Flaa et. al. v. Hollywood Foreign Press Ass'n et. al.

Unreasonable restraints on trade are prohibited under the Sherman Act, unreasonable restraints can be established two ways.

Petitioners accused the Hollywood Foreign Press Association’s (HFPA) membership practices of being too exclusionary and thus creating a monopoly under sections 1 and 2 of the Sherman Act and California’s Cartwright Act. Unreasonable restraints on trade are prohibited under the Sherman Act.  Analysis under the Sherman Act also covers the Cartwright Act. Unreasonable restraints can be established in two ways. Restraints which are plainly anticompetitive as to almost always restrict competition and decrease output are per se unreasonable. All other restraints fall under the “rule of reason” where a court examines facts peculiar to a business, history of restraint, and reasons for the practice to be imposed. Petitioners alleged a boycott of all non-member foreign entertainment journalists and an agreement by HFPA to divide foreign entertainment news markets among themselves were unreasonable restraints. The Court held that Petitioner failed to state a claim because HFPA’s admission practices possess none of the characteristics identified by the Supreme Court in Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 294 (1985), calling for per se condemnation. HFPA does not control access to talent and they have not cut off access to a supply. There are plausible pro-competitive explanations for HFPA’s practices. AFFIRMED.