Free Motion for Judgment as a Matter of Law - District Court of Delaware - Delaware

Case 1 :07-cv-00178-GIVIS Document 186 Filed 07/30/2008 Page 1 of 4
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
DEUTSCHER TENNIS BUND (GERMAN )
TENNIS FEDERATION), ROTHENBAUM )
SPORT GMBH, and QATAR TENNIS )
FEDERATION, )
Plaintiffs, )
)
vs. )
) C.A. N0. 07—l78—GMS
ATP TOUR, INC., ETIENNE DE VILLIERS, )
CHARLES PASARELL, GRAHAM PEARCE, )
JACCO ELTINGH, PERRY ROGERS, and )
IGGY J OVANOVIC, )
)
Defendants. )
DEFENDANTS’ MOTION FOR JUDGMENT AS A MATTER OF LAW AS TO
RELEVANT PRODUCT AND GEOGRAPHIC MARKETS
Defendants submit this memorandum of law in support of its motion, pursuant to Rule 50
of the Federal Rules of Civil Procedure, for judgment as a matter of law as to Plaintiffs’ Antitrust
Claims (Counts II, III, and IV) for failure to present evidence of the relevant product and
geographic markets.
I. Plaintiffs Have Failed T0 Prove A Relevant Product Market
P1aintiffs’ expe1t’s methodology for defining the relevant product market as markets
relating to the production of top-tier men’s professional tennis, is unsound, unreliable, and
should be rejected under Daubert. If Mr. Zimbalist’s methodology is rejected, his testimony
must be struck and Plaintiffs’ antitrust claims must be dismissed.
In order to prevail on their antitrust claims, Plaintiffs must prove the existence of a
relevant product and geographic market. "The outer boundaries of a product market are
determined by the reasonable interchangeability of use or the cross—elasticity of demand between
the product itself and substitutes for it." Brown Shoe C0 v. US., 370 U.S. 294, 325 (1962);
{0O233020;v1}

Case 1 :07-cv—00178-GIVIS Document 186 Filed 07/30/2008 Page 2 of 4
Allen-Myland, Inc. v. IBM Corp., 33 F.3d 194, 207 (3d Cir. 1994). Mr. Zimbalist admitted that
he was unable to do an analysis of whether or not the product in question, which he defined as
top-tier men’s tennis, had close substitute products that were so close that they were in direct
competition with each other. (Zimbalist 1323-24). He also admitted that he did not test whether
live audience attendees at top-tier men’s professional tennis might have alternatives other than
second-tier men’s professional tennis if the price of top-tier men’s professional tennis increased,
he merely "considered" the relationship between top-tier men’s professional tennis and top-tier
women’s professional tennis and the possibility that consumers would go to other products
outside of the tennis industry. (Zimbalist 1330). Although this is a far from exhaustive list of
the deficiencies in Mr. Zimbalist’s methodology, it serves as an example of why his testimony
should be stricken.
Without Mr. Zimbalist’s testimony, Plaintiffs have not offered reliable evidence that their
proposed "relevant markets" include all reasonably interchangeable or substitutable products and
p thus their § 2 Sherman Act claims should be dismissed. The other evidence at trial indicates that
there are other products that must be included in the relevant product market. Plaintiffs’ own
witnesses have acknowledged that sponsors and fans see all sports (Pfauth 1126-27), or all forms
of entertainment "in cultural and other areas" (Knapper 608), as substitutes for top-tier men’s
tennis.
II. Plaintiffs Failed To Prove A Relevant Geographic Market.
Plaintiffs’ expert methodology for defining the relevant geographic markets is also
unsound and unreliable and should be rejected under Daubert. "[T]he relevant geographic
market is the area in which a potential buyer may rationally look for the goods or services he or
she seeks.” Pennsylvania Dental Assn. v. Med. Serv. Assn. of Pa., 745 F.2d 248, 260 (3d Cir.
1984), cert. denied, 471 U.S. 1016 (1985); see also Brokerage Concepts, Inc. v. US. Healthcare,
{00233020;vl} 2

