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Right Field Rooftops, LLC v. Chicago Baseball Holdings, LLC

United States District Court, N.D. Illinois, Eastern Division

April 2, 2015

RIGHT FIELD ROOFTOPS, LLC, et al., Plaintiffs,
v.
CHICAGO BASEBALL HOLDINGS, LLC, et al., Defendants

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[Copyrighted Material Omitted]

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For Right Field Rooftops, LLC, doing business as Skybox on Sheffield, Right Field Properties, LLC, 3633 Rooftop Management, LLC, doing business as Lakeview Baseball Club, Rooftop Acquisition, LLC, Plaintiffs: Abraham Brustein, DiMonte & Lizak, Park Ridge, IL; Thomas M Lombardo, DiMonte & Lizak, LLC, Park Ridge, IL.

For Chicago Cubs Baseball Club, LLC, Wrigley Field Holdings, LLC, Chicago Baseball Holdings, LLC, Thomas S. Ricketts, Defendants: Andrew A. Kassof, LEAD ATTORNEY, Daniel E. Laytin, Diana M. Watral, Kirkland & Ellis LLP, Chicago, IL.

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MEMORANDUM OPINION AND ORDER

Virginia M. Kendall, United States District Judge.

A few things are inevitable when it comes to spring baseball at Wrigley Field: the ivy won't be green, the weather won't be warm, there will be many who say, " This is the year," and there will be a battle between the Chicago Cubs and the rooftop businesses that surround Wrigley Field. This spring is no different. The

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decades-old battle began back in the late 1990s[1] and came to a head in 2002 when the Cubs sued certain Rooftop owners for misappropriating the Cubs' property rights by selling tickets to patrons to watch Cubs games from the Rooftops.[2] Rather than having a judge resolve that matter on the law at that time, the parties opted to settle their differences. On January 27, 2004, the Cubs (who were then owned by the Chicago Tribune) entered into an agreement (the " License Agreement" ) that permitted the Rooftops to continue their business of wining and dining fans on the rooftops of various buildings surrounding Wrigley Field while viewing, albeit at a significant distance, the baseball game being played within the Friendly Confines. The License Agreement in its simplest terms required the Rooftops to give the Cubs 17% of their profits and in return, the Cubs agreed not to erect any barricades that would block the long-distance viewing of the game from across the street. There was, however, one clause within the License Agreement that permitted the Cubs to have an " expansion" of Wrigley Field if that expansion was approved by a " governmental authority." Therein, lies the rub. The Cubs, under the new ownership of the Ricketts family, are working to make THIS year the year, and in doing so, have received a government-issued permit to update the Friendly Confines with electronic signs and video boards that will entirely block the views of the field from the Rooftop clients. The Rooftops have cried foul and want the signs down, or they assert they will be put out of business entirely. The Cubs instead claim that their move is fair and within the expected understanding of the parties when they entered into the License Agreement eleven years ago.

The Rooftops, however, have not simply relied on the License Agreement to battle the Cubs this season. This time, they allege, the Cubs have gone too far and have engaged in anti-competitive practices to put them out of business. The Rooftops claim that the Cubs tried to bully them to price-fix (essentially to increase the price of their tickets) and when they refused, the Cubs retaliated against them by taking steps to erect the massive video board directly in front of their businesses. This antitrust claim may be new to the battle between the Cubs and the Rooftops, but it is not novel to Major League Baseball which, according to the Cubs, enjoys the benefit of being exempt from any antitrust claims. Relying on Supreme Court case law starting back in 1922, the Cubs say that the antitrust claims must fall.

The ultimate dispute hinges on both contract and antitrust claims. Because the Court finds that the Cubs did not breach the 2004 License Agreement and are exempt from being accused of antitrust violations under clearly established Supreme Court precedent, and even if they were not, the Cubs did not engage in anti-competitive behavior, the Court denies the Rooftops' Motion for Preliminary Injunction primarily because the Rooftops have no likelihood of success on the merits. All of the other factors also weigh in favor of the Cubs as set forth below.

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PROCEDURAL HISTORY

On January 20, 2015, Plaintiffs, Right Field Rooftops, LLC, Right Field Properties, LLC, 3633 Rooftop Management, LLC, and Rooftop Acquisition, LLC, brought a nine-count Complaint against Defendants, Chicago Cubs Baseball Club, LLC, Wrigley Field Holdings, LLC, Chicago Baseball Holdings, LLC, and Thomas Ricketts, alleging a host of claims stemming from the Cubs' intention to install a " jumbotron" video board and billboard signage over the right field bleachers at Wrigley Field. (Dkt. No. 1.) The Rooftops sit on Sheffield Street in Chicago, Illinois, directly across the street from Wrigley Field. They sell tickets to patrons wishing to watch Cubs baseball games and other events, like concerts, occurring in Wrigley Field. The Rooftops contend that the construction will deprive them of their business.

