Cards
Fanatics scores big win in lawsuit over increased card prices
Chalk up a victory for Fanatics.
Last year, five plaintiffs filed a lawsuit alleging harm from increased prices of NBA and NFL cards that Fanatics hadn’t even sold yet. A district judge in New York ruled on Monday to dismiss the case due to a lack of standing.
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Also in the lawsuit, two counts of monopolization and attempted monopolization by Fanatics were dismissed.
Paul Lesko of St. Louis-based Lesko Law LLC wasn’t surprised by the court’s decision in this antitrust case.
“I posted on social media a couple times that this case was kind of a trainwreck, because initial versions of their complaint were alleging that their plot plaintiffs had bought basketball and football cards directly from Fanatics before the licenses had even kicked in,” Lesko told SCD. “There were all types of problems with this.”
Fanatics was pleased with the ruling from the case designated as Scaturo et al. v. Fanatics.
“We said from the start that this was a baseless and fundamentally flawed lawsuit since Fanatics was being accused of raising prices on cards we didn’t even produce,” Fanatics said in a statement. “The court agreed and ruled that the plaintiffs did not even have standing to sue. We are happy the court has now ruled the complaint legally deficient and dismissed it.”
Lesko, who is known as the “hobby lawyer” in the industry, has always been critical of antitrust cases in general but particularly when it comes to direct buyer scenarios.
“Direct buyer actions are difficult because they’re focused on an alleged raise in prices due to anticompetitive behavior,” Lesko said. “It’s difficult to show that in an initial complaint. Prices tend to go up over time, you have to have some type of analysis like a direct one-on-one correlation, basically. It’s just really difficult to do. Panini products and Fanatics products, they don’t line up; they’re all different. There’s different price points, there’s different cards, there’s different everything else. You need to do a very detailed analysis to do this, and sometimes it’s just not possible to do.”
Plaintiffs Robert Scaturo, Scott Bubnick, Joseph Davidov, Steven Mardakhaev and Jonathan Madar brought an eight-count putative class-action complaint against Fanatics, Major League Baseball, the NFL, the NBA and all of the leagues’ players associations. The first six counts related to conspiracy in restraint of trade claims under Section 1 of the Sherman Act against various groups of defendants; the seventh count is a monopolization claim under Section 2 of the Sherman Act against Fanatics; and the eighth count is an attempted monopolization claim under Section 2 of the Sherman Act against Fanatics.
According to Lesko, the court found that the plaintiffs lacked standing for various reasons but mostly because “none of the named Plaintiffs adequately allege[d] that they have overpaid or will imminently overpay for trading cards sold by [Fanatics].”
The plaintiffs in this case have the option to fix their claims and appeal by refiling within the next three weeks. If the plaintiffs decide to take another run at this case, there will be another motion to dismiss from Fanatics and the judge will make one final ruling.
Fanatics still has an antitrust lawsuit on the table that was filed by Panini. Interestingly enough, the judge who presided over Scaturo et al. v. Fanatics case is also assigned to the Panini v. Fanatics case. The cases aren’t exactly the same where Scaturo et al. v. Fanatics is related to direct buyer action while Panini v. Fanatics is an alleged lost profits lawsuit.
“There are different issues, obviously, in both cases, but I don’t think that Panini’s going to be overly happy with that ruling,” Lesko said. “You’ve got the judge looking at very similar issues between both cases. If the direct purchaser case can’t even get past the beginning, it shows there might be a little bit more scrutiny on the Panini side.”
Due to the different issues in the two cases, it’s hard for Lesko to say Scaturo et al. v. Fanatics set a precedent that could directly affect the Panini v. Fanatics outcome.
“But looking at it, it shows the judge has an understanding of the hobby and an understanding of the issues here,” Lesko said. “Normally, when you have antitrust cases, there’s a competitor action and there’s a direct purchaser and indirect purchaser and another action. When some of those actions start falling apart, it kind of does make the other ones look weaker. If you’re an illegal monopoly for one thing, shouldn’t you be an illegal monopoly for everything? If you’re not an illegal monopoly for the direct buyers, then how are you an illegal monopoly for the competitors that are out there? Especially since it’s the same judge, that’s got to be worrisome for Panini.”
