FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS DEC 8 2022

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

KJERSTI FLAA, an individual; ROSA No. 21-55347

GAMAZO ROBBINS,

D.C. No. 2:20-cv-06974-SB-E Plaintiffs-Appellants,

v. OPINION

HOLLYWOOD FOREIGN PRESS

ASSOCIATION, a California Mutual Benefit Corporation; AUD BERGGREN MORISSE, an individual; TINA JOHNK CHRISTENSEN, an individual; ANIKO SKORKA NAVAI, an individual; MEHER TATNA, an individual,

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California Stanley Blumenfeld, Jr., District Judge, Presiding

Argued and Submitted February 16, 2022 Pasadena, California

Before: John B. Owens and Eric D. Miller, Circuit Judges, and Dana L. Christensen,* District Judge.

Opinion by Judge Miller

* The Honorable Dana L. Christensen, United States District Judge for the District of Montana, sitting by designation.

SUMMARY **

Antitrust

The panel affirmed the district court’s dismissal of an antitrust action brought by two entertainment journalists who challenged the membership policies of the Hollywood Foreign Press Association.

The HFPA is a California non-profit mutual benefit corporation whose members are involved in reporting for media outlets outside of the United States. The members are offered advantages such as access to Hollywood talent granted by movie studios. The HFPA strictly limits the admission of new members.

The panel affirmed the dismissal of the journalists’ antitrust claims. The journalists alleged that the HFPA’s exclusionary membership practices violated section 1 (restraint of trade) and section 2 (monopolization) of the Sherman Act, as well as California’s Cartwright Act. The panel held that the journalists did not establish a per se restraint of trade under section 1 on either a theory that the HPFA’s membership practices have produced an anti-competitive group boycott of all non- member foreign entertainment journalists, or a theory that the HFPA members have unlawfully agreed to divide the foreign entertainment news market among themselves. The panel held that the journalists also failed to state a claim that the HFPA’s practices were unlawful under a rule of reason analysis.

The panel held that a group boycott may be per se unlawful when the group of competitors cuts off access to a supply, facility, or market necessary to enable the boycotted firm to compete; when the group possesses a dominant position in the relevant market; or when the criticized practice is not justified by plausible arguments that it is intended to enhance overall efficiency and make markets more competitive. The panel concluded that the HFPA’s admissions practices possessed none of these characteristics.

The panel held that the journalists did not state a claim of per se liability based on a horizontal market division agreement because this theory was inconsistent with

** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. statements in the complaint that the HFPA’s members do not participate in the same product market.

The panel held that, under a rule of reason analysis, the journalists failed to allege that the HFPA had market power in any reasonably defined market.

The panel also affirmed the dismissal of the journalists’ claim based on California’s right of fair procedure, which protects, in certain situations, against arbitrary decisions by private organizations. The panel held that the right of fair procedure did not apply because, under California law, the HFPA was not a quasi- public organization.

Finally, the panel affirmed the district court’s dismissal for lack of subject-matter jurisdiction of the journalists’ claim seeking a declaration that the HFPA’s bylaws were inconsistent with its federal tax-exempt status. The panel held that this claim fell within the Declaratory Judgment Act’s jurisdictional bar to declaratory relief related to federal tax controversies.

COUNSEL

David W. Quinto (argued) and Joanna Ardalan, One LLP, Beverly Hills, California, for Plaintiffs-Appellants.

Samir Deger-Sen (argued) and Mateo de la Torre, Latham & Watkins LLP, New York, New York; Christopher S. Yates, Latham & Watkins LLP, San Francisco, California; Marvin S. Putnam and Robert J. Ellison, Latham & Watkins, Los Angeles, California; for Defendants-Appellees. MILLER, Circuit Judge:

Kjersti Flaa and Rosa Gamazo Robbins are entertainment journalists who

seek admission to the Hollywood Foreign Press Association (HFPA). The

journalists challenge the HFPA’s membership policies under federal and state

antitrust laws and California’s right of fair procedure. They also seek a declaration

that the HFPA’s bylaws conflict with its tax-exempt status. The district court

dismissed their complaint for failure to state a claim and for lack of subject-matter

jurisdiction. We affirm.

I

Because this is an appeal from a motion to dismiss, we assume the truth of

the facts alleged in the complaint. Ellis v. Salt River Project Agric. Improvement &

Power Dist., 24 F.4th 1262, 1266 (9th Cir. 2022).

