Nike is not only embroiled in a lawsuit against three former employees who jumped ship to rival, Adidas late last year. Until very recently, the Oregon-based sportswear giant was also up against Havensight Capital, the owner of soccer equipment and apparel maker, St. Thomas F.C., in a court battle stemming from allegations that it is has "created an iron monopolistic grip on the soccer market."
According to Havensight Capital's complaint, which was filed in the U.S. District Court for the Central District of California in November 2014, Nike engages in illegal practices to squash competitors in the soccer equipment market. Specifically, Havensight claimed that Nike is guilty of antitrust, business torts, racketeering, and unfair competition based on its pricing of soccer apparel and equipment, and asked the court to award it nearly $380 million in damages. Oh, and in case that's not enough, Nike also allegedly hacked the plaintiff's email accounts and posted anti-Semitic images on its website -- further proof of its unfair method of conducting business.
Well, as of last month, Nike has prevailed in the lawsuit, which California federal judge Manuel L. Real called "overbroad and contradictory." Judge Real noted, for instance, that such contradictions included the plaintiff's allegation that "Nike had a monopoly on the soccer equipment market [but that it] also engaged in fierce competition with Adidas." Interestingly, the lawsuit noted that Adidas is, in fact, beating rival Nike in terms of reach and profits in the soccer market. (This is particularly noteworthy given reports that Adidas has been swiftly losing marketshare to Nike in the U.S. over the past several years).
Before we put this suit to bed, what exactly went down between the two parties is worth a second glance. According to the lawsuit, Nike unfairly cut Havensight’s St. Thomas FC brand products out of the soccer supply market due to Nike's intentionally large minimum purchase requirements. According Havensight’s complaint, store owners have been unable to commit to substantial purchases of non-Nike brands, such as Havensight’s St. Thomas FC brand, because the Nike purchase program is so burdensome. This has since been held to be an unmerited claim according to the court.
In addition to claiming that Nike is involved in unfair business practices, Havensight's attorney, Benjamin Woodhouse, who is actually a principal of Havensight, alleged that Nike illegally got a hold of an email between between his company and the owner of a soccer gear store, either through an improper deposition or by hacking Havensight’s email. To this, the court held that Woodhouse cannot make such allegations as there is no evidence that it occurred. The court also shot down claims that a photo on Nike’s website was an “allusion to quasi terrorist and hate congregation.” In regards to the photo, which featured Los Angeles Angels outfielder Mike Trout putting on a compression arm sleeve with the slogan “gear up for a white hot season," Nike said Havensight's claims that it posts racist imagery are a "bizarre misinterpretation" and born from a "desire to harass Nike and force a settlement of an unmeritorious lawsuit.”
U.S. District Judge Manuel L. Real dismissed the suit late last month, and also imposed sanctions against Woodhouse for filing false affidavits and “frivolous papers,” ordering that the attorney pay Nike's attorneys fees and other expenses the company incurred in the litigation.
The lawsuit at hand fails to provide a significant look into Nike's method of business (as most of the claims that Havensight made about them have since been deemed inaccurate). However, it does provide some interesting insight into what litigious brands (paired with an unethical legal team) will do to either gain some needed media attention and/or to walk away with a monetary damages award thanks to bullying a bigger company into settling a lawsuit -- only the former of which happened here. While it would seem that lawsuits of this nature are few and far between, this is not the first of its type that we have seen, and thus, this lawsuit suggests it is not the last. More to come …