This is Bloomberg Law with June Brusso from Bloomberg Radio.
NASCAR is one of the most popular spectator sports in the country, but unlike other major professional sports leagues, NASCAR is owned privately by the France family, and now two racing teams are suing the Stock Car Series and its chairman for anti trumpt violations, saying it exploited its position to extract monopoly profits. Leading the way is NBA legend Michael Jordan, a co owner of one of those teams. He told Fox Sports that it hasn't been a fair playing field.
So the smaller teams as well. It's not just me, I mean, obviously, I think everybody can. I have an opportunity to be.
To chessco in any business that my voice is saying that it hadn't been what they hadn't been happening.
Joining me is Anti Truss law expert Harry First, a professor YU Law School. Harry tell us about this lawsuit, NASCAR is a.
Little odd for a sports league. It's organized a little differently. Most sports leagues are owned by sort of the participants, like the National Football League owns the league. The people who own the clubs the teams. The NCAA is run by the universities, and the NBA is that's run by the teams. The PGA about which we've talked the golfers
are supposedly running the PGA. But here NASCAR, the stock car racing, the circuit or the league in a way, is run by apparently one family, this France family, who puts together the racing circuit that NASCAR team owners drive on. And they're sort of at the mercy, or so they say in their complaint of NASCAR of how they run the business and critically for them, how they split the money, because the money, of course is in the broadcast rights.
So there's been a lot of back and forth apparently between the race car owners and the France family a NASCAR about what the deal is going to be and renegotiations, and recently the France family has sort of turned the screws a little bit and made the next deal less attractive. According to the complaint, the race car owners are barely scraping by, hopefully not on the track scraping by, but
financially scraping by. Now Michael Jordan comes along and he decides that he's sort of going to lead the charge in not bowing to what the owner of NASCAR, France wants, and instead is going to file this any trust suit represented by a very good sports any trust lawyer. The basic idea is they look at a number of the contracts that NASCAR has entered into and look at its acquisitions of the racing circuit of other tracks and say, hey, look,
you're excluding competitors, you're fencing out others. You control this sport and you are sort of taking all the money for yourself. The great line is the France family and NASCAR are monopolistic, bully.
That was a good line. So there's a noncompete. The teams have to agree not to race in any other circuits. They have to buy their supplies and whatnot from NASCAR approved dealers. And you mentioned the hardball tactics. NASCAR sent a final take it or leave it charter in the late afternoon early evening of September sixth, and the teams were given until midnight to sign it, under the threat that they would eliminate the charter system if a substantial
number of teams didn't sign. Several of the teams described the signing as coerced it doesn't sound good.
That's a good way of putting it. Sounds like strong arm tactics. The question is whether it sounds like an anti trust case. And that's going to be the plaints burden a little bit. And you know, bullying is bullying, and we don't like bullies. But the anti trust laws actually don't protect companies necessarily from bullying. What they want is competition in the marketplace that helps consumers. So whether NASCAR really has a monopoly is not so clear from
the complaint. They sort of skirt around it in a way. No market share figures. What do they compete with Formula one racing? I have no idea what these things are exactly, but you know, what's their competitors? Do they really have monopoly power? If they don't, the case dissolves, you know, I mean, why don't these drivers go to some other circuit? Why do they Why are they so stuck with NASCAR?
It's not so clear. It's not so clear to me why the race car owners are allowed to negotiate together against the owner of the circuit, because, in a sense, they are selling their services. Normally, we don't allow firms that are selling their services to negotiate together. They're forming a league, of course, so there are anti trust complexities
that have yet to be surmounted. There's not a lot of detail about who the other competitors might be, so maybe there aren't, but they're still going to have to prove things, and you know, there needs to be a little more fleshed out about what the competition is exactly.
But if they are monopoly, some of the things that they've allegedly done do sound like the things that courts have been condemning recently from monopoly firms, like exclusionary contracts, exclusives, you can only deal with me, not with others, And this is a problem in the golfing case as well. So you know, that could be a problem for NASCAR in the litigation.
As far as a preliminary injunction where the standards are pretty high, do you think that they'll be able to get a preliminary injunction?
Well, so we haven't seen the answer to the complaint yet, so you know, I don't know. It has to be in the public interest. My instinct is something's going to be worked out with the parties. You know, they're not going to throw everyone out of NASCAR. Something will get worked out in some way so that the case can move on and the business can move on, because that's
in everyone's interest. They've interestingly sued the head of NASCAR as well personally, so I don't know, you know, they have to prove a likelihood of success and they have to prove that, you know, an injunction is in the public interest, So hard to say exactly whether they're really going to be able to succeed with that at this point.
