficient basis to take its lost
profits claim out of the realm of impermissible speculation and
thus permit the claim to be presented to the jury. As was the
case in Malatesta and Fishman (which, like the present case,
involved a tortious interference claim in addition to an
antitrust claim), JamSports bases its claim not on unsupported
speculation, but rather on the profits Clear Channel earned
promoting the AMA Pro series. The Court recognizes that there are
differences in JamSports' prospective supercross operation and
Clear Channel's established one that could affect whether
JamSports would have earned as much as Clear Channel. But as the
court noted in Malatesta, "[a] finding that profits are too
speculative based on these differences . . . would preclude
recovery for intentional interference with prospective advantage
in most instances" and thus would effectively write such tort
claims out of existence. Malatesta, 186 Ill. App. 3d at 622,
542 N.E.2d at 783. The Court finds JamSports' evidence to be
sufficient to allow its demand for lost profits on its contract
and tort claims to be presented to the jury.
3. Motion to exclude supplemental report
Clear Channel has moved to exclude a supplemental report
submitted by JamSports' damages expert Siwek following his review
of the report of Clear Channel's damages expert, Dr. Dennis
Carlton. Clear Channel contends that Siwek's original report was
premised on the assumption that there would have been no
competition by Clear Channel had JamSports not been (allegedly)
excluded from the supercross market, that JamSports must have
belatedly realized the problem created by this approach, and that
Siwek sought to switch course under the guise of a rebuttal report. The Court denies the motion to strike the
rebuttal report. As indicated earlier in this decision, Siwek's
original report did not foreclose the possibility of competition.
The Court has reviewed the rebuttal report in light of Clear
Channel's arguments and finds that it is a proper rebuttal
report. The Court will, however, permit Clear Channel to take a
short deposition of Siwek on the rebuttal report if it wishes to
do so, so that its counsel can prepare properly for trial. The
parties are directed to attempt to agree on the length and timing
of this deposition; if they cannot do so, the Court will set the
For the reasons stated above, the Court denies the Clear
Channel defendants' motion in limine to bar JamSports from
presenting lost-profits claims [docket # 203-1 & 2, 205-1 & 2,
206-1 & 2] and defendant Paradama Productions, Inc.'s motion in
limine to exclude evidence of lost profits [# 207-1]. The Court
also denies Clear Channel's motion to preclude JamSports from
filing a new expert report [# 228-1]. Finally, the Court denies
JamSports' motion to strike Clear Channel's reply brief [#