Flaa and Gamazo are entertainment journalists based in Los Angeles. Flaa

began her career in Norway, where she reported on entertainment for several

Norwegian publications. In 2007, Flaa moved to New York, where she reported for

several Norwegian newspapers and magazines and served as the lead interviewer

for the “biggest entertainment television show in Norway.” In 2015, she moved to

Southern California. There, she founded and served as the creative director of a

production company that produced a short-form entertainment series, “Hollywood

Stories,” that was carried on Scandinavia’s largest streaming network and was sold

2 to more than 40 countries. Flaa also hosts a celebrity interview series on YouTube,

“Flaawsome Talk,” that has been viewed nearly 70 million times. Flaa’s work has

earned her professional awards and recognition. For example, Flaa was profiled by

“major outlets in Norway concerning her success reporting on celebrities.”

Gamazo, a citizen of Spain, has also been a successful entertainment

journalist for many years. She has “report[ed] for outlets around the world” and

has served as a correspondent for numerous outlets, including Mediaset España,

since 2013, reporting on entertainment, trends, and restaurants in Los Angeles.

Gamazo conducts celebrity interviews and publishes them online, and she also

serves as a correspondent for La Razón, a Spanish newspaper.

Flaa and Gamazo seek admission to the HFPA. Founded in 1943, the HFPA

is a California non-profit mutual-benefit corporation best known for hosting the

annual Golden Globe Awards. At the time the complaint was filed, the HFPA had

85 members, all of whom were involved in reporting for media outlets outside of

the United States. According to the complaint, “[o]nly half [of] the HFPA’s

members are considered truly ‘active,’” and only “[t]wo or three dozen HFPA

members . . . are legitimate, respected media figures,” while the rest are

“intermittent freelancers at best.” The HFPA’s stated purposes include “promoting

interest in the study of the arts,” “providing facilities for education and instruction

3 in the arts of motion picture production,” and “establishing favorable relations and

cultural ties between foreign countries and the USA.”

Membership in the HFPA offers significant advantages. Movie studios

provide HFPA members with access to Hollywood talent that non-HFPA members

lack: HFPA members receive opportunities to interview and interact with popular

actors, directors, and producers. Studios grant HFPA members such privileges in

order to gain favor with the individuals responsible for voting on the Golden Globe

Awards. HFPA members also reap financial benefits. Members receive invitations

to all-expenses-paid excursions to film festivals and press junkets, and are paid

directly by the HFPA for performing what the complaint describes as trivial,

makeweight tasks.

According to the complaint, membership in the HFPA is increasingly vital to

success as a foreign entertainment journalist. Until a few years ago, non-HFPA

foreign journalists could compete for the few interview and press-junket slots

available to non-members. Now, however, those slots are given to “bloggers and

social media influencers.” The lack of interview opportunities has been

“economically devastating for non-member foreign reporters.”

It is no surprise, then, that journalists like Flaa and Gamazo seek HFPA

membership. But the HFPA strictly limits the admission of new members. At the

time the complaint was filed, a journalist seeking HFPA membership was required

4 to submit two letters of sponsorship from active HFPA members, provide 24

articles written by the applicant in the last three years, demonstrate membership in

the Motion Picture Association of America, and receive a majority vote of the

HFPA’s active members, among other requirements. The HFPA admitted only one

new member in 2018, and no new members in 2019.

Flaa unsuccessfully applied for membership in 2018, 2019, and 2020.

Gamazo attempted to apply in 2015, 2017, 2018, and 2019, but she could not find

two members to sponsor her application. The complaint asserts that the HFPA’s

restrictive membership practices serve to insulate HFPA members from

competition and protect the financial benefits that accrue to them.

In August 2020, Flaa brought this action in the Central District of California

against the HFPA and several of its individual members. She alleged that the

HFPA’s refusal to admit her and other qualified journalists violated federal and

state antitrust law and California’s common-law right to fair procedure. Flaa also

sought a declaratory judgment that the HFPA’s bylaws conflict with its obligations

as a tax-exempt mutual-benefit corporation under 26 U.S.C. § 501(c)(6).

