WILLIAMS MICHAEL HICKS; KENNETH HARMS, as Class Representative Plaintiffs and Individual Plaintiffs; MATTHEW ACHATZ; BRANDON ANTUS; CHAD ANTUS; ANDREW BARNES; CHRIS BERRY; MICHAEL BESTOR; DUANE BOCK; DAVID BROOKER; MARK CARNES; STEVEN CATLIN; BRUCE CLENDENEN; GRAEME COURTS; MICHAEL DARBY; HENRY DIANA; DON DONATELLO; MICHAEL DORAN; JAMES EDMONDSON; DEAN ELLIOTT; JOSEPH ETTER; BRENT EVERSON; MICAH FUGITT; DAMON GREEN; JAY HAAS, JR.; STEVEN HALE; MATTHEW HAUSER; ADAM HAYES; WILLIAM HEIM; JONATHAN JAKOVAC; TOM JANIS; JIMMY JOHNSON; CHRIS JONES; NICK JONES; STEVE KAY; ANTHONY KNIGHT; SHAY KNIGHT; MITCH KNOX; KURTIS KOWALUK; RONALD LEVIN; JOHN LIMANTI; BRENNEN LITTLE; SCOTT MARTIN, Esquire, Attorney; RICH MAYO, JR.; DANIEL MCQUILKEN; ERIC MELLER, Esquire, Attorney; MATTHEW MINISTER; CHARLES MOHR; TODD MONTOYA; TONY NAVARRO; DONALD NELSON; TRAVIS PERKINS; JOSEPH PYLAND; BRIAN REED; CHAD REYNOLDS; MIGUEL RIVERA; DAVID ROBINSON; SCOTT SAJTINAC; ANDREW SANDERS; FRED SANDERS; CORBY SEGAL; SHAWN SEGARS; BRIAN SMITH; RUSSEL STARK; BRAD SWEARINGEN; PAUL TESORI; ROBERT THOMPSON; SCOTT TWAY; STEVE UNDERWOOD; MARK URBANEK; RUSTY URESTI; BRETT WALDMAN; NEIL WALLACE; AARON WARK; JEFFERY WILLETT; BARRY WILLIAMS; MICHAEL MAZZEO; JOHN YARBROUGH; JUSTIN YORK; DENNIS TURNING; STEPHEN WILLIAMS; TERRY R. ENGLEMAN; THOMAS FLETCHER; ALAN BOND; EDWARD E. WILLIS; ROBERT J. MCFADDEN; PETER AMBROSETTI; KENNETH A. TOLLES; JOSEPH DUPLANTIS; BRADLEY WHITTLE; PETER JORDAN; WESTON SCOTT WATTS; JOSHUA E. DICKINSON; DAVID B. PARSONS; PETER VANDERRIET; MARK CRUNDEN; JOHN M. BUCHNA; COLIN BYRNE; LINN STRICKLER; CHAD ROSENAK; MATTHEW BEDNARSKI; MARTIN COURTOIS; KENNY BUTLER; JEFF DOLF; MARCEL LABAS; RUSSELL CRAVER; JAMES WALTERS; JAMES SMITH; PATRICK V. ESWAY, JR.; MARK HUBER; JON CUSTER; LEWIS B. PULLER III; JIM THOMAS; MARK E. MILLER, Esquire, Attorney; MATTHEW HALL; ERIC SCHWARZ; JOHN R. ADCOX; JOHN VENN; JOHN EGAN; MATTHEW TRITTON; JAMES SPRINGER, Esquire, Attorney; TERRY TRAVIS; RICHARD J. MOTACKI; ROBERT DICKERSON; TIM GOODELL; ROBERT VAIL; TODD NEWCOMB; GREG W. MARTIN; NOAH ZELNIK; BRENT HENLEY; CHRISTOPHER S. FIEDLER; PHILIP LOWE; DAVID PATTERSON; KEVIN MCARTHUR; RICHARD M. SCHLAACK; DAVID H. RAWLS; BOB BURNS; MICHAEL J. WAITE; HARRY BROWN; DAVID A. KERR; BRIAN H. SULLIVAN; ANDREW DAVIDSON; ALLAN MELLAN; DAVID WOOSLEY; RONALD MCCANN; DANIEL SCHLIMM; STEVE GREENWOOD; ANTHONY WILDS; MICHAEL MARONEY; ANDREW MARTINEZ; KYLE KOLENDA; DAVID LAWSON; JOHN L. SMITH; MICHAEL MIDDLEMO; SPENCER SEIFERT; LADDEN CLINE; THOMAS G. WILLIAMS; MICHAEL CARRICK; CALVIN HENLEY; GEORGE ASSANTE; WALTER WORTHERN, JR.; TIMOTHY J. THALMUELLER; WILLIAM POORE; NORMAN R. BLOUNT, JR.; WILLIAM SPENCER; MARK HAMILTON; CHRISTIAN HEATH HOLT; DAMIAN LOPEZ, Plaintiffs-Appellants,
PGA TOUR, INC., Defendant-Appellee.
and Submitted October 12, 2017 San Francisco, California
from the United States District Court for the Northern
District of California D.C. No. 3:15-cv-00489-VC Vince
Chhabria, District Judge, Presiding.
