Free Redacted Document - District Court of Delaware - Delaware

Case 1 :07-cv-00178-GIVIS Document 48 Filed 10/19/2007 Page 1 of 4
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CONFIDENTIAL AND
FILED UNDER SEAL
October 12, 2007
BY ELECTRONIC FILING
The Honorable Gregory M. Sleet I ‘
United States District Court
for the District of Delaware
844 North King Street
Lockbcx 19
Wilmington, Delaware 19801
Re: Deutscher Tennis Burial et al. v. ATP Tour, Inc. ef al.,
C.A. No. 07—178—Gi\/IS
Dear Chief Judge Sleet:
Plaintiis respectfully submit this letter in support of their request that documents and
communications drafted and! or exchanged by the ATP in relation to its settlement with the
Monte Carlo Plaintiff ("Monte Carlo") be provided to the Court for in-·camera review and, if
appropriate, subsequent production.
This Court has held that evidence of settlement negotiations otherwise inadmissible under
FRE 408 may be cliscoverable under F.R.C.P. 26 broad provisions. See Block Drug Co. v.
Sedona Labs., 2007 WL 1183828, at *1 (D. Del. Apr. 19, 2007). The standard for discovery of
these documents is a "more ‘particularized showir1g’ that the evidence sought is relevant and
calculated to lead to the discovery of admissible eviclence." Id Plaintiffs can make such a
particularized showing.
Evidence in antitrust cases focuses on agreements or conspiracies made to restrain or
rnonopolize trade. These agreements or conspiracies can be subtle and often involve
circumstantial evidence that establishes the conduct in restraint of trade.
Discovery taken to date establishes that the ATP has conspired with others to take a
centralized commercial role in nien’s professional tennis; to take its members property rights,
including the Plaintiffs ATP Membership for its own; and to decrease output into and out of
relevant markets so as to artificially increase the value of the assets it has taken from its members
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Case 1 :O7—cv—OO178-GIVIS Document 48 Filed 10/19/2007 Page 2 of 4
Yotnao CoNAwAY STARGATT & TAYLOR, LLP
The Honorable Gregory M. Sleet
October 12, 2007
Page 2
(the "Conspiracy"). The ATP is doing, this in a ptuposeful and knowing disregard of its
corporate stmctute, its fiduciary duties and the antitrust laws ofthe United States}
The Conspiracy involves, among others, the ATP, certain Chinese entities, indivicluals
and entities associated with the Madrid tournament, the individuals and entities who will run the
Tennis Masters Cup ("co—conspirators”) and a few distinct tournament members who have been
welcomed (as active participants or otlierwise) into the Conspiracy to secure its monopoly on
players’ services. Central to the Conspiracy is the development of absolute control ever the
supply-side market of ATP players to tournaments obtained via the use of “carrots" such as
monopoly-funded bonus pools and "sticl mandatory tournaments. This will compel the top players to play in the co-conspirators’
toumaments; preclude their participation in other tournaments thereby reducing the supply—side
input of world-class 1nen’s professional tennis; and secure rnonopolistic control of this market
for the ATP and its conspirators. The success ofthe Conspiracy is already evidenced by the
ATP’s appropriation and sale of P1aintift`s’ ATP Membership to cwconspirators in China,
London and Madrid.2
The Monte Carlo settlement is a key part ofthe Conspiracy. The settlement incorporates
key aspects of the ATP’s Brave New World plans. From its inception, the Brave New World
contemplated only a minor downgrade of Monte Carlo as the ATP oonspirators did not require
Monte CB.I'lO’S week on the calendar to effectuate their schemes. They could not afford,
however, to require players to play in Monte Carlo as that might affect player participation in
their favored tournaments (by overburdening players). Accordingly, it is not surprising that the
ATP settled with Monte Carlo now, in liirtherance of its illegal schemes, in a manner where
Monte Carlo retains its week with no player commitment beneits. .
Ultimately, the ATP bargained for terms and conditions in its agreement with Monte
Carlo that preclude Monte Carlo from any mandatory player participation privileges while
simultaneously requiring that Monte Carlo attract, on average, six ofthe top ten players in the
world so as to retain its Masters 1000 sanction. The ATP’s reasons for doing so are not only
relevant and calculated to lead to the discovery of admissible evidence but may be of critical
importance to this Court and the jury impaneled by this Court. For example, the Settlement
Agreement does not explain: (a) why the ATP did not pay Monte Carlo damages when the ATP
has admitted that damages were appropriate; (b) why Monte Carlo must attract, on average, six
ofthe top ten players annually to retain its sanction; (c) its prospects for doing so; (cl) the effect
of this requirement on player participation; or (e) the eieet of this requirement on the ability of
other tournaments to attract players in a dramatically limited and controlled player participation
market.
l The Plaintiffs intend on seeking leave from the Court on Monday, October 15, 2007 (pursuant to thc C0tn·t’s case
management Orders) to amend its complaint to set forth the A'fP’s actions in iimher detail and add a party plaintiff
and certain ATP Directors as Defendants.