The district court dismissed the complaint. The court dismissed the antitrust

claims because Flaa “fail[ed] to plead a facially sustainable market definition.” It

dismissed the fair-procedure claim because the California right to fair procedure

applies only “to an organization that ‘occupies a quasi public position similar to

5 that of a public service business,’” and the court determined that the HFPA is not

such an organization. (quoting James v. Marinship Corp., 155 P.2d 329, 335 (Cal.

1944)). And it dismissed the declaratory-judgment claim for lack of jurisdiction

because 28 U.S.C. § 2201(a) generally bars federal courts from deciding claims for

declaratory relief relating to federal taxes.

The district court’s dismissal was with prejudice, except as to the antitrust

claims, which the court allowed Flaa to amend. Flaa then joined Gamazo as a co-

plaintiff and filed an amended complaint. In the amended complaint, the journalists

asserted that the HFPA had committed per se antitrust violations by engaging in a

group boycott and agreeing upon a horizontal market division.

The district court dismissed the amended complaint and denied further leave

to amend. The court rejected the group-boycott theory because the journalists did

not “offer non-conclusory allegations that the HFPA or its members have market

power” or “plead facts establishing a joint effort among horizontal competitors.”

The court rejected the market-division theory because, as it understood the

complaint, “HFPA members are generally not able to compete with one another

because of the peculiar characteristics of each geographic submarket,” and “[i]f

HFPA members cannot compete, then they cannot agree to divide a market.” The

court also rejected the antitrust claims under the rule of reason because “the

allegations in the amended complaint remain ‘hopelessly muddled as to what

6 product market (or markets) are at issue here,’” and the complaint did not plausibly

allege that the HFPA has market power. (quoting Ticketmaster LLC v. RMG

Techs., Inc., 536 F. Supp. 2d 1191, 1195 (C.D. Cal. 2008)).

The journalists appeal. We review the district court’s dismissal for lack of

subject-matter jurisdiction or for failure to state a claim de novo. Gilbert v. United

States, 998 F.3d 410, 413 (9th Cir. 2021); City of Oakland v. Oakland Raiders, 20

F.4th 441, 451 (9th Cir. 2021).

II

We begin with the journalists’ antitrust claims. The journalists allege that the

HFPA’s exclusionary membership practices violate section 1 (restraint of trade)

and section 2 (monopolization) of the Sherman Act, 15 U.S.C. §§ 1, 2, as well as

California’s Cartwright Act, Cal. Bus. & Prof. Code §§ 16700–16770. Because the

analysis under the Cartwright Act mirrors the analysis under the Sherman Act, we

consider both claims together. See PLS.com, LLC v. National Ass’n of Realtors, 32

F.4th 824, 831–32 (9th Cir. 2022). And because the legal tests used for sections 1

and 2 of the Sherman Act are similar, we can “review claims under each section

simultaneously.” FTC v. Qualcomm Inc., 969 F.3d 974, 991 (9th Cir. 2020). If “a

court finds that the conduct in question is not anticompetitive under § 1, the court

need not separately analyze the conduct under § 2.” Id. (emphasis omitted).

7 Section 1 prohibits “[e]very contract, combination in the form of trust or

otherwise, or conspiracy, in restraint of trade or commerce.” 15 U.S.C. § 1.

Notwithstanding the apparent breadth of that provision, the Supreme Court has

long interpreted it “to outlaw only unreasonable restraints.” Ohio v. American

Express Co., 138 S. Ct. 2274, 2283 (2018) (quoting State Oil Co. v. Khan, 522

U.S. 3, 10 (1997)).

A restraint can be unreasonable in two different ways. “A small group of

restraints are unreasonable per se because they ‘always or almost always tend to

restrict competition and decrease output.’” American Express, 138 S. Ct. at 2283

(quoting Business Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723 (1988)).

When a restraint is “so plainly anticompetitive that no elaborate study of the

industry is needed to establish [its] illegality,” it is illegal per se. Texaco Inc. v.

Dagher, 547 U.S. 1, 5 (2006) (quoting National Soc’y of Pro. Eng’rs v. United

States, 435 U.S. 679, 692 (1978)). We assess all other restraints under the “rule of

reason.” American Express, 138 S. Ct. at 2284; Dagher, 547 U.S. at 5 (noting that

the Court “presumptively applies rule of reason analysis”). Under the rule of

reason, a court examines “‘the facts peculiar to the business, the history of the

restraint, and the reasons why it was imposed,’ to determine the effect on

competition in the relevant product market.” In re Nat’l Football League’s Sunday

8 Ticket Antitrust Litig., 933 F.3d 1136, 1150 (9th Cir. 2019) (quoting National

Soc’y of Pro. Eng’rs, 435 U.S. at 692).

