Want more wrestling news, rumors, and results? Be sure to visit PWInsider.com and PWInsiderXtra.com.
The United States District Court, Northern Division of California, San Jose Judge Edward J. Davila issued a 14-page ruling today, shooting down WWE's motion attempting to dismiss the amended version of MLW's lawsuit against the company.
In the ruling, Davila wrote:
"MLW alleges a relevant product market defined as “the sale or licensing of media rights for professional wrestling programming” and a relevant geographic market of the United States. The relevant market “includes the media rights for professional wrestling TV series and programs that are aired on U.S. national television networks, U.S. cable and satellite television networks, pay-per-views purchased by U.S. households, and U.S. streaming services.”
WWE argues that the [First Amended Complaint] does not sufficiently allege that purchasers of the relevant product—i.e., television networks and streaming services—have no reasonably interchangeable content alternatives to wrestling programming. WWE contends that the small fraction of media platforms that air professional wrestling content, as alleged in the FAC, “confirms that [the majority of platforms] view other content as reasonable alternatives for professional wrestling.”
Additionally, WWE posits that “to define a relevant market, MLW must plausibly allege that men aged 35-44 only watch professional wrestling, and thus networks and streaming services must purchase professional wrestling content in order to attract those viewers. MLW does not and could never allege this.”
The Court disagrees. Although the professional wrestling media rights market may be narrow, the Court may reasonably infer from the FAC’s allegations that other forms of programming content are not economic substitutes for professional wrestling. Importantly, MLW defines its relevant market by explicitly distinguishing it from reasonably interchangeable substitutes. Cf. Tanaka, 252 F.3d at 1063–64 (finding complaint failed to define relevant market where allegations regarding product market did not discuss interchangeability with any specificity). For example, the FAC alleges that professional wrestling programming is a niche market segment that is distinct from comedy, drama, reality, news, or sports shows.
The FAC further alleges that the professional wrestling audience is demographically distinct from the general audience for prescheduled television shows in that it skews male and toward the 35 to 44 age range, as opposed to female and toward the over-60 age range.
Based on the above allegations, it is not “apparent from the face of the complaint that the alleged market suffers a fatal legal defect.” Newcal, 513 F.3d at 1045. Here, Plaintiff’s allegations regarding the relevant product market are sufficiently detailed to survive a motion to dismiss. See Sidibe v. Sutter Health, 667 F. App'x 641, 642–43 (9th Cir. 2016) (finding dismissal of antitrust action based on market definition inappropriate where allegations were “sufficiently detailed”).
Defendant’s cursory challenge to Plaintiff’s alleged relevant geographic market of the United States also fails. Defendant suggests that Plaintiff was required to allege “fact[s] suggesting the market for media rights is limited to the United States and is not, instead, a [U.S.] and Canadian market or a global market.” Id. As the Ninth Circuit has noted, “the ‘relevant market’ is typically a factual element rather than a legal element,” and alleged markets may therefore “survive scrutiny under Rule 12(b)(6) subject to factual testing by summary judgment or trial.” Newcal, 513 F.3d at 1045 (citation omitted). And although Plaintiff is not required at this stage to plead specific facts eliminating all other possible markets as the relevant geographic market, the Court notes that the FAC’s allegations do support the claimed market. See, e.g., FAC ¶ 68 (alleging that Fox and NBC operate the two cable networks with the largest coverage in the United States), (“WWE reached a five-year agreement with NBCUniversal’s streaming platform, Peacock, for the exclusive streaming rights of WWE programming in the United States.”). Accordingly, the Court finds that Plaintiff had adequately alleged relevant product and geographic markets."
Davila also ruled:
"The Court finds that MLW has sufficiently pleaded circumstantial evidence of WWE’s monopoly power. The FAC alleges that WWE captures 92% of the revenue generated by the sale of media rights for professional wrestling programming. Defendant argues that MLW must allege facts explaining why revenue share is an appropriate measurement of market share, but cites only to cases that evaluated the proper market share metric based on factual findings.
At the pleading stage, MLW’s allegations of the revenues generated from the sale of professional wrestling media rights, and WWE’s 92% share of that revenue (with the next largest competitor possessing a 6% share) are sufficient to show dominance in the market.
In addition to defining the relevant market and alleging WWE’s dominance in that market, MLW has also sufficiently alleged barriers to entry, as required to show circumstantial evidence of market power. Plaintiff alleges that WWE has used its dominant stature in the market to prevent competitors from accessing certain distributors and arenas, (alleging WWE’s exclusivity agreement with Peacock prevents competitors from working with Peacock’s partners, such as Reelz), (alleging Fox and NBC are the two cable networks with the largest coverage in the United States, so that WWE’s exclusivity provisions prevent competitors from accessing a wider audience), WWE caused at least two arenas to reject or cancel bookings by competitors other than MLW).
These barriers, as alleged, are plausible “additional long-run costs that were not incurred by incumbent firms” and that “deter entry while permitting incumbent firms to earn monopoly returns.” Rebel Oil Co.,The factual existence of these barriers, which WWE challengesm is not a question to be resolved at the motion to dismiss stage. Accordingly, the Court finds that MLW has sufficiently alleged circumstantial evidence of WWE’s monopoly power. It need not and does not address the parties’ arguments regarding direct evidence of monopoly power. And since the possession of monopoly power is a greater showing than a dangerous probability of obtaining monopoly power, MLW’s monopoly power allegations are sufficient for both of its claims under Section 2 of the Sherman Act.