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Case 1 :O7—cv—OO178-GIVIS Document 48 Filed 10/19/2007 Page 3 of 4
Yomso CONAWAY Smmoew & TAYLGR, LLP
The Honorable Gregory M. Sleet
October 12, 2007
Page 3
The ATP’s document production to date includes no correspondence between the ATP
and any of its c0—conspirs.t0rs concewing negotiations for player participation guarantees despite
the fact that these guarantees are a central component ofthe Conspiracy. This failure occurs
despite the fact that e—mai1s reference meetings, negotiations and commimicatioms relating
thereto. Such correspondence, whether relating to the settlement or otherwise, would constitute
direct or circumstantial evidence ofthe conspiracy alleged by the Plaintiffs.
Finally, the Plaintiffs camzot reiy on the ATP’s representation that any discrete category
of relevant documents is not reasonably Iiily to lead to the discovery of admissible evidence.
For example, it took the Plaintiffs over one month, two Subpoenes Duces Tecum, numerous
26(f)-related telephone calls, tens of letters, and an Order from the United States District Court
for The Southern District of Imdianeg to obtain 1,200 pages of documents relating to Mark Miles,
the former CEO ofthe ATP over a burdensome obj ection, the last four hundred pages of which
were only produced a&er the ATP mandated an et£0meys’-eyes-only review by P18j.I'1tiffS’
‘ counsel. These documents revealed, inter alia, that 1011 Tixiac, the owner of ihe Madrid
tournament, told Mr. Miles in February 2007 that the ATP refhsed to permit him to sell another
sanction but was negotiating instead to permit him to move the Madrid tommement into the
Hamburg tournament week well before the ATP had officially announced that the Hamburg
tournament would be moved and downgraded. Plaintiffs respee‘d;`u.Hy submit that the ATP’s
inteme] and exiemal communications relating to Monte Carlo settlement may similarly
illuminate these negotiations as admissible evidence of the ATP’s conspiracy.
The ATP’s intent and actions exe illuminated and set forth 1101: just in "key" documents
such as the Settlement Agreement itself. Rather, to date, the clearest indications of the A'I`P’s
scheme are buried in e-mails or other more informal documents that the writers never believed
would see the light of day. This furtlier illuminates the need for a full (albeit reasonable)
production ofthe "behi11d—the—scenes" documents such as those relating to the Monte Carlo
settlement. Simply put, the production of iawyer-cleansed agreements, presentations or
Settlement Agreements, without more, is insufiicient. Given this reality, and the broad scope of
discovery appropriate in antitrust litigation, The production ofthe Documents is just and proper
and a "particu1arized" showing has been made.
Au in-camera inspection by she Court of the correspondence exchanged between Monte
Caxkfs counsel and the ATP’s counsel appropriately balances the need for information regarding
co-couspirator agreements with the ATP’s concerns under Rule 408. Plaintiffs respectfully
request that the Court agree to examine in camera the documents exchanged between counsel for
the ATP and counsel for Monte Carlo amd make its own determination.
Respeetiixll Submitted,
Z E,. b\_
C. Bam: Flixm (No. 4092)
3 That Court denied a Motion to Quasi: before receiving PIaintiiTs’ Response, based solely on Defends1ut’s
submission. See 1:07·me·0O129—LI1\/I-Jlx/{S ‘ 2 V _ _ u ______ __ __ ____ - _ A __
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Case 1 :07-cv-00178-GIVIS Document 48 Filed 10/19/2007 Page 4 of 4
Yomso CoNAwAY Smso/yi? & Tnmos, LLP
The Honorable Gregory M. Sleet
October 12, 2007
Page 4
cc: Clerk of The Court (by electronic filing/hand delivery)
Lawrence C. Ashby, Esquire (by electronic iiling/hand delivery)
Philip Trainer, Jr., Esquire (by electronic tiling/hand delivery)
Bxadley Rs Ruskin, Esquire (by e—maii)
Jennifer R. Scullion, Esquire (by e—meil)
(_ Robert D. MacGii1, Esquire (by e—mai1)
Hamish S. Cohen, Esquire (by e-mail)
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