Court Denies New York Rangers' Motion for Preliminary Injunction in Internet Rights Case

On Friday November 2, Judge Loretta Preska of the Southern District of New York denied the New York Rangers motion for a preliminary injunction against what the Rangers alleged were anticompetitive practices by National Hockey League ("NHL") clubs in centrally controlling each of the NHL clubs' websites. I had previously blogged about this case here and here.

According to the court's recent opinion, the Rangers failed to meet the Second Circuit standard to prevail on a motion for a preliminary injunction, which requires that a moving party establish that "(1) absent such relief, it will suffer irreparable injury; and (2) either (a) a likelihood of success on the merits, or (b) sufficiently serious questions going to the merits and a balance of hardships tipping decidedly toward the moving party."

In reviewing the case's merits, the court ruled that the NHL's Internet Regulations, as business rules implemented by a joint venture, require full Rule of Reason analysis under Section One of the Sherman Act, and as a result, the New York Rangers "failed to carry its initial burden of showing a prima facie case of an anticompetitive restraint," as well as that "[i]n the alternative ... [the NHL] has shown offsetting procompetitive benefits."

In recognizing the potential pro-competitive effects of the NHL policy, the court pointed specifically to that "[t]he common technology platform [required by the Internet policy] will enable ... sponsors and advertisers to reduce transaction costs by negotiating centrally with the League."

Overall, this opinion was brilliantly reasoned. Importantly, Judge Preska explained repeatedly that the NHL is a "joint venture" capable of illegally colluding under Section One of the Sherman Act, but that, upon preliminary review, the new NHL Internet Regulations likely had sufficient pro-competitive effects to withstand such scrutiny.

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