Key Points

  • The Ninth Circuit held that the district court abused its discretion under Federal Rule of Evidence 702 by excluding, after the verdict, the subscribers' experts on antitrust injury and damages, Daniel Rascher and Douglas Zona.
  • Because the judgment as a matter of law for the NFL rested on those exclusions, the panel reversed it and ordered the jury's liability verdict reinstated.
  • The panel affirmed the conditional new-trial order on damages because the jury's award measured a discount off the list price rather than the overcharge the jury was instructed to find.
  • The court held that whether a yardstick market such as college football is comparable enough, and whether an expert's model reaches the right conclusions, are questions for the jury rather than the gatekeeping judge.
  • The case was remanded for a new damages trial; a concurrent memorandum disposition affirmed class certification and revived the Section 16 injunctive claims.

A federal appeals court on Oct. 30 reinstated a jury's verdict that the National Football League violated antitrust law in selling "Sunday Ticket," its DirecTV package of games not televised in a viewer's local market. The court held that the trial judge wrongly threw out the subscribers' expert economists after the jury had already relied on them.

The U.S. Court of Appeals for the Ninth Circuit handed a partial win to a class of DirecTV subscribers who had won about $4.7 billion at trial. The panel agreed, however, that the jury calculated damages the wrong way, so the subscribers must prove their losses again before a new jury. Judge Anthony D. Johnstone wrote for the panel, which also included Judge Holly A. Thomas and U.S. District Judge Joan H. Lefkow of the Northern District of Illinois, sitting by designation.

The ruling restores a liability finding that U.S. District Judge Philip S. Gutierrez of the Central District of California had erased by granting the NFL judgment as a matter of law. It also limits how far a trial judge may go in policing experts under Federal Rule of Evidence 702, which governs expert testimony. "Opinions are neither unfounded nor unreliable merely because they are impeachable," Judge Johnstone wrote. "Such opinions are for the jury to weigh at trial."

The subscribers sued the NFL and DirecTV in 2015, challenging three "interlocking agreements": the teams' pooling of their telecast rights under league control, the league's deals with CBS and Fox for local games, and an exclusive deal letting DirecTV sell every out-of-market Sunday game as a satellite add-on.

The NFL asked Judge Gutierrez to exclude the subscribers' economists, Daniel Rascher and Douglas Zona, at class certification and again before trial. He refused each time and rejected the challenge again during trial. The jury found the NFL liable on every element and awarded $4.6 billion to the residential class and $96 million to the commercial class.

"The Subscribers' victory was short-lived," Judge Johnstone wrote. Ruling on the NFL's renewed motion, Judge Gutierrez found that Rascher relied on a model "developed based on speculation and ipse dixit opinion" and that trial had revealed "flaws" in Zona's models. Without that testimony, he concluded, it was "impossible for a jury to determine on a class-wide basis that Sunday Ticket subscribers would have indeed paid less" absent the challenged conduct. He also conditionally ordered a new trial, citing "the jury's irrational damages award."

Rascher, an economist and professor at the University of San Francisco, used college football as a yardstick, a comparable market used to model a "but-for world" without the challenged conduct. College football operated under an exclusive deal until the Supreme Court struck it down in 1984, after which conferences competed and telecasts multiplied. Rascher testified that NFL games would likewise have reached free and basic cable channels. "One's on Saturday, one's on Sunday," he testified.

Judge Gutierrez found too many differences between the college and professional games. "Because Dr. Rascher testified to several reasonable similarities between the markets for college-football broadcasts and NFL broadcasts, the district court abused its discretion by deciding facts that should go to the jury," Judge Johnstone wrote.

Zona, a practicing economist, modeled a market with direct-to-consumer rivals such as a streaming service and estimated that one more competitor would have cut Sunday Ticket's price by 49.7%. He calculated overcharges of $2.81 billion for residential subscribers and $670 million for commercial ones. Judge Gutierrez rejected the model as infeasible because no specific standalone competitor was shown to exist, and as "irrational" because it predicted some consumers would pay a rival more than DirecTV charged.

The panel held that the trial judge weighed Zona's conclusions rather than his methods. Zona's testimony about a streaming service and an NFL study of offering out-of-market games on regular channels gave him a sufficient factual basis, the court said. The pricing result was "an economic feature, not a bug, of his methods," Judge Johnstone wrote. Excluding Zona's alternative "NFL Tax" model, which estimated Sunday Ticket would have cost 24.6% less, "without discussion" was also an abuse of discretion, the panel held.

In a footnote, the panel noted that Rule 702 was amended in 2023 to stress that admissibility must be shown by a preponderance of the evidence, but said the parties did not argue that the change affected the analysis.

The NFL prevailed on damages. The awards of $4,610,331,671.74 and $96,928,272.90 almost certainly came from multiplying each class's membership by $191.26, as the trial judge had noted. That figure is the gap between Sunday Ticket's 2018 and 2019 residential list price of $294 and Zona's disputed estimate that residential subscribers paid $102.74 on average.

Jurors had been told to award the overcharge, the difference between what subscribers paid and what they would have paid absent the anticompetitive conduct. Their figure instead captured money subscribers may have saved when DirecTV sold below list price, which "reflected a discount, not an overcharge," Judge Johnstone wrote. It also ignored commercial prices, which averaged an order of magnitude higher. "So the jury clearly awarded damages based on its improper consideration of the evidence rather than according to the district court's instructions," he wrote.

In a separate memorandum disposition, according to the opinion, the panel upheld class certification against the NFL's cross-appeal and revived the subscribers' injunctive claims under Section 16 of the Clayton Act. It left to the trial court whether the injunctive classes should be decertified now that the NFL-DirecTV Agreement has expired.

Amanda K. Bonn of Susman Godfrey LLP argued for the subscribers, and Paul D. Clement of Clement & Murphy PLLC argued for the NFL. Lisa S. Blatt of Williams & Connolly LLP represented a group of NFL media partners as friends of the court.

The case returns to the district court with instructions to reinstate the jury's liability verdict and hold a new trial on damages.