R. Miller (argued), The Lanier Law Firm P.C., New York, New
York; Benjamin T. Major (argued), Kevin P. Parker, Richard D.
Meadow, and W. Mark Lanier, The Lanier Law Firm P.C.,
Houston, Texas; for Plaintiffs-Appellants.
Jeffrey A. Mishkin (argued) and Anthony Dreyer, Skadden Arps
Slate Meagher & Flom LLP, New York, New York; Raoul D.
Kennedy, Skadden Arps Slate Meagher & Flom LLP, Palo
Alto, California; for Defendant-Appellee.
Before: Sidney R. Thomas, Chief Judge, and Michael Daly
Hawkins and Kathleen M. O'Malley, [*] Circuit Judges.
panel affirmed in part and vacated in part the district
court's dismissal of antitrust and related state law
claims of professional golf caddies who participate in golf
tournaments run by the PGA Tour, arising out of the
Tour's requirement that the caddies wear bibs containing
advertisements at professional golfing events.
panel held that the district court was not required to
convert the Tour's Fed.R.Civ.P. 12(b)(6) motion to
dismiss to a summary judgment motion because the court did
not consider any material outside the pleadings.
panel held that the district court properly concluded that
the caddies had consented to wearing the bibs, based on the
text of a tournament participation form, considered with the
caddies' concession that the Tour had required them to
wear bibs for decades. The district court also did not err in
concluding that the caddies failed to allege plausibly that
the Tour secured their consent through economic duress. The
caddies therefore failed to state claims for breach of
contract and quasi-contract relief, California state law
publicity claims, a Lanham Act false endorsement claim, or a
plausible economic duress claim.
panel held that the district court properly determined that
the caddies had not alleged plausible product markets to
support their antitrust claims. The panel held that, even if
advertisements to golf fans constituted a unique product
market, "in-play" or "in-action"
advertising during professional golf tournaments-either in
any format or endorsements alone-did not constitute a unique
submarket. Agreeing with other circuits, the panel concluded
that the caddies' proposed product markets were facially
unsustainable because they failed to include many reasonably
panel held that the district court therefore correctly
dismissed the caddies' antitrust claims, as well as their
California unfair competition claim. The panel, however,
vacated the dismissal with prejudice of these claims because
the district court made a simple denial of leave to amend
without adequate explanation. The panel remanded for the
district court to reconsider its decision to deny the caddies
leave to amend the antitrust and unfair competition claims.
THOMAS, CHIEF JUDGE.
appeal concerns various antitrust and related state law
claims of professional golf caddies ("Caddies") who
participate in golf tournaments run by the PGA Tour
("the Tour") arising out of the Tour's
requirement that they wear bibs containing advertisements at
professional golfing events. The district court dismissed all
claims with prejudice. We affirm the dismissal, but remand
the case to allow the district court to reconsider whether to
grant the Caddies leave to amend their federal antitrust and
California unfair competition claims.
Longhurst, the renowned British golf writer and commentator,
once wrote: "A good caddie is more than a mere
assistant. He is a guide, philosopher, and friend." The
professional caddie has evolved from simply carrying bags and
locating errant shots to providing valuable insights on
course topography, club selection, and reading shots. Caddies
serve as coaches, strategists, and counselors to professional
Tour operates three tours of professional golf tournaments
throughout the United States. It requires caddies to wear
specified uniforms at the tournaments, including a
"bib"-a loose-fitting sleeveless garment on the
upper body used for identification. For each tournament, the
Tour generally works with a local host ("Local
Host"). The Local Hosts and Tour seek to secure and
retain sponsors, including title sponsors for the
tournaments. Sponsors pay Local Hosts and the Tour to secure
advertising space at the tournaments. At issue in this case
is the advertising space on the bibs worn by the Caddies
during the tournaments.
Hosts and the Tour design the bibs. The bibs bear a
tournament logo and sponsors' logos, which are often
integrated together. With exposure to live tournament,
television, and webcast audiences, advertising space on the
bibs is valued at approximately $50 million annually. Local
Hosts and the Tour receive the entirety of these revenues.
The Caddies receive none.
individual professional golfers employ the Caddies as
independent contractors, the Tour and Local Hosts require the
Caddies to wear the bibs. The Caddies must sign a Caddie
Registration and Regulations Form ("the Form") in
order to participate in any Tour tournament. The Form notes
that "[i]n consideration of PGA TOUR's services in
cosponsoring the Tournament," the Caddies "grant
and assign to PGA TOUR, without limitation, [their]
individual television, radio, motion picture, photographic,
electronic, . . . and all other similar or related media
rights with respect to [their] participation in the
Form also provides a list of regulations that the Caddies
must adhere to, which in relevant part state:
2. Caddies shall wear uniforms and identification badges as
prescribed by the host tournament and PGA Tour. All caddies
are required to wear solid-colored, Khaki-style long pants,
which touch the top of the shoe, or solid-colored,
knee-length, tailored shorts or skorts and a collared shirt
while on club property. T-shirts, jeans, culottes, skirts,
capris, cut-off shorts and cargo-style shorts are not
permitted. Acceptable colors shall be determined at the
discretion of the Tournament Director.
