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Windage, LLC v. United States Golf Association and unnamed co-conspirators: US District Court : ANTITRUST - no antitrust violation regarding device to check wind direction playing golf

1 The factual allegations in the Complaint are taken to be true for the purposes of the
USGAs Motion to Dismiss. Hamm v. Groose, 15 F.3d 110, 112 (8th Cir. 1994).
Windage, LLC,
Civ. No. 07-4897 ADM/AJB
United States Golf Association,
and unnamed co-conspirators,
Stanford P. Hill, Esq., Bassford Remele, P.A., Minneapolis, MN, argued on behalf of Plaintiff.
Lee N. Abrams, Esq., Mayer Brown, LLP, Chicago, IL, and Joseph W. Anthony, Esq., Anthony
Ostlund Baer Louwagie & Ross, P.A., Minneapolis, MN, argued on behalf of Defendant United
States Golf Association.
On May 7, 2008, the undersigned United States District Judge heard oral argument on the
Motion to Dismiss [Docket No. 8] brought by Defendant United States Golf Association
(USGA). In its Complaint [Docket No. 1], Plaintiff Windage, LLC (Windage) asserts an
antitrust claim under the Sherman Act, 15 U.S.C. 1, and the Minnesota antitrust statute, Minn.
Stat. 325D.52 and 325D.53. For the reasons set forth below, the USGAs Motion is granted.
The USGA is a non-profit association of golf clubs, golf courses, and individuals.
Compl. 2, 10; Weight-Rite Golf Corp. v. U.S. Golf Assn, 766 F. Supp. 1104, 1107 (M.D. Fla.
2 A court may take judicial notice of judicial opinions and public records. Stutzka v.
McCarville, 420 F.3d 757, 761 n.2 (8th Cir. 2005). The USGA asserts this court can take
judicial notice of background facts described in Weight-Rite. Def.s Mem. in Supp. of Mot. to
Dismiss [Docket No. 10] at 4 n.1. Windage did not oppose judicial notice in its brief. This
Court takes judicial notice of the background of the USGA as recited in the Weight-Rite
1991).2 Since 1894, the USGA has functioned as the exclusive governing body of golf for the
United States, its territories, and Mexico. Compl. 9. The Royal & Ancient Golf Club
(R&A) in St. Andrews, Scotland, functions as the governing body of golf for the rest of the
world. Id. Together, the R&A and the USGA promulgate the Rules of Golf. Id. The stated
purposes of the Rules of Golf are to preserve the traditions of golf and to ensure that a players
score is the product of skill, and not equipment. Id. 12. Thus, the Rules of Golf regulate the
equipment used in the game of golf. Id. 13.
The USGA applies the Rules of Golf in the thirteen national championships it conducts
each year. Weight-Rite, 766 F. Supp. at 1107. The PGA Tour, Inc., and other entities
conducting golf competitions are separate from the USGA. Id. at 1108. However, those entities
usually apply the Rules of Golf. Id. Additionally, more than twenty thousand golf courses and
twenty-five million golfers voluntarily follow the Rules of Golf. Compl. 10.
Since 2006, Windage has manufactured the Windage device, a small, golf-ball-shaped
plastic container with talc powder inside. Id. 16-17. A golfer can gauge wind direction by
squeezing the Windage device to release a puff of talc power into the air. Id. 17. The product
allows golfers to assess wind conditions without having to bend over to pluck grass to toss into
the air. Id.
On July 19, 2006, Windage submitted its device to the USGA for determination of
3 The USGAs decisions have not been made a part of the record.
whether the device conforms to the Rules of Golf. Id. 18. On August 17, 2006, USGA staff
determined that the Windage device did not conform to Rule 14-3(b) because it was an artificial
device for the purpose of gauging or measuring conditions that might affect play. Id. 19.
Rule 14-3(b) provides in relevant part that [e]xcept as provided in the Rules, during a stipulated
round the player must not use any artificial device or unusual equipment . . . [f]or the purpose of
gauging or measuring distance or conditions that might affect his play[.] Id. 13.
Windage appealed the USGA staffs ruling to the USGA Equipment Standards
Committee and the USGA Executive Committee. Id. 20-21. Both committees affirmed the
USGA staffs determination that the Windage device does not conform to Rule 14-3(b). Id.
On December 19, 2007, Windage filed the instant lawsuit. Windage alleges that the
USGA has arbitrarily applied the Rules of Golf to the Windage device to harm competition and
stifle innovation in the markets for golf products that determine wind direction and for products
that assist golfers with disabilities. Id. 26-27. Windage alleges that the USGA, its members,
affiliates, and those acting in concert, have engaged in a group boycott to restrain trade and
inhibit research and development. Id. 29-30. Windage asserts that retail stores, pro shops
and other golf retailers have refused to stock the product specifically because it is not USGA
approved, and the lack of approval is a major sales obstacle for retailers and manufacturers. Id.
