## Facts

- William H. Sullivan II owned the New England Patriots from the franchise’s inception until October 1988.
- NFL Constitution and By-Laws Article 3.5 required approval by three-quarters of member clubs for transfers of ownership interests (except certain family transfers).
- The NFL also maintained an uncodified policy against public ownership of member clubs through publicly traded stock offerings, implemented through the Article 3.5 approval mechanism.
- Before the AFL–NFL merger, Sullivan and a partner sold non-voting shares of the team to the public beginning in 1960; after the merger, the team’s existing public float was permitted under a grandfather exception.
- After incurring substantial personal and business debt, Sullivan sought to sell a 49% non-controlling interest in the Patriots through a public stock offering while retaining control.
- The NFL refused to approve the proposed offering based on its anti-public-ownership policy.
- Sullivan later sold the Patriots to a private buyer and claimed the policy reduced the price he could obtain.

## Issues

1. Whether the NFL’s concerted policy against public ownership, enforced through the Article 3.5 approval requirement, constituted an unreasonable restraint of trade under Sherman Act § 1.
2. Whether the jury was properly instructed on rule-of-reason requirements, including relevant market definition and the need to prove harm to competition rather than harm to an individual seller.
3. Whether errors in jury instructions, special verdict questions, and evidentiary rulings (including expert/economic proof) were prejudicial enough to require a new trial.

## Decision

- The First Circuit vacated the district court’s judgment for Sullivan and remanded for a new trial.
- The court concluded that multiple prejudicial trial errors undermined the reliability of the liability and damages verdict.
- The court did not finally determine the legality of the NFL policy; it required retrial under correct rule-of-reason standards and properly framed jury submissions.

## Legal Principles

- A professional sports league composed of separately owned clubs can engage in concerted action subject to Sherman Act § 1 when member clubs collectively implement and enforce league-wide transfer policies.
- Joint-venture restraints are generally evaluated under the rule of reason, requiring analysis of market definition, competitive effects, and any legitimate justifications.
- Antitrust liability requires proof of harm to competition in a properly defined relevant market; injury to a single market participant, without more, is insufficient.
- Jury instructions and verdict forms in rule-of-reason cases must distinctly present the required elements (market, anticompetitive effects, and balancing against justifications) to avoid conflating legal questions.
- Material instructional, verdict-form, or evidentiary errors that bear on core antitrust elements are not harmless and warrant vacatur and a new trial.

## Conclusion

The First Circuit set aside a jury verdict finding the NFL’s anti-public-ownership policy unlawful and awarding treble damages, holding that significant instructional, verdict-form, and evidentiary defects required retrial of the Sherman Act § 1 claims under a properly focused rule-of-reason framework.


Sullivan v. Nat'l Football League, 34 F.3d 1091 (1st Cir. 1994)