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)
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