43. Windage seeks damages under federal and state antitrust statutes, and a declaratory
judgment that the Windage device conforms to the Rules of Golf. Id. 50.
A. Standard of Review
Rule 12(b)(6) of the Federal Rules of Civil Procedure provides that a party may move to
dismiss a complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P.
12(b)(6). In considering a motion to dismiss, the pleadings are construed in the light most
favorable to the nonmoving party, and the facts alleged in the complaint must be taken as true.
Hamm, 15 F.3d at 112; Ossman v. Diana Corp., 825 F. Supp. 870, 879-80 (D. Minn. 1993). Any
ambiguities concerning the sufficiency of the claims must be resolved in favor of the nonmoving
party. Ossman, 825 F. Supp. at 880.
Under Rule 8(a) of the Federal Rules of Civil Procedure, pleadings shall contain a short
and plain statement of the claim showing that the pleader is entitled to relief. A pleading must
contain enough facts to state a claim to relief that is plausible on its face. Bell Atl. Corp. v.
Twombly, 127 S. Ct. 1955, 1974 (2007).
B. The Federal Antitrust Claims
Windage alleges that the USGAs decision that the Windage device does not conform to
the Rules of Golf violates 1 of the Sherman Act, which provides that [e]very contract,
combination . . . or conspiracy, in restraint of trade or commerce . . . is declared to be illegal.
15 U.S.C. 1. The USGA argues that Windage has failed to adequately allege the existence of
an illegal agreement.
The Supreme Courts 2007 decision in Bell Atlantic Corp. v. Twombly, addresses the
pleading standard for 1 claims. The Twombly plaintiffs allegations of an illegal 1
agreement rested exclusively on the parallel conduct of the defendant regional
telecommunications providers. 127 S. Ct. at 1970. Before 1996, the defendants had
government-sanctioned regional monopolies for local telephone service, but could not compete
in the competitive long-distance market. Id. at 1961. The Telecommunications Act of 1996, 110
Stat. 56, restructured local telephone markets by imposing duties on the defendants to facilitate
new entrants. Id. The statute also allowed the defendants to enter the long-distance market and
compete in each others territories. Id. The Twombly plaintiffs 1 claims rested on the parallel
conduct of the defendants in refraining from entering each others markets and resisting new
competition in their respective geographic markets. Id. at 1970.
In considering whether these claims survived a motion to dismiss, the Supreme Court
stated that a 1 claim must set forth enough factual matter . . . to suggest that an agreement was
made. Id. at 1965. [A]n allegation of parallel conduct and a bare assertion of conspiracy will
not suffice. Id. at 1966. Instead, allegations of parallel conduct must be placed in a context
that raises a suggestion of a preceding agreement, not merely conduct that could just as well be
independent action. Id. Applying this standard, the Twombly plaintiffs complaint was
properly dismissed because defendants parallel conduct was naturally explainable as the result
of each defendants independent decision to attempt to maintain its regional dominance. Id. at
1971-72. The Twombly Court cautioned that we do not require heightened fact pleading of
specifics, but only enough facts to state a claim to relief that is plausible on its face. Id. at 1974.
[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of
those facts is improbable, and that a recovery is very remote and unlikely. Id. at 1965
(quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).
Windage argues that three paragraphs of its Complaint satisfy the Twombly standard of
pleading facts that suggest that an agreement was made. Pl.s Mem. in Oppn to Def.s Mot.
to Dismiss [Docket No. 12] at 4-5. Paragraph three alleges upon information and belief that
the USGA has engaged in a series of actions, agreements, understandings and/or arrangements
with other individuals and entities whereby they have combined and conspired to participate in
the conduct as set forth in this Complaint. Compl. 3. Paragraph twenty-nine asserts [t]he
actions of the USGA, its members, affiliates, and those acting in concert, including golf pro
shops and specialty stores that have refused to sell the Windage product, all have the effect of
restraining competition . . . . Id. 29. Paragraph thirty-one alleges [t]he actions of member[s]
of the USGA and its affiliates, including golf pro shops and specialty golf equipment shops,
constitute a contract, combination or conspiracy to unlawfully restrain trade in the ancillary golf
products market. Id. 31.