Can they get discovery before emotion to dismiss.
So judges don't have a bit of discretion on this. The complaint will survive emotion to dismiss, and the motion to dismiss is just on the face of the complaint, so in some sense they don't need discovery to get past that hurdle. Of course, it's sometimes put off the emotion to dismiss and allow some degree of discovery, or allow full discovery. There's a lot of sort of play
in the system. My guess is they'll survive emotion dismissed, but in part depends on how NASCAR wants to respond to this, and they may say they have no standing to sue for damages because the injury is the competition, not competitors, And they're just complaining that, you know, they want a different cut of the monopoly profits, not that they really want competition in Stockhart racing. Maybe they're going to you know, ring that bell to try to stop obligation because you.
Never know what you find in discovery. Well, you never know about that email that shouldn't have been sent.
No, you do know you'll find something. You'll find the email that looks bad. It's lurking somewhere in all those gigabytes or terabytes of data that everyone has. So yes, discovery is something that's expensive and defenders would rather not have happened because at this point they might not know what's in their own file.
NASCAR has faced two anti trust actions over the last twenty five years, but those came from race tracks that wanted cup races. NASCAR one one and settled the other.
Well, I mean, usually the owner of a circuit has a lot of discretion in deciding how it's going to allocate games and so forth. The NFL has been through this a lot as well. And you know, if you're going to run a circuit, run a league, any of these things, you're balancing the number of races against you know, too much, too few, and that's generally in the circuit's
interest and they need to figure that out. So there's usual a lot of discretion with that, and unless they're trying to exclude where it gets touchiers, if they're trying to exclud some potential competitor, and that's what this case seems to have over those other cases where the argument is that they acquired a circuit much like Facebook acquired WhatsApp or Instagram to suppress the competitor. So that's a different competition story.
Let's move from race cars to handbags. This is an area I do have some expertise in. Is this, I guess the first foray of the FTC into fashion. It's suing to stop the eight point five billion dollar deal to marry the Coach and Kate Spade brands with Versace and Michael Core's, and the battle is over whether the deal would suppress competition in the category of accessible luxury handbags. What is that? I mean, it seems made up.
My innits reaction is, of course it's made up. Market definitions are often made up in a sense, you know, luxury fountain pens, premium ice, cream cases abound with those kind of market definitions. I do want to back you
up for one second. Of very famous anti trust case from the thirties was brought by the Federal Trade Commission against the Fashion Originator's Guild of America, which was suppressing knockoffs on Seventh Avenue by you know, companies that would get the high fashion stuff and quickly turn out knockoffs that looked alike. So the fashion industry wanted to stop that, and the Federal Trade Commission stopped them from doing it.
So not the first time, Just to give a little history, It's not often perhaps, but this is an eight and a half billion dollar acquisition, so there are a few zeros attached to it. Now, your question is does this make sense as a market And you know, key to all of this and mentioned this with you know, stock car racing is assessing what the universe competitors might be, or as you know, we call it market definition. So that's the start of every anti trust case. Not necessarily
the finish. Current law gives some latitudes. Even though you know, a handbag's a handbag and a lot of things can serve the same function. Current law gives the plaintiffs a chance to look at how consumers actually behave patterns of trade, the way things are recognized. The Wall Street Journal actually ran a story sort of as the Commission is considering this case, where they use this category of accessible luxury.
So the industry seems to recognize this. That's the first thing. Yes, it seems a little cooked, and that's always a danger in anti trust cases, but it may be backed up with how the parties themselves the market, and more importantly in this case, I think who the parties themselves saw as their close competitors, because that's really the key to the theory of what's going on, and that corps saw Coach and Kate Spade and vice versa as close competitors
and looked at pricing data based on those and paid a lot of attention to that to those as competitors. Obviously, there are lots of handbags and you know, lots of sellers. But if they paid close attention to those, and it's backed up by data that consumers see them as pretty close by, or you know, they consider one or the other, that will probably be enough for the Federal Trade Commission's case. You know, the first leg of showing that the effect of the merger may be the less competition.
All right, coming up next, I'll continue this conversation with NYU Law professor Harry First and we'll talk more about this handbag deal. You're listening to Bloomberg. I've been talking to anti trust law professor Harry First of NYU Law School about the FTC trying to block tapestries eight point five billion dollar acquisition of Capri Holdings, saying the deal would eliminate head to head competition between the fashion companies brands like Coach and Michael Core's in the so called
affordable luxury handbag market. It seems like there's a lot of competition in the handbag market, and it's a market that's easy to enter.
