Ninth Circuit Gives Pro Golf Caddies an Antitrust Mulligan

Professional golf caddies may get a second shot at claiming that the PGA Tour Inc. violated federal antitrust laws and California unfair competition law by forcing them to work as unpaid advertising billboards.

The U.S. Court of Appeals for the Ninth Circuit held July 27 that a California district court was too hasty in dismissing the caddies’ antitrust claims without letting them try to plead enough for the allegations to stick.

The caddies sued the Professional Golfers’ Association in 2015 challenging contract terms that force them to sign over their publicity rights during tournaments and work as walking advertising displays by wearing mandatory tournament “bibs.” They allege that the contracts forcing them to act as human billboards while they work, without giving them a cut of the advertising profits, are illegal.

The caddies also claimed the PGA is restraining the professional golf endorsement market, monopolizing the endorsement market, and using its power over tournaments to force the caddies to stay out of the endorsement market in exchange for being allowed to caddy at PGA events. These, they allege, are all antitrust violations in one of two markets for golf advertising.

The district court dismissed the caddies’ entire complaint in February 2016 with prejudice, meaning the caddies had no chance to try again. The court said that the caddies agreed to the contracts waiving their endorsement and publicity rights and have no valid reason to void their agreement.

The lower court also concluded that the “relevant markets” the caddies alleged the PGA is damaging are too narrow. Without a valid definition of the markets being harmed, the caddies can’t show the PGA hurt competition in a specific market, the court said. Without an antitrust violation, the court said the caddies didn’t have a basis for a California unfair competition claim.

On appeal, Chief Judge Sidney R. Thomas, joined by Circuit Judge Michael Daly Hawkins and District Judge Kathleen M. O’Malley, said that the district court was right in analyzing the caddies claims as they currently stand. But the lower court erred when, without stating a reason, it didn’t allow the caddies to amend their market definition allegations with a new complaint.

Thomas told the district court to “reconsider its decision to deny the caddies leave to amend the antitrust and unfair competition claims.”

The appeals court agreed that the caddies’ current complaint won’t fly and dismissed the rest of the caddies’ claims with prejudice because they can’t be amended to fix their shortcomings.

The case is Hicks v. PGA Tour, Inc., 2018 BL 267199, 9th Cir., No. 16-15370, 7/27/18

To contact the reporter on this story: Eleanor Tyler in Washington at etyler@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com