The journalists assert two theories of per se liability. First, they allege that

the HFPA’s membership practices have produced an anti-competitive group

boycott of all non-member foreign entertainment journalists. Second, they allege

that HFPA members have unlawfully agreed to divide the foreign entertainment

news market among themselves. Alternatively, the journalists argue that the

HFPA’s practices are unlawful under the rule of reason. We agree with the district

court that the journalists have not stated a claim under any of those theories.

A

In its traditional form, a group boycott (also known as a concerted refusal to

deal) involves “a concerted attempt by a group of competitors at one level to

protect themselves from competition from non-group members who seek to

compete at that level.” PLS.com, 32 F.4th at 834 (quoting Smith v. Pro Football,

Inc., 593 F.2d 1173, 1178 (D.C. Cir. 1978)). The boycotting group may, for

example, “deprive would-be competitors of a trade relationship” necessary to

survive in the market, or “induc[e] suppliers not to sell to potential competitors.”

Id. (quoting Smith, 593 F.2d at 1178). A group boycott may also involve

“competing firms engaged in a cooperative venture excluding other competing

firms.” Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1411 (9th Cir. 1991).

9 Determining “which group boycotts qualify as per se violations of the

Sherman Act has been a source of confusion for decades.” PLS.com, 32 F.4th at

835. While group boycotts have sometimes been described as unlawful per se, see

FTC v. Indiana Fed’n of Dentists, 476 U.S. 447, 458 (1986) (recognizing that the

Supreme Court has “in the past stated that group boycotts are unlawful per se”),

that statement sweeps too broadly: Some practices that resemble a group boycott

are per se unlawful, while others are not. See Bhan, 929 F.2d at 1410 (“[S]ome, but

not all, boycotts are considered illegal per se.”). The Supreme Court has cautioned

that “the category of restraints classed as group boycotts is not to be expanded

indiscriminately,” Indiana Fed’n of Dentists, 476 U.S. at 458, and that “[s]ome

care is therefore necessary in defining the category of concerted refusals to deal

that mandate per se condemnation,” Northwest Wholesale Stationers, Inc. v.

Pacific Stationery & Printing Co., 472 U.S. 284, 294 (1985).

In Northwest Wholesale Stationers, the Supreme Court clarified that the

“mere allegation” of a group boycott is not sufficient to justify per se

condemnation “because not all concerted refusals to deal are predominantly

anticompetitive.” 472 U.S. at 298. Certain indicia may suggest that per se

treatment is appropriate, including whether the group of competitors “cut[s] off

access to a supply, facility, or market necessary to enable the boycotted firm to

compete,” whether the group “possesse[s] a dominant position in the relevant

10 market,” and whether the criticized practice is “not justified by plausible

arguments that [it is] intended to enhance overall efficiency and make markets

more competitive.” Id. at 294; see also id. at 296 (“Unless the cooperative

possesses market power or exclusive access to an element essential to effective

competition, the conclusion that expulsion [from the cooperative] is virtually

always likely to have an anticompetitive effect is not warranted.”); PLS.com, 32

F.4th at 835; Adaptive Power Sols., LLC v. Hughes Missile Sys. Co., 141 F.3d 947,

949–50 (9th Cir. 1998). When a group boycott possesses some or all of these

characteristics, “the likelihood of anticompetitive effects is clear and the possibility

of countervailing procompetitive effects is remote,” justifying application of the

per se rule. Northwest Wholesale Stationers, 472 U.S. at 294.

The journalists allege that the HFPA’s membership practices amount to a

group boycott that is per se unlawful. By “exclud[ing] from membership all

objectively qualified applicants who might possibly compete with an existing

member,” they say, the HFPA engages in a “group boycott of everyone who might

compete with its members.” We reject that argument because the HFPA’s

admissions practices possess none of the characteristics that the Supreme Court has

identified as calling for per se condemnation.