Yeah, And in that Wall Street Journal article, they said a search of Macy's website for bags price from one hundred to five hundred dollars yields results for more than seventy brands. So that sounds like a lot of competition. And you're right that this is going to be the argument. On the other hand, I'll put it back to you. Apparently the defend economic experts testify that people who buy Coach would consider Prada and Burbery. Now is that true?
Isn't it true? I don't know personally, But the question again in the end is, you know not is there a whole universe? But if Cores raises its price by
a little, what brand will consumers switch to? And if a lot of consumers switch to either Coach or Kate Spade, this means I think the FDC is going to argue, this means that by having all three brands, they could raise the corese price a bit and what they used to lose because these were separate companies in terms of business, they'll retain because people will now switch to Coach or Kate Spade. So this would give them the ability to raise price on these bags in a way that they
couldn't before. And I think that's going to be a key to the government's complaint, is that by putting the brands together, they'll do things that they couldn't do if the brands were competing.
The FDC says that working in middle class women will suffer harm if the acquisition goes through. I mean, is it really harm if you don't get to buy one handbag as opposed to the other. I mean, it's not like groceries.
Well, yeah, I wish I could parry that by saying, excuse me, this bag is important. Well, the harm that they're saying is is not that they won't be able to buy the bag. So one of the stories is that Cores has been suffering because they've had to discount some suffering. Cores may be suffering, but consumers are, like Corps bags, presumably are pleased with this. Now is the merger supposed to end that suffering by how by allowing Cores to raise its price? So what will buyers of
Cores bags then do? Will they be harmed? Well, maybe some of them just won't buy handbag. I guess not. But maybe some of them will pay the higher price, or maybe some of them will say, now step up to that Kate Spade that I wouldn't have before. So they're now spending more So from the point of view of the company, they keep the sale, and consumers now instead of being able to pay a lower price for the Cores one have to pay either pay a higher
price or switch to something they would not have bought before. So, you know, are they harmed in a way that we think of for consumer welfare? The answer would be yes, you know, they would be better off with competition between the brands, and in fact, that's what the Supreme Court has emphasized. Inter brand competition is supposed to be a key thing, and you know, now Tapestry says, well.
Not so much.
The trial's over. The judge is going to rule, we expect soon. Would a victory here for the FTC in any way expand what the FTC is doing or is it just another in a line of cases?
Well, it's not high tech. It's actually not an unusual theory to me. It's it's within what we might call conventional analysis in the sense that most merge enforcement has been done against horizontal mergers, mergers between competitors. That's what this is. I mean, if they win, that's what the court's saying, that they were really direct competitors. It uses, in a sense, familiar theories the government has been using for a decade. Really, you know, nothing new here that
questions does it apply to these facts? So I don't think this is breaking new ground. It's confirming the ground that courts have been going on now really consistently with the government's cases, which is being willing to look at the patterns of trade, look at how people operate, not be super reliant on you know, economists and economic models. So I think it's that sort of case, not not a oh my god, this is something really new.
I want to turn for a moment to the Google anti trust case, which was the biggest anti trust case of the summer, perhaps of the year. And the question now is what remedies the government is going to ask for.
I have to say, I don't know what the government's going to ask for, and the government is still being maybe koi is the word shy. I don't know exactly. All the government has filed has been this framework for remedies. You know, their shows they're thinking about it, which is very nice. They've been litigating this case for four years. It's nice that they're now thinking about now that they've caught the bus, what do they want to do with it. I hope they really have an idea in mind and
they're not just now trying to figure this out. So one of the things that people have been talking about is to you know, restructure Google in a way that would force them to sell some of their assets, maybe get rid of their interests, their their own brand of Android, maybe to vest chrome. Maybe there are other things, so that is a possibility. The government sort of tea that
in its papers said it could include these things. Maybe Google plays also at the app store, So possible, But I don't know whether they'll ask it, and I don't know whether the judge would order it even if I asked.
Why is the government playing coy? What's the point a surprise attack?