3. Caddies shall wear smooth rubber-sole shoes, preferably
tennis or basketball shoes. Permissible colors are limited to
white and earth tones such as navy, blue, black, brown, tan,
gray, dark green and the like. Bright colors that are
intended to draw attention to a person's footwear are not
acceptable. Footwear with a closed toe is required. Flip
flops, open-toed sandals and other similar shoes are not
permitted. Closed-toe Crocs are acceptable provided they
conform with the colors described above. GOLF SPIKES are
4. Caddies' clothing must conform to the Player
Endorsement Policy as stated in the PGA TOUR Player Handbook
and Tournament Regulations.
Player Endorsement Policy ("Endorsement Policy")
referenced in Regulation Four prohibits endorsing specific
categories of products, places limitations on the size and
location of endorsements, and specifies that "[a]ll
sponsorships, endorsements and promotional activities by
members, whether during or outside PGA TOUR competitions, are
subject to the approval of the PGA TOUR."
Tour and Local Hosts have threatened to prevent caddies who
refuse to wear the bibs from participating in tournaments.
They have also directly contacted golfers to determine
whether the golfers would decline to hire caddies who refused
to wear the bibs. These tactics, combined with the Tour's
requirement that each golfer have a caddy to participate in a
tournament, maximize the value of bib advertising during
Caddies contend that the Tour and Local Hosts cannot compel
them to wear the bibs. Relatedly, they allege that by
requiring the Caddies to wear the bibs, the Tour and Local
Hosts have inhibited their endorsement rights under the
Endorsement Policy. Based on these allegations, the Caddies
assert contract, equitable quasi-contract, economic duress,
publicity, and unfair competition claims under California
See, e.g., Cal. Civ. Code § 3344(a) (discussing
publicity claims); Cal. Bus. & Prof. Code § 17200
(defining "unfair competition"). They also allege a
false endorsement claim under the Lanham Act. 15 U.S.C.
§ 1125. Finally, the Caddies assert antitrust claims
under Sections 1 and 2 of the Sherman Act. 15 U.S.C.
§§ 1, 2.
their antitrust claims, the Caddies allege two relevant
product markets: the Endorsement Market and the Live Action
Advertising Market. They define the Endorsement Market as
"the national market for the endorsement of products and
services by participants in professional golf
tournaments." Without the Tour's requirement that
the Caddies wear bibs, the Caddies and golfers would be the
only sellers in this market. Indeed, the Caddies and golfers
are the only visible and recognizable individuals who
participate in golf tournaments.
to the Caddies, the Tour's audience is a distinct
advertising market given its unique demographic. The majority
of Tour fans are older, Caucasian, travel via airplane for
business, and are interested in products such as financial
planning and vacation traveling. These characteristics
allegedly distinguish the average Tour fan from the average
fan of other major sports.
endorsements from the Caddies and golfers during tournament
play are purportedly more effective than other forms of
golf-related advertising. A golf fan can ignore other forms
of advertising by flipping the page of a magazine, clicking
away from an online advertisement, or fast-forwarding through
television commercials with a DVR. In contrast, a golf fan
cannot ignore an in-action endorsement from a caddy or
golfer. The Caddies contend that this enhanced effectiveness,
combined with a unique degree of price-flexibility provided
by the possibility of hiring golfers and caddies of varying
skill levels, establishes the plausibility of the Endorsement
Caddies define the slightly more expansive Live Action
Advertising Market as "the national . . . market for
in-play or in-action commercial advertising at professional
golf events between commercial breaks." In addition to
endorsements from the Caddies and golfers, this market
includes advertising space on and around the golf course that
live tournament, television broadcast, and webcast audiences
can see during in-play tournament action. The Tour and Local
Hosts provide the advertising space on and around the course.
The Caddies contend that the Live Action Advertising Market
constitutes a plausible product market for similar reasons as
Caddies allege three antitrust claims reliant on these
proposed product markets. First, they contend that the Tour
and Local Hosts violate Section 1 of the Sherman Act by
agreeing to require the Caddies to wear the bibs, which
unreasonably restrains trade by reducing the product supply
in the relevant markets. Second, the Caddies allege that the
Tour violates Section 2 of the Sherman Act by monopolizing or
attempting to monopolize the relevant markets through the use
of coercive and threatening conduct. Finally, the Caddies
allege that the Tour also violates Section 2 by engaging in
coercive reciprocal dealing-a variant of tying. Specifically,
the Caddies contend that the Tour leverages monopoly power in