Neither these paragraphs, nor the remainder of Windages Complaint, provide a factual
context to suggest an agreement. While the quoted paragraphs, like the allegations in Twombly,
allege a conspiracy in form, the only facts provided are that the USGA determined that
Windages device does not conform to the Rules of Golf and unidentified golf retailers have
refused to sell the device. However, Windage does not provide a plausible factual context in
which the USGA, golf pro shops, and golf retailers would conspire to interpret the Rules of Golf
to exclude Windages product. Windage does not allege that the USGA or the golf retail stores
are direct competitors of Windage, or that they have a financial incentive to interpret the Rules
of Golf to exclude Windages device. Although Windage alleges a group boycott, the golf
retailers decisions not to stock the Windage device could just as well be independent self7
interested behavior in response to golfers desire to play with products that conform to the Rules
of Golf, as Windage itself avers in the Complaint. Compl. 40. Windage has not alleged that
the USGA, a non-profit entity, and its unnamed co-conspirators support a competitor of
Windage, or that they have an economic motivation to exclude the Windage device. Therefore,
the golf retailers parallel refusals to sell the Windage device does not create a plausible
inference that the USGA and the golf retailers reached a preceding agreement.
Windages reliance on this Courts decision in Fair Isaac Corp. v. Equifax, Inc., Civ. No.
06-4112, 2008 WL 623120 (D. Minn. March 4, 2008), is misplaced. Fair Isaac alleged that the
defendant credit bureaus agreed to take anticompetitive actions that would support their joint
venture credit scoring corporation. This Court denied the credit bureaus motion to dismiss
because the close temporal proximity between the creation of the credit bureaus joint venture
and the start of the parallel anticompetitive conduct provided a context that raises a suggestion
of a preceding agreement. Id. at *6 (quoting Twombly, 127 S. Ct. at 1966). The case at bar is
distinguishable because although Windage alleges golf pro shops have refused to sell its product,
Windage has not alleged any facts that suggest a preceding agreement.
Windage asserts that the USGA has made an exception to Rule 14-3(b) to allow the use
of laser and Global Positioning System (GPS) that measure distance in certain circumstances.
Compl. 28. Windage contends it is arbitrary, inconsistent, unfair, unreasonable, and
unjustified for the USGA to make an exception to Rule 14-3(b) for distance devices while
excluding wind devices. Compl. 38, 43. However,
So long as [the USGA] made game-defining rules decisions based upon its
purpose as a sports organization, an antitrust court need not be concerned with the
rationality or fairness of those decisions. Irrational decisions and unfair treatment
of suppliers will result in an unpopular game, and players and spectators will take
4 Because Windage has not adequately alleged an agreement, it is unnecessary to address
the USGAs argument that Windage has not sufficiently pleaded a relevant market or an antitrust
their entertainment dollars elsewhere.
Brookins v. Intl Motor Contest Assn, 219 F.3d 849, 854 (8th Cir. 2000). Although Windage is
dissatisfied with the USGAs ruling and golf retailers reluctance to sell the Windage device, it
cannot proceed to costly antitrust discovery by conclusorily labeling the conduct as a conspiracy
and a group boycott.
The Court grants the USGAs Motion to Dismiss Windages claims under 1 of the
Sherman Act.4
C. The State Antitrust Claims
Minnesota antitrust law is generally interpreted consistently with federal antitrust law.
Lorix v. Crompton Corp., 736 N.W.2d 619, 626 (Minn. 2007). Windage and the USGA agree
that the analyses of Windages federal and state antitrust claims are identical. Def.s Mem. in
Supp. of Mot. to Dismiss at 19-20; Pl.s Mem. in Oppn to Def.s Mot. to Dismiss at 12. The
Court dismisses Windages state antitrust claim for the same reasons discussed in assessing
Windages federal claim.
D. Declaratory Judgment
The Declaratory Judgment Act provides in relevant part that [i]n a case of actual
controversy within its jurisdiction . . . any court of the United States, upon the filing of an
appropriate pleading, may declare the rights and other legal relations of any interested party
seeking such declaration, whether or not further relief is or could be sought. 28 U.S.C.
2201(a). The Declaratory Judgment Act does not provide an independent basis for federal
jurisdiction. Victor Foods, Inc. v. Crossroads Econ. Dev. of St. Charles County, Inc., 977 F.2d
1224, 1227 (8th Cir. 1992) (citation omitted).
Windage seeks a declaratory judgment that the USGAs decision regarding the Windage
device was arbitrary and capricious, and that the device conforms to Rule 14-3(b) of the Rules of
Golf. Windage asserts that its declaratory judgment claim is a distinct cause of action that is
independent from the antitrust claims. Pl.s Mem. in Oppn to Def.s Mot. to Dismiss at 12.
Although federal and Minnesota statutes provide a cause of action for violation of the antitrust
laws, there is no independent cause of action premised on interpretation of the Rules of Golf.
Therefore, this Court has neither federal question jurisdiction nor diversity jurisdiction over
Windages declaratory judgment claim. Windages declaratory judgment claim is dismissed.
Based upon the foregoing, and all the files, records, and proceedings herein, IT IS
1. Defendant United States Golf Associations Motion to Dismiss [Docket No. 8] is
2. Plaintiff Windage, LLCs Complaint [Docket No. 1] is DISMISSED.
s/Ann D. Montgomery
Dated: July 2, 2008.


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