I don't know for sure. Sometimes, I mean, one strategy is to play close to the vest so that you don't really you wait until the last minute to tell your opponent exactly what you want. Another thing is the government might not want to royal the markets unduly, and you know, by indicating it's going to ask for X and then maybe not get it, and it affects, you know, markets, These are market events, so the governments can be a
little cautious about that. I have no idea whether you know, someone in the Justice Department is thinking about the election says let's not put anything crazy out here until after the election. I have no idea. So it could be any of those things, And it could be that they don't know for sure because they're still talking to people in the industry and to experts about what might work and thinking about what legally they can ask for, So
all those are possible. I don't have any way really of choosing what it might be.
The Google case was a Justice Department case. The FTC and the Justice Department do they divvy up these cases where you'll take this, I'll take that. I mean, how does it work out in.
These tech cases. Apparently what they did, and this was in the Trump administration, is they did divide them up two industries for each, So the FTC got Amazon and Facebook and the Justice Department got Google and Apple. They don't know how that was done, you know, presumably some agreement between maybe the Attorney General, the head of any trust division, and the then chair of the Federal Trade Commission.
So I think that was sort of an ad hoc thing that usually the cases go to the agency that has had some prior experience with the industry, and these fights are generally held in merger cases where notification has to be given to both the Justice Department and the Federal Trade Commission, and then the two agencies have a liaison procedure to decide who gets what, and sometimes they get pretty contentious, actually, but these monopolization cases were more
unusual because the government hadn't really filed a major case since Microsoft twenty years before.
Always a pleasure to have you on Harry. That's NYU law professor Harry First. The Supreme Court seems unlikely to side with an American citizen challenging the revocation of her spouse is visa a visa which was revoked because of a sham marriage. Join me is immigration law expert Leon Fresco, a partner Holiday Night. Leon tell us what this case is about.
So let's start with the simple facts of the case. You have a US citizen here whose name is Amina Buarfa, and what she's trying to do is she's trying to do what many people, almost a million people a year do, and that is to take a foreign national and convert their status from either undocumented or some other visa status to the status of a lawful permanent resident on the basis of a marriage to US citizens. And so this
person Buarfa marries her husband. That petition is approved. But then what happens is as the petition starts to go toward the final step of what's called the background check approval process, it actually gets revoke because they say that the foreign national who is marrying the US citizen here had entered into a previous marriage solely to evade the immigration laws. So the point was they couldn't be approved because then this marriage was not deemed to be a
valid marriage. Had that been an original decision denying the application, that decision could have been reviewed by a federal court.
But because it was a revocation of an approved decision, the question is is that review barred because the ability to revoke such a petition is discretionary, and because of that, there's all these statutes in the Immigration Code that say there's no judicial review of discretionary immigration decisions, which is something the Supreme Court over the last two three years has really been focusing on and eliminating as much judicial review as possible on all of these questions where they're
starting to dean these things discretionary. And so the incongruency year is does Supreme Court want to create this perverse incentive where it gives, basically, in difficult cases, the immigration authority the ability to avoid review by saying, look, why don't we just grant it and then revoke it a few days later, and then that way it can't be reviewed as opposed to just denying it, and then this can get judicial review. And so that's the debate here.
If someone's accused of a prior sham marriage, would they ever be allowed to stay here as a permanent residence.
Well, so one of the questions was is this really a discretionary decision or not? Because but the justices were trying to figure out was is if the US Citizenship and Immigration Services sometimes let the occasional sham marriage through on discretionary factors, then this is clearly a discretionary thing,
and so hence it's not reviewable. But the odd sort of argument that the plaintiff were making here is they never let the sham marriages through, which is a point that the government attorney didn't really have all her facts straight here. Odd are there any such cases where the government would let them slide? And I doubt she would want to make such a pronouncement because it would make the government look bad if there were such cases that
the government let slide. So the case sort of has this assumption in it that if the government knows there is a sham marriage, it would revoke the petition, hence making it a little bit more difficult to say that this is a discretionary revocation as opposed to one that would be done in every single case.
Chief Justice Roberts told the attorney for the visa applicant, this is an easy case. Just file another visa application and you'll get judicial review if it's denied.
I mean, I get the government's position, as far as I can tell, is that you just won't take yes for an answer. You want there to be review rather than review after revocation. And they're saying you can get that kind of just apply again and you'll get exactly what you would have you think you're entitled to, which is judicial review of the decision. What more can what more.
Do you want?
