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Right Field Rooftops, LLC v. Chicago Cubs Baseball Club, LLC

United States Court of Appeals, Seventh Circuit

September 1, 2017

Right Field Rooftops, LLC, et al, Plaintiffs-Appellants,
v.
Chicago Cubs Baseball Club, LLC, et al, Defendants-Appellees.

          Argued May 23, 2017

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 15 C 551 - Virginia M. Kendall, Judge.

          Before Bauer, Easterbrook, and Ripple, Circuit Judges.

          Bauer, Circuit Judge.

         Plaintiffs-appellants Right Field Rooftops, LLC, doing business as Skybox on Sheffield; Right Field Properties, LLC; 3633 Rooftop Management, doing business as Lakeview Baseball Club; and Rooftop Acquisition, LLC (the "Rooftops"), filed suit against defendants-appellees Chicago Baseball Holdings, LLC; Chicago Cubs Baseball Club, LLC; Wrigley Field Holdings, LLC; and Thomas S. Ricketts (the "Cubs"), alleging that the Cubs violated antitrust laws and breached an agreement in which the Rooftops provide the Cubs 17% of their profits in exchange for the Cubs' promise not to obstruct the view of Wrigley Field (the "License Agreement").

         The Rooftops control two buildings and businesses that sell tickets to view Cubs games and other events at Wrigley Field. Both businesses are situated on the 3600 block of North Sheffield Avenue in Chicago, Illinois. Spectators have long enjoyed a view into Wrigley Field from the roofs of the buildings on Sheffield and Waveland Avenues. In the mid-1980's, rooftop owners gradually converted their flat-topped roofs into bleacher-style grandstands and formed businesses to serve the growing market for viewing Cubs games and other Wrigley Field events. In 1998, the City of Chicago enacted an ordinance formally allowing the rooftop businesses to operate for profit. By 2002, there were eleven such businesses.

         In 2000, the City began the process of naming Wrigley Field a landmark. While the landmarking process unfolded, the Cubs announced a proposal to expand the Wrigley Field bleachers in 2001. Prior to the 2002 Major League Baseball season, the Cubs installed a large green windscreen above the outfield bleachers, obstructing the views from the rooftop businesses on Sheffield Avenue.

         On December 16, 2002, the Cubs filed suit against a number of rooftop businesses, including the Rooftops, claiming that they were misappropriating Cubs' property by charging admission fees to watch Cubs games.[1] Prior to the 2004 baseball season, the parties settled the suit by entering into the License Agreement, in which the rooftop businesses agreed to pay the Cubs 17% of their gross revenues in exchange for views into Wrigley Field. The License Agreement expires on December 31, 2023. Section 6 of the License Agreement contemplated the expansion of Wrigley Field and established protocols to facilitate such an expansion. The pertinent provisions are as follows:

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 lect 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 tempo-rary 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.

         On February 11, 2004, the City completed the Iandmarking process; Wrigley Field's landmark designation limited future alterations to the field. However, following the 2005 baseball season, the Cubs were permitted to add approximately 1, 790 bleacher seats.

         In Fall 2009, the Ricketts family and certain related entities purchased 95% of the Cubs and acquired Wrigley Field from the Tribune Company. The acquisition was subject to the preexisting License Agreement. Shortly thereafter, the Cubs began to acquire ownership interests in a number of the rooftop businesses, [2] but failed in their attempt to purchase all of them. In 2010, the Cubs announced plans to install a "Toyota" sign in left field. Ricketts stated that the sign "[would not] affect any rooftops and everyone will be able to see."

         In early 2012, the Cubs sought approval from the City for several Wrigley Field renovations, including bleacher seating expansion, an outfield sign package, and two video boards. On April 15, 2013, the Cubs announced a new renovation plan, which included a 6, 000-square-foot video board in left field and a 1, 000-square-foot billboard in right field. The Cubs released a mock-up of its proposed renovation on May 28, 2013, to all the rooftop business owners, which revealed that the rooftop businesses would be largely blocked by the construction.

         After numerous meetings and public hearings stretching out over 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. 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.

         During the approval process, the Rooftops contend that Cubs' representatives used the threat of blocking rooftop views as leverage to force a sale of the rooftops to the Ricketts at below-market prices. The Rooftops allege that the Cubs demanded the Rooftops set minimum ticket prices and that the failure to do so would lead to having their views blocked. Once the City approved the Cubs' initial construction 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. In May 2014, Ed McCarthy, one of the owners of the Rooftops, proposed a potential sale to the Cubs of both Rooftops. McCarthy offered to sell the Rooftops to the Cubs for fair market value, but was met by a Cubs representative stating that McCarthy should accept whatever sale terms the Cubs offer because the buildings would be worth nothing once they no longer had views into Wrigley Field. The Cubs offered McCarthy a significantly lower price, and McCarthy refused. The Cubs also told McCarthy that they would block any rooftop business they did not purchase.

         At the annual Cubs Convention held in January 2014, in response to a question regarding the construction ...


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