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JAMSPORTS AND ENTERTAINMENT, LLC v. PARADAMA PRODUCTIONS

November 22, 2004.

JAMSPORTS AND ENTERTAINMENT, LLC, Plaintiff,
v.
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.

Discussion

  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 hearings).

  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 ticket prices.
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 analysis.

  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 Channel:
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 your calculations?
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, yes.
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 jury.

  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 ...


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