First, the HFPA has not “cut off access to a supply . . . necessary to enable

the boycotted firm to compete.” Northwest Wholesale Stationers, 472 U.S. at 294;

11 see Charley’s Taxi Radio Dispatch Corp. v. SIDA of Haw., Inc., 810 F.2d 869, 878

(9th Cir. 1987). The journalists assert that HFPA members are provided unique

opportunities to interview and interact with Hollywood movie stars, producers, and

directors, which they claim are essential to success as an entertainment journalist.

They analogize this case to Associated Press v. United States, in which the

Supreme Court concluded that the bylaws of the Associated Press constituted a per

se violation because the Associated Press was “the chief single source of news for

the American press,” and its bylaws prohibited members from sharing news with

non-members. 326 U.S. 1, 11 n.7 (1945); see id. at 18 (noting that members

“control 96% of the total circulation in the United States”).

Critically, however, the HFPA does not control access to talent—Hollywood

studios do. As the complaint concedes, Hollywood studios provide HFPA

members with interview opportunities in order to gain favor with the individuals

who organize and vote on the Golden Globe Awards. The complaint does not

allege that the HFPA entered into an exclusive agreement with the studios or

otherwise “persuad[ed] or coerc[ed]” the studios to deny opportunities to non-

HFPA members. Northwest Wholesale Stationers, 472 U.S. at 294 (citation

omitted). Instead, the distribution of interview opportunities reflects the studios’

independent business judgment.

12 We do not question that membership in the HFPA provides economic

benefits, in part because the ability to vote on the Golden Globe Awards can

generate valuable business opportunities. But membership in almost any trade

association provides some kind of economic benefit. It does not follow that every

trade association must open itself to all comers.

Second, the HFPA lacks market power. See Northwest Wholesale Stationers,

472 U.S. at 294, 296; Indiana Fed’n of Dentists, 476 U.S. at 458 (noting that “the

per se approach has generally been limited to cases in which firms with market

power boycott suppliers or customers in order to discourage them from doing

business with a competitor”). As we explain in more detail below, the complaint

does not plausibly allege that the HFPA—a group of 85 entertainment journalists,

only half of whom are “active” journalists—possesses market power in any

reasonably defined market.

But even if the HFPA cut off access to an essential competitive resource or

possessed market power, we still would hesitate to apply the per se rule to its

membership practices. Per se condemnation is appropriate only when the

challenged practice is “not justified by plausible arguments that [it is] intended to

enhance overall efficiency and make markets more competitive.” Northwest

Wholesale Stationers, 472 U.S. at 294; see also Paladin Assocs., Inc. v. Montana

Power Co., 328 F.3d 1145, 1155 (9th Cir. 2003). In this case, the challenged

13 activity—exclusion from a small, voluntary professional organization—is not a

practice that “would almost always tend to be predominantly anti-competitive”

such that it can be condemned without further inquiry into its actual competitive

effects. Bhan, 929 F.2d at 1412. In that respect, it differs from the practice at issue

in Associated Press, which involved a large organization whose membership

explicitly excluded competitors, and that expressly forbade members from dealing

with non-members. 326 U.S. at 4.

The Supreme Court has cautioned us against “condemn[ing] rules adopted

by professional associations as unreasonable per se” when the “economic impact”

of those rules is “not immediately obvious.” Indiana Fed’n of Dentists, 476 U.S. at

458–59. Keeping with that guidance, courts are hesitant to apply the per se rule to

dictate the admissions practices of trade associations and professional

organizations. See, e.g., Phil Tolkan Datsun, Inc. v. Greater Milwaukee Datsun

Dealers’ Advert. Ass’n, 672 F.2d 1280, 1285 (7th Cir. 1982) (“Because they often

depart from the traditional group boycott paradigm, membership arrangements in

trade associations form an exception to the general rule that group boycotts

constitute per se antitrust violations.”); National Ass’n of Rev. Appraisers &

Mortg. Underwriters, Inc. v. Appraisal Found., 64 F.3d 1130, 1133 (8th Cir. 1995)

(applying the rule of reason because the organization’s membership policies

14 “appear[ed] to serve some legitimate purpose necessary to [its] proper

functioning”).

