By: Evan Stewart

It is never a good sign when a judge describes your $4.1 billion lawsuit as “25 hours of depositions and gobbledygook.” But this was how a U.S. District Judge described the plaintiff’s expert witness testimony during the In re: National Football League’s Sunday Ticket Antitrust Litigation trial, leading to a rare procedural decision that altered the trajectory of the litigation.

Background of NFL Sunday Ticket Antitrust Litigation

In 2015, Mucky Duck, a San Francisco sports bar, filed a class action lawsuit against the NFL and DirecTV, alleging that the NFL and DirecTV violated antitrust laws by conspiring with network partners to eliminate broadcasting competition and inflate the price of NFL Sunday Ticket. Mucky Duck, acting on behalf of a class of residential and commercial Sunday Ticket customers, brought two claims against the NFL. First, Lucky Duck claimed that the NFL entered into agreements with CBS and Fox to create single telecasts that limited free televised games regionally. Second, Lucky Duck alleged that the NFL and DirecTV agreed to allow the licensing of all CBS and Fox telecasts to DirectTV so they could bundle them into one all-or-nothing package, thereby eliminating the consumer’s ability to watch out-of-market games through other means.

Understanding NFL Broadcasting Rules

NFL broadcasting rules are complicated. There are NFL games broadcasted nationally, or streaming online on Thursday nights (Amazon Prime), Sunday nights (NBC/Peacock), and Monday nights (ESPN/ESPN+), which are available regardless of location. However, on Sunday afternoons, CBS and Fox split the broadcasts for the remaining games (usually between 8-13 games per Sunday) by region. For example, Seahawks games on Sunday afternoons are broadcast in the Pacific Northwest, but rarely in other U.S. regions with NFL teams.

What is NFL Sunday Ticket and Why Is It Controversial?

 Sunday Ticket is a yearly subscription that allows NFL fans to bypass regional restrictions and watch any CBS or Fox broadcast. Currently, YouTube TV is the official provider of Sunday Ticket. But from 1994 to 2002, DirecTV was the sole provider, thus implicating them in the litigation. 

NFL Sunday Ticket has been controversial among football fans for many years because it only offers one broadcast package. Sunday Ticket consumers are limited to buying a bundle of every regional broadcast, whether they want them or not. This differs significantly from the streaming services for the other major American professional sports leagues. For example, MLB.TV and NBA League Pass offer single-team and league-wide packages. There is also a significant price disparity between Sunday Ticket ($670.96), MLB.TV ($129.99/149.99), and NBA League Pass ($109.99/$159.99).

Verdict and Subsequent Appeal

On June 27, 2024, a jury ruled that the NFL and DirectTV had violated antitrust laws by restricting the availability of NFL broadcasts and allowing DirecTV to inflate the cost of Sunday Ticket. The plaintiffs were awarded $4.7 billion, but because federal antitrust rules allow for trebled damages, the damages exceeded $14.1 billion. The two key pieces of evidence that led to this decision were memos showing that CBS and Fox swayed the NFL not to charge lower prices for Sunday Ticket or to sell a team-by-team package to ESPN. 

In response to the jury’s verdict, the NFL filed a motion for judgment as a matter of law, petitioning the judge to reverse the verdict and enter a judgment in their favor. The NFL argued that the damages were nonsensical, specifically taking exception FL specifically with the damage experts presented by the plaintiffs as the basis for their argument. 

The two experts called into question by the NFL were Dr. Daniel Rascher and Dr. John Zona. Dr. Rascher’s damage model followed college football’s broadcasting model, where conferences and teams made their own broadcasting contracts. Such situations lead to increasing numbers of telecasts and decreasing costs to watch the broadcasts. Dr. Zona attempted to calculate damages using a multiple distributor model that predicted what consumers would have paid if another service other than DirecTV offered Sunday Ticket. 

The NFL argued that these two experts used flawed methodologies to calculate the damages and thus should have been barred from testifying. The NFL added that the jurors did their own unfounded math to award damages by unfairly using the list price for Sunday Ticket and using subscriber discounts as overcharges to arbitrarily come up with the $4.7 billion verdict.

The NFL’s Successful Challenge

U.S. District Court Judge Phillip Gutierrez agreed with the NFL and vacated the $4.7 billion verdict.

In his opinion, Judge Gutierrez focused his rationale for overturning the verdict on the plaintiff’s experts. He wrote that their damage models were “not the product of sound economic methodology,” and used incorrect distribution methodologies. Judge Gutierrez disagreed with Dr. Rascher because his model did not explain how out-of-market telecasts would have been available on cable through different channels without additional subscriptions, like in the college football model. Judge Gutierrez also disagreed with Dr. Zona because he made an unsupported assumption that another distributor could provide a service like Sunday Ticket and predicted consumers would pay more for that other service. 

Judge Gutierrez also wrote about his remorse for not barring the plaintiff’s witnesses earlier in the trial for not meeting the Daubert Standard. The Daubert Standard provides a systematic framework for assessing the reliability and relevance of expert witnesses. There are five factors for determining whether an expert’s methodology is valid.

1. Whether the technique or theory in question can be, and has been tested; 
2. Whether it has been subjected to publication and peer review; 
3. Its known or potential error rate; 
4. The existence and maintenance of standards controlling its operation; and 
5. Whether it has attracted widespread acceptance within a relevant scientific community.

Typically, judges assess expert witnesses before the testimony is presented to the jury, but General Electric Co. v. Joiner clarified that an appellate court may still review if a trial court abused its discretion to admit or exclude expert testimony. This was the mechanism that Judge Gutierrez used to overturn the jury verdict.

Although Judge Gutierrez did not dispute the plaintiff’s antitrust claims, he explained that the experts did not produce coherent, testable models, thereby barring them from testifying. He then finished his opinion by writing “Without the testimonies of [the two experts], no reasonable jury could have found class-wide injury or damages”, essentially retroactively barring the previously admitted expert testimony, and directing a verdict for the NFL.

The Future of In re Sunday Ticket Antitrust Litigation and Daubert Challenges

The plaintiffs immediately appealed this decision, so the future of this case will be interesting to follow. Judge Guiterrez’s opinion seemed to confirm the antitrust violations, but providing scientifically-supported damage calculations will be challenging. It will also be worth monitoring whether this case sets a precedent for more Dauert challenges being raised post-verdict, which could have serious ramifications for judicial efficiency and trial procedures. 

#WJLTA #Antitrust #NFL #SportsLaw