Well, this is a complicated argument in the following sense. So number one, what the Chief Justice was saying is after this revocation occurs, there is nothing because this person is in the United States right now preventing them from filing a new application, which they assume would just be denied, and they could just get judicial review of this new application. And they did, yes, already get review in the Board of Immigration Appeals, but they didn't get review in the
federal court. But they could get review in the federal court if they just filed a new application, So which point the plantiff said, yeah, but now we're delayed several years, and so why is that fair? And the court seem
to have no simpathy for that. But where this is actually quite a compelling argument is this many times in other contexts where there are green card petitions, not in this sham marriage context, but for instance, someone argues that they are an expert in a particular job, and so the government agrees with that, and then one year later revokes it say no, actually, you're not an expert at a particular job. A lot of times in those cases,
two problems exist. Number one is that there is this sort of statute of limitations whereby the person had to file their application before a certain date that they would have lost their status on a non immigrant visa. And the whole success of that green card application is because they filed it before a certain date. So if you were to revoke that one and just say well, you can always file again, no, in those cases you couldn't.
That person would be in illegal status and they couldn't file a new green card application, and so that would be a huge problem, and it was not raised unfortunately by the attorney. The other one that the plane of slawyer did mention was this concept of if your petition
gets revoked, then you have to apply again. You start with a new date in line, which means that where there is a line for green cards, which exists in a lot of the categories, you move from the front of the line all the way to the back of the line, which could mean ten, twenty, thirty, forty years
of additional ways. And I think the court understood that but basically said those people can bring that case later, which I don't think would actually be true, because I think this authority either exists or won't exist to revote these petitions. But nevertheless, the court appeared did not have sympathy for.
This argument, because the Chief Justice at one point said, Okay, the government made a mistake, and you know you're set back two years or whatever, but you know we are where we are. Was any justice sympathetic to this argument.
I didn't see a lot of sympathy to that argument. I actually thought, just as Thomas, interestingly enough, showed a little bit of sympathy to the fact that at the end of the day, if you were revoking for any other reason that might make sense. But if you're revoking for the exact same reason that was the reason that was approved, that maybe this didn't make sense and this
wouldn't be considered a discretionary determination. But I ultimately don't see any of the justices want to rule in favor of the plaintive year and so it seems very difficult to see that there'd be any sympathy for this argument.
I mean, you have a sham marriage here, so it doesn't really evoke much sympathy someone trying to get around the rules.
Yes, I mean, this is another problem of bad fact make bad law. And there certainly could have been a different where the government would have brought the case in a flip side of the circuit split where it was the ninth Circuit. And I actually had a case like this where the ninth Circuit was there was a revocation of someone's employment based visa on this exact thing where
the government had said this person was an expert. And then basically what happened was the government didn't like that this person was not cooperating with the government to give all sorts of secrets from their own country, which this person didn't have to do after the law. So they basically made up that the person was no longer an expert and revoked their position. And if it had been that kind of case, I think the Supreme Court would
have viewed it a lot differently. But here the bad facts to make bad law situation is one where yeah, you're starting with a marriage that has a lot of components of fraud in it. And the question is why, if this is ultimately going to be rejected when it all shakes out, do we need to make a Supreme Court case out of it?
So what did they take this case?
Very odd? But I think there is this circuit split, and I think that the circuit split is something they've wanted to resolve and something the government wanted to resolve. I mean, I think when the government saw this appeal being taken, they were sort of saying, yeah, yeah, go for it. It takes the case so that they could finally close this circuit split up in a way that was beneficial toward the government and against judicial review of these kinds of cases.
And the government's attorney said there are more than nine hundred thousand of these kinds of visa cases. Is that possible?
Correct? Believe it or not. That's a normal number because it's not a cap category, and it's pretty much been that way for the last twenty years. It's been somewhere between seven hundred and nine hundred thousand per year of US citizens marrying foreign nationals and trying to get them green cards.
So and explain why you think this case is so important beyond the marriage context.
The government they actually do this practice of revoking petitions so that they don't have to get them reviewed by the federal courts. Instead of just denying it in the first instance, they'll approve it and then revoke it. That people know that happens, and it doesn't happen a lot, but it happens a handful of times this year in
some very complicated cases. And that's the kind of thing where I think it would have been much more useful to talk about those cases and to not provide a path for the service to be able to do that, whereas they just stayed focused on just this marriage issue and how the marriage statute operates within this discretion, which I think just everybody's eyes lies over, yeah, and didn't allow for what the real states are here.
Thanks so much, Leon. That's Leon Fresco of Holland and Knight. And that's it for this edition of the Bloomberg Law Podcast. Remember you can always get the latest legal news by subscribing and listening to the show on Apple Podcasts, Spotify, and at Bloomberg dot com, slash podcast, slash Law. I'm June Grosso and this is Bloomberg