Case 1 :07-cv—00178-GIVIS Document 186 Filed 07/30/2008 Page 3 of 4
Inc., 140 F.3d 494, 515 (3d Cir. 1998). This geographic market must "conform to commercial
reality." Acme Mkts., Inc. v. Wharton Hardware & Supply Corp., 890 F. Supp. 1230, 1239 (D.
N.], 1995) (citing Brown Shoe Co., 370 U.S. at 336).
Mr. Zimbalist’s testimony concerning relevant geographic markets failed to meet even
minimum standards of reliability or relevance. Mr. Zimbalist admitted that the only consumers
he considered were “live" fans, and that he did not consider broadcasters and sponsors, @
@ugh he agreed that broadcasters and sponsors are consumers in the market of live top tier
men’s professional tennis. (Zimbalist 1348-49). Further, the evidence presented shows that the
relevant geographic markets that ATP competes in vary greatly, depending on the product at
issue. Mr. Zimbalist himself conceded that the relevant geographic market varies depending on
the product. "If we are talking about live top—tier men’s professional tennis, then the relevant
geographical market is local and regional. lf we are talking about the sanctioning market, it’s an
international market. It’s a world market. If we are talking about the player services market, it is
a world market." (Zimbalist 1460). However, Mr. Zimbalist admitted that although he defined
the relevant geographical market as local and regional, he did not conduct any inquiry to
determine what the closest ISG events would be in the same regional or local market as
Hamburg. (Zimbalist 1461).
III. Plaintiffs’ Only Evidence of the Relevant Product and Geographic Market
Should be Struck as a Sanction
In addition to the fact that Plaintiffs have failed to present evidence as to the relevant
product and geographic markets that passes the Daubert standard, any evidence offered by
Plaintiffs’ expert Dr. Zimbalist should be stricken as a sanction. It is "gross misconduct" by
Plaintiffs and their counsel to create a detailed outline for a witness to prepare for his testimony,
see In re Scrap Metal Antitrust Litig., 2006 WL 2850453, at * 5 (N .D. Ohio Sept. 30, 2006), and
{0O233020;vl} 3

Case 1 :07-cv—00178-GIVIS Document 186 Filed 07/30/2008 Page 4 of 4
even more so where, as here, the witness relied upon the document on the stand and the jury was
not aware of it. Dr. Zimbalist’s use of this outline in the first hour and a half of his testimony
was prejudicial to the Defendants as the use of that script could have had the effect of
“programming" his testimony to accord with the Plaintiffs’ arguments. People v. Ramos, 141
Misc. 2d 930, 932-936 (N .Y. Sup., 1988). Additionally, the use of the script likely gave the jury
the impression that Dr. Zimbalist had a better recollection of the testimony and documents in the
case than he actually did, which may have caused them to attach greater weight and reliability to
his testimony. A
Curative instructions and cross examination will not suffice to correct the prejudice to
Defendants. The likelihood that the jurors will be able to separate in their minds that testimony
and evidence presented by Dr. Zimbalist when he was not testifying with a script and when he
was is minimal. The jury has been indelibly effected by Dr. Zimba1ist’s earlier testimony. For
these reasons, his testimony should be stricken.
CONCLUSION
Based on the foregoing, the Court should rule as a matter of law that Plaintiffs’ antitrust
claims fail because of their failure to prove a relevant product or geographic market.
ASHBY & GEDDES
/s/ Philzp Trainer, Jr.
Of Counsel:
Philip Trainer, Jr. (l.D. #2788)
PROSKAUER ROSE LLP Tiffany Geyer Lydon (I.D. #3950)
Bradley l. Ruskin . Toni—Ann Platia (l.D. #5051)
Colin A. Underwood 500 Delaware Avenue, 8th Floor
Jennifer R. Scullion P.O. Box 1150
Evan S. Greene Wilmington, Delaware 19899
1585 Broadway 302-654-1888
New York, NY 1003 6-8299 [email protected]
212-969-3000 [email protected]
[email protected]
{OO233020;v1} 4