Regarding MLW's claims of WWE engaging in "anticompetitive conduct", Judge Davila noted, "The FAC alleges that WWE’s exclusivity agreements with Fox and NBC foreclosed competitors from the “two cable networks with the largest coverage in the United States.” WWE also allegedly forecloses its competitors from accessing NBC’s streaming platform, Peacock, which reaches more than 20 million paid subscribers. These allegations, combined with WWE’s 92% revenue share, AEW’s 6% share, and the remaining competitors’ combined 2% share, suffice to make a prima facie showing that WWE’s exclusivity arrangements with NBC and Fox, which “largely foreclosed [] two primary [distribution] channels to its rivals,” had a substantial effect in foreclosing competitors from the professional wrestling media rights market. See Microsoft, 253 F.3d at 72.4 Accordingly, the Court finds that MLW has sufficiently alleged that WWE engaged in anticompetitive conduct with respect to foreclosure of distribution channels. The Court need not address the parties’ arguments regarding foreclosure of wrestling talent and arenas."
On WWE trying to shoot down MLW's claims that they have been harmed as of a result of WWE's alleged antitrust actions, "The Court finds that MLW has sufficiently alleged antitrust injury. As described above, the FAC alleges that WWE engaged in exclusionary conduct, including foreclosure of primary content distribution channels, in an attempt to continue to dominate the professional wrestling media rights market. MLW’s allegations do not restrict these harms to MLW itself, (alleging WWE prevented or attempted to prevent competitors other than MLW from accessing arenas). MLW also alleges that WWE’s dominance restricts consumer choice, as evidenced by the high viewership of MLW’s first three episodes aired on Reelz and MLW’s inability to stream on Peacock. Although “limitation of consumer choice, in itself, does not amount to antitrust injury,” (quoting Netafirm Irrigation, Inc. v. Jain Irrigation, Inc., 2022 WL 2791201, at *12 (E.D. Cal. Jul. 15, 2022) MLW’s allegations of harm to consumers and competitors in combination are sufficient to withstand a motion to dismiss."
WWE has argued that since MLW failed to adequately allege a federal cause of action, the Court would have to dismiss the remaining State law claims for lack of subject matter and jurisdiction. The Court also shot that down.
Back in March 2023, Major League Wrestling filed an amended lawsuit against WWE. That suit, totaling 44 pages with an additional filing breaking down all the changes from the original January 2022 lawsuit filing, had been expanded to include MLW alleging "WWE’s predatory conduct further impeded MLW in its ability to compete in the licensing of its programming for distribution on streaming services and continues to threaten to deprive MLW of its ability to license its programming for distribution on cable. As a result of WWE’s misconduct, MLW is at risk of its business being irreparably destroyed. In February 2023, MLW’s new media partner -- Reelz -- announced a distribution deal with streaming service Peacock. But as a direct result of WWE’s exclusivity arrangement with NBCUniversal, which prohibits any other professional wrestling programming on Peacock, MLW’s programming is excluded from this streaming deal, which further suppresses competition in the Relevant Market. MLW also is reportedly at risk of losing its cable deal with Reelz as a result of WWE’s exclusivity with Peacock."
MLW exited REELZ after 13 episodes, but REELZ later issued a statement to PWInsider.com that the two sides were in discussion about additional "seasons." The belief upon MLW's REELZ debut was that the two sides had agreed to a multi-year deal but upon the announcement of the REELZ-Peacock alliance, the MLW series was downplayed greatly in comparison to its initial weeks on the cable broadcaster. There has been no indication the two sides will resume any sort of relationship as of this writing.
MLW's Amended lawsuit alleged that WWE's exclusivity agreements (such as Peacock and NBC) create violations of the Sherman Antitrust Act as it pertains to the pro wrestling media market in the United States.
MLW has argued since it first filed its first lawsuit that WWE was engaging in unfair practices, including attempting to prevent Ring of Honor (then owned by The Sinclair Broadcast Group) from running Madison Square Garden when allegedly Paul Levesque stepped in to stop it temporarily, that WWE prevented AEW from booking an Arena in Cincinnati several years back and that WWE went after signed MLW talents, including Davey Boy Smith Jr. and Swerve Strickland, neither of whom are currently with WWE.
MLW has also maintained that WWE interfered with a MLW deal with FOX-owned streaming service Tubi, leading to that deal being canceled the night before it was to be announced and a potential deal with Vice TV, which only aired one original MLW special and several older MLW TV shows.
No matter what happens going forward, this was a major step forward for MLW's case against WWE. Had their case been dismissed today, it was over for MLW. Instead, the court says they have claimed enough in terms of allegations and damages to investigate further, potentially opening WWE up to a lot in the discovery process.
This ruling absolutely sets the stage for the case to eventually go to trial, unless the two sides make some sort of settlement over the course of the process.
If you enjoy PWInsider.com you can check out the AD-FREE PWInsider Elite section, which features exclusive audio updates, news, our critically acclaimed podcasts, interviews and more by clicking here!
Bang On Casino