Around three weeks after the Rooftops filed their Complaint, they sought a temporary restraining order (" TRO" ) and preliminary injunction enjoining the Cubs from installing the video board and any other signage. The Court held a TRO hearing on February 18, 2015 and denied the Rooftops' motion for TRO the next day because the Rooftops had failed to establish: (1) a likelihood of success on their antitrust claim, (2) irreparable harm, and (3) an inadequate remedy at law. ( See Dkt. No. 35.) The Court set a briefing schedule for the Rooftops' preliminary injunction motion and listened to over seven hours of oral argument from the parties on March 23, 2015. The preliminary injunction pertains to Counts I, II, and VIII of the Rooftops' Complaint. Counts I and II allege that the Cubs' conduct constitutes attempted monopolization in violation of the Sherman Act, 15 U.S.C. § § 2, 26, while Count VIII alleges anticipatory breach of contract based on the 2004 License Agreement guaranteeing the Rooftops views into Wrigley Field through the 2023 Major League Baseball season. With the benefit of the parties' thorough briefs and argument, the Court now denies the Rooftops' motion for a preliminary injunction for the following reasons.

BACKGROUND

Instead of an evidentiary hearing, the parties presented oral argument on their respective filings which comprise over 1,500 pages. For the purposes of the preliminary injunction, the facts are largely undisputed. Accordingly, the Court takes the following facts from the Complaint, briefs, and exhibits filed with the Court.

The Rooftops control two buildings and businesses that sell tickets to view Cubs baseball games and other events taking place within Wrigley Field. Right Field Rooftops does business as the " Skybox on Sheffield" and operates at 3627 N. Sheffield. (Dkt. 1, Compl. at ¶ 1.) 3633 Rooftops Management does business as " Lakeview Baseball Club" and, as its name suggests, operates at 3633 N. Sheffield. ( Id. at ¶ 3.) Since Wrigley Field's construction in 1914, spectators on the roofs of the buildings across the street on Sheffield enjoyed a view into Wrigley Field. ( Id. at ¶ 15.) Starting in the 1980s, owners of the buildings began to turn their roofs into grandstands for spectators and in 1998, the City of Chicago enacted an ordinance formally allowing the rooftop businesses to operate for profit. ( Id. at ¶ ¶ 23-24.) By 2002, there were eleven rooftop businesses operating for profit by selling tickets to patrons who wanted to watch Cubs games and other events from the roofs. ( Id. ) The City designated Wrigley Field as a landmark on February 11, 2004, adopting the prepared Landmark Designation Report and limiting future alterations to Wrigley

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Field. ( Id. at ¶ ¶ 31, 37.) Throughout the City's landmark process beginning in 2000, the Cubs expressed an intention to expand the Wrigley Field bleachers which they did in 2005. (Compl. at ¶ 43.)

Before the beginning of the 2002 Major League Baseball season, the Cubs installed a large green windscreen above the outfield bleachers. ( Id. at ¶ 34.) The windscreen negatively impacted views from the rooftop businesses across Sheffield. ( Id. ) The Cubs proceeded to file suit against a number of the rooftop businesses on December 16, 2002, claiming that the rooftop businesses were misappropriating the Cubs' property by charging admission fees to watch Cubs games from the roofs. ( Id. at ¶ 35.) Before the start of the 2004 baseball season, the parties to the 2002 litigation reached a settlement leading to a contract (the " License Agreement" ) in which the rooftop businesses agreed to pay the Cubs a royalty of seventeen percent of their gross revenues in exchange for views into Wrigley Field until December 31, 2023. ( Id. at ¶ 38; Dkt. 21-3, Ex. C-2-A, License Agmt. § 3.1.) The License Agreement contains a number of provisions establishing protocol for the expansion of Wrigley Field, its potential effect on any rooftop business, and consequences:

