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Live Nation has no monopoly on rock concerts, says L.A. judge

3/26/2012 COMMENTS (0)

We all probably have our own personal view of the essential elements of a rock concert, but antitrust litigation doesn't have a whole lot of tolerance for subjectivity. Just ask the plaintiffs in a decade-old class action alleging that Live Nation, the former concert business of the radio conglomerate Clear Channel (now a separate, public company), monopolized the market for rock show tickets.

Last Friday, U.S. District Judge Stephen Wilson of Los Angeles federal court granted a summary judgment motion by Clear Channel's lawyers at Wilson Sonsini Goodrich & Rosati, concluding in a 63-page decision that the plaintiffs' lead expert, economist Owen Phillips of the University of Wyoming, failed to properly define the relevant market, as required in monopoly cases. Phillips, according to the judge, has "no expertise" in rock music, so he relied primarily on Billboard magazine's artist biographies. Wilson found fault with that methodology: According to his ruling, Phillips classified Simon & Garfunkel as pop musicians, even though their Billboard bio calls them the "most successful folk-rock duo of the '60's."

Plaintiffs represented by Hagens Berman Sobol Shapiro and Wexler Wallace had alleged that Clear Channel and Live Nation were engaged in unjust enrichment through their monopoly power. "Clear Channel has built a monopolistic, multimedia empire that has substantially harmed competition, resulting in high concert ticket prices and fewer offerings," the class alleged in its third amended complaint. In 2006, Wilson Sonsini convinced the 2nd Circuit Court of Appeals that the relevant geographic market could not be national, so the case was broken up into 22 suits based on large metropolitan areas. All were centralized in a multidistrict litigation before Wilson in Los Angeles. In 2007, he ruled that the class actions could proceed, and selected the Los Angeles and Denver cases as bellwethers. In just those two cases, plaintiffs claimed more than $100 million in damages.

But Clear Channel and Live Nation challenged the class' expert on Daubert grounds. Phillips defined the relevant product market as "live rock music concerts," but Wilson Sonsini said he didn't use a reliable methodology.

Wilson ruled that for antitrust purposes, a "market" is made up of "products that have a reasonable interchangeability." He said that Phillips "failed reliably to apply his chosen methodology" to define that market. According to the judge, the expert didn't consider a narrower definition of the market, like the heavy metal sub genre. Instead, Wilson wrote, "his market analysis both started and ended with the purported market for live 'rock' music concerts." As evidence of Phillips' flawed reasoning, the defense pointed out that Wilson's report (which is under seal) classified Burt Bacharach as a rock artist.

The judge gave both sides three weeks to stipulate what he should do with the remaining 20 class actions in the MDL. Clear Channel told On the Case that Friday's ruling should end the litigation. "This case has been around in various forms for over 10 years, and we are gratified that it has finally now been put to rest. We believe that the ruling is correct and should dispose of all 22 cases," said Jonathan Jacobson of Wilson Sonsini. (This is the second high-profile win in six months for Jacobson and the Wilson antitrust team. They won dismissal of class allegations that Netflix had colluded with Walmart to divide the market for DVD rentals and sales.)

Class counsel at Hagens Berman and Wexler Wallace did not respond to requests for comment. Phillips, the expert witness, said he had seen the judgment but wanted to speak to plaintiffs' counsel before responding; he did not immediately call back.

(An earlier version of this post incorrectly stated that Live Nation belongs to Clear Channel. It is a separate company. Also, in the earlier version, a quotation from plaintiffs' filings was misattributed to defendants. That quotation has been deleted from the current version. In addition, the second-to-last paragraph has been changed to make clear the dismissed allegations were against Netflix.)

(Reporting by Erin Geiger Smith)

Follow Erin on Twitter: @erin_gs 

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