Supreme Court’s Cert Denial Leaves Low Pleading Bar for Claims Against Sports Leagues

The US Supreme Court on April 22, 2024 denied a petition for a writ of certiorari in the closely watched antitrust case United States Soccer Federation Inc. v. Relevent Sports LLC. The decision raises important questions about the pleading requirements in Sherman Act Section 1 cases brought against sports leagues and other collective organizations.

The Supreme Court’s denial of certiorari leaves intact—for now—precedent upholding that when a plaintiff challenges an association rule governing the business actions of individual association members, the fact of the rule itself is direct evidence of concerted action; the plaintiff need not go further and allege that the association members had an express agreement or entered into a conspiracy to adopt the challenged rule.

This principle, and the Supreme Court’s decision not to revisit it, has important implications not only for sports leagues, but for trade associations, business cooperatives, standard setting organizations, and other collective organizations of competitors.

Background of United States Soccer Federation Inc. v. Relevent Sports LLC

The Fédération International de Football Association, or FIFA as it is known to fans around the world, is a membership organization that governs soccer internationally. FIFA’s membership comprises more than 200 national associations. In turn, each national association is itself a membership organization, consisting of soccer leagues and teams located in the national association’s territory.

FIFA’s governing rules require national associations and their members to comply with FIFA’s policies, regulations, and directives—one of which is a policy requiring that official league matches be played within the geographic territory of the respective national association. The United States Soccer Federation Inc.—commonly referred to as US Soccer—is the FIFA-authorized national association for the United States. Its membership includes the country’s most prominent men’s and women’s soccer leagues: Major League Soccer (MLS) and the National Women’s Soccer League.

Relevent Sports LLC is a soccer promoter that competes with MLS to organize and promote top-tier men’s professional soccer games in the United States. Relevent has had success organizing exhibition matches that do not count toward teams’ official season records, known as “friendlies,” but was repeatedly thwarted when it sought to host official matches between foreign teams in the United States.

In 2018, for example, Relevent sought to host an official game between two Argentinian teams in Miami. In response, US Soccer declined to sanction the match. Relevent had a similar experience in 2019, when it sought to organize an official match between two Ecuadorian teams in the United States.

In 2019, Relevent filed an antitrust lawsuit against US Soccer and FIFA, alleging that they had entered into an agreement to divide geographic markets and stifle competition. The US District Court for the Southern District of New York dismissed the case, reasoning that “for an organizational decision or policy to constitute concerted action,” Relevent was required to “plausibly allege an antecedent agreement among horizontal competitors to agree to vote a particular way to adopt such a policy.” [1]

In other words, the district court reasoned that the lawsuit must be dismissed because Relevent had alleged only the existence of FIFA’s policy governing official matches taking place within particular geographic territories, not that FIFA and US Soccer (or their respective members) had engaged in concerted action by agreeing or conspiring to vote to enact the FIFA policy.

Relevent appealed to the US Court of Appeals for the Second Circuit. In 2023, the Second Circuit vacated the district court decision and remanded the case for further proceedings. In its analysis, the Second Circuit observed that “[a] plaintiff challenging an association rule that governs the conduct of members’ separate businesses need not allege an antecedent agreement to agree.” Rather, “[t]he promulgation of the rule, in conjunction with the members’ surrender to the control of the association, sufficiently demonstrates concerted action.” [2]

The Second Circuit noted, however, that “not every decision by an association violates federal antitrust laws.” [3] Rather, the Second Circuit instructed that courts should “focus on improprieties reducing competition among the members or with their competitors, not the day-to-day operations of the organization, including [but not necessarily limited to] buying, selling, hiring, renting, or investing decisions.” [4] The Second Circuit subsequently denied a petition for rehearing en banc.

In August 2023, US Soccer petitioned the Supreme Court to review the Second Circuit’s decision. US Soccer’s petition sought to highlight the importance of the concerted action pleading standard by emphasizing the significant number of trade associations and other cooperatives in the United States, and the potential uncertainty and legal risks that they would face when implementing and enforcing their policies.

In response to the petition for certiorari, the Supreme Court invited the US Solicitor General to file a brief expressing the views of the United States. The Solicitor General did so in March 2024, expressing the view in an amicus brief that the Second Circuit’s decision was consistent with applicable precedent, that US Soccer’s certiorari petition “dramatically overstate[d] the effect of the court of appeals’ decision” on sports leagues and other membership associations, and that certiorari was not warranted.

Key Implications

Shortly before the denial of certiorari, on April 8, 2024, FIFA and Relevent announced that they had reached an agreement to resolve the litigation between them. Although the terms of the agreement have been kept confidential, according to public reporting, attorneys for FIFA told the district court at a hearing on May 2, 2024 that it was likely that FIFA would change its rules governing the playing of official matches outside member territories.

Regardless of the ultimate trajectory of the remaining dispute between Relevent and US Soccer, the antitrust doctrine concerning the pleading requirement for concerted action in Section 1 cases has significant implications for many types of organizations and their members, including sports leagues, trade associations, business cooperatives, standard setting organizations, and other membership organizations through which competitors may interact with one another.

These organizations and their members should be mindful that the mere promulgation and following of membership eligibility criteria and other general policies may be deemed adequate evidence of the concerted action element of a Section 1 claim, increasing the risk of a complaint proceeding past the motion to dismiss stage if the impact of the challenged conduct potentially raises competitive concerns. Organizations and individual members would be well advised to seek legal counsel to identify and mitigate potential legal risks stemming from organizational policies that could likely impact competition.