6. Wrigley Field bleacher expansion.

6.1 If the Cubs expand the Wrigley Field bleacher seating and such expansion so impairs the view from any Rooftop into Wrigley Field such that the Rooftop's business is no longer viable unless it increases the height of its available seating, then such Rooftop may in its discretion elect to undertake construction to raise the height of its seating to allow views into Wrigley Field and the Cubs shall reimburse the Rooftop for 17% of the actual cost of such construction.
6.2 If the Cubs expand the Wrigley Field bleacher seating and such expansion so impairs the View from any Rooftop into Wrigley Field such that the Rooftop's business is no longer viable even if it were to increase its available seating to the maximum height permitted by law, and if such bleacher expansion is completed within eight years from the Effective Date, then if such Rooftop elects to cease operations . . . the Cubs shall reimburse that Rooftop for 50% of the royalties paid by that Rooftop to the Cubs . . .
. . .
6.4 If the Cubs expand the Wrigley Field bleacher seating and such expansion impairs the view from any Rooftop into Wrigley Field such that the Rooftop's Gross Revenue in the year of expansion is more than 10% below the average Gross Revenue for that Rooftop in the two years prior to expansion . . . then the affected Rooftop can seek a reduction in the Royalty rate for all subsequent years of the Term . . .
6.5 Nothing in this Agreement limits the Cubs' right to seek approval of the right to expand Wrigley Field or the Rooftops' right to oppose any request for expansion of Wrigley Field.
6.6 The Cubs shall not erect windscreens or other barriers to obstruct the views of the Rooftops, provided however that temporary items such as banners, flags, and decorations for special occasions, shall not be considered as having been erected to obstruct views of the Rooftops. Any expansion of Wrigley Field approved by governmental authorities shall not be a violation of this Agreement, including this section.

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(License Agmt. § 6.) The Cubs added approximately 1,790 seats to the bleachers of Wrigley Field after the 2005 baseball season. (Compl. ¶ 43.)

The integral time period for the instant lawsuit is from 2009 onward. In the Fall of 2009, the Ricketts family and controlled entities purchased 95% of the Cubs and acquired Wrigley Field from the Tribune Company, subject to the preexisting Rooftop License Agreement. ( Id. at ¶ 44.) Soon after, the Cubs began to acquire ownership interests in a number of the rooftop businesses.[3] ( Id. at ¶ 46.) The Cubs unsuccessfully attempted to purchase all of the rooftop businesses before beginning any construction. ( Id. at ¶ ¶ 46, 49; Dkt. 27 at 9.) In early 2010, the Cubs announced plans to install a " Toyota" billboard in left field, which Ricketts said " [would not] affect any rooftops." (Dkt. 21-1, Ex. A-6-2, ESPN Chi. Article.)

In late 2011 and early 2012, the Cubs began to lobby the City for approval of a number of Wrigley Field renovations, including bleacher seating expansion, an outfield sign package, and two video boards. (Compl. ¶ 51.) On April 15, 2013, the Cubs announced the renovation plan would include a 6,000 square foot video board in left field and a 1,000 square foot billboard in right field. (Dkt. 21-1, Ex. A-8-2, Apr. 15 Trib. Article.) The Cubs released an illustration of the intended construction on May 28, 2013 to all the rooftop business owners and the illustration showed that the rooftop businesses would be largely blocked by the construction.[4] ( Id. ). (Dkt. 21-2, Ex. A-3-3, May 28 Article.) After many meetings and public hearings over the course of two years, where a number of rooftop businesses appeared and objected to the proposed construction, the Chicago Plan Commission, City Council, and Commission on Chicago Landmarks approved the Cubs' plan, including the construction of the bleachers, video boards, and billboards. (Compl. ¶ ¶ 75, 91; Dkt. No. 27, Exs. 4-10, 27-28.) The City approved the Cubs final plan to construct a total of eight outfield signs above the bleachers, including a video board in both left and right field. (Dkt. 27, Ex. 1, Rice Decl. ¶ 14.)

Throughout the approval process, the Rooftops maintain that representatives of the Cubs made a number of statements acknowledging their obligations to the Rooftops and demonstrating their intent to drive the Rooftops out of business. Specifically, the Rooftops claim that Ricketts and other Cubs executives found the License Agreement to be a " bad deal" for the Cubs and that the business relationship led to a " price war" on Cubs tickets. (Dkt. 21-2, Ex. B, Anguiano Decl. ¶ ¶ 6-8.) The Rooftops allege that the Cubs demanded the Rooftops set minimum ticket prices and that failure to do so would lead to getting blocked. ( Id. at ¶ 15.) The Rooftops refused to agree to set minimum ticket prices.[5] ( Id. ) The Rooftops further contend that they offered the space above their properties for the billboards and signs at no cost to the Cubs, but the Cubs refused. (Dkt. 21 at 17.) Once the City approved the Cubs' initial construction

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plan in July 2013, the Rooftops allege that the Cubs engaged a number of rooftop business owners in strong-arm negotiations to purchase their properties. ( Id. at 18.) In May 2014, Ed McCarthy, one of the owners of the Rooftops, proposed a potential sale to the Cubs of both Rooftops. (Dkt. 21-4, Ex. D, McCarthy Decl. ¶ 6.) McCarthy claims that he offered to sell the Rooftops to the Cubs for below market value, but was met by a Cubs representative stating that McCarthy " better take" whatever the Cubs offer because the buildings would be worth nothing once they no longer had views into Wrigley Field. ( Id. at ¶ ¶ 6-8.) The Cubs offered McCarthy a significantly lower number and ...


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