The HFPA’s membership practices are justified by plausible pro-competitive

explanations. Anyone who has seen movie advertising is aware that there is robust

competition in the market for motion-picture awards. In order to compete more

effectively in that market, the HFPA could decide to limit its membership to

prevent the organization from becoming unwieldy in size, and it could choose to

select members who will add particular viewpoints to the Golden Globe voting

pool. Whether that is a sensible approach is a question to be decided not by us, but

by the moviegoing public, which can give Golden Globe Awards whatever weight

it thinks they deserve.

While some professional organizations may seek to include everyone

practicing in a particular field, others may choose to limit their membership to

those that they deem to be among the elite of the profession. For example, the

HFPA says that it seeks to “enhanc[e] the subject-matter expertise” of member

journalists. Such an organization requires some degree of exclusivity in order to

function effectively. Its restrictive admission policy is not inherently

anticompetitive, so the organization generally is “entitled to determine its members

and is certainly not required to accept every applicant.” Phillip E. Areeda &

Herbert Hovenkamp, 13 Antitrust Law ¶ 2214c, at 341 (4th ed. 2019).

15 Because the membership decisions of a small, private professional

organization like the HFPA are not so likely to prove “harmful to competition and

so rarely prove justified” to warrant condemnation as a per se unreasonable group

boycott, we conclude that the HFPA’s admissions practices should instead be

analyzed under the rule of reason. NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 133

(1998); see Bhan, 929 F.2d at 1412.

B

The journalists allege that HFPA members have agreed to divide the foreign

market for entertainment news, allowing generally only one member, and at most

several members, to report for a given country or a given outlet. They say that the

HFPA’s rules “enshrine the members’ purported right to protection from

competition” by prohibiting a member from attempting to write for a publication

that is already represented by another member. And they suggest that the HFPA

uses its membership rules to enforce that division by ensuring that the organization

does not “admit anyone who might possibly compete with an existing member” by

encroaching on “the geographic market or markets allocated to [an incumbent]

reporter.”

“[A] classic horizontal market division agreement” is one “in which

competitors at the same level agree to divide up the market for a given product,”

and it is unlawful per se. Metro Indus., Inc. v. Sammi Corp., 82 F.3d 839, 844 (9th

16 Cir. 1996); see also United States v. Topco Assocs., Inc., 405 U.S. 596, 608–09,

612 (1972). Thus, market division could certainly form the basis for a viable

antitrust claim. But a plaintiff can plead itself out of court by alleging facts that are

inconsistent with its claim, and we agree with the district court that the journalists

have done so here. See Weisbuch v. County of Los Angeles, 119 F.3d 778, 783 n.1

(9th Cir. 1997).

As an initial matter, the market-division theory is difficult to reconcile with

the statements in the complaint that the HFPA’s members do not participate in the

same product market: Some members “are journalists while others are

photographers; some journalists report in print while others report for electronic

media; some report for outlets in the same country but in different languages.” In

addition, even among those members in the same field of print reporting, the

complaint says that competition from one country to another would not be

possible, quite apart from any restrictions the HFPA might impose. The complaint

alleges that “each country has unique outlets for [entertainment] reporting” and

requires “country-specific news reporters and news stories.” That is because

“stories by reporters from particular countries written for consumers in those

countries will be sensitive to nuances of language and will reflect knowledge of the

distinct cultures, interests, and concerns of their [local] readership or viewership.”

As the complaint describes the market, a reporter from one country cannot provide

17 stories for outlets in other countries. For example, the complaint says that “an

entertainment article appearing in the German edition of a U.S.-based magazine is

typically written for the German edition by a German reporter and would not

typically be translated into Hungarian for the Hungarian edition of the same

magazine.”

The complaint thus describes not one global market for entertainment news,

but separate geographic submarkets. As the district court observed, those

allegations mean that HFPA members from different countries cannot compete

with each other. If the members are unable to compete in the same market, they are

unable to agree to divide the market. See Metro Indus., 82 F.3d at 844 (noting that

a market-division claim requires an “agreement between competitors at the same

market level” (emphasis added)); United States v. Suntar Roofing, Inc., 897 F.2d

469, 473 (10th Cir. 1990) (holding per se unlawful “an agreement to allocate or

divide customers between competitors within the same horizontal market”

(emphasis added)); Topco, 405 U.S. at 608.

To be fair, the complaint does allege that HFPA members regularly switch

countries, an allegation that could be taken to suggest that in the absence of the

alleged market division, there might be more competition among members. In

addition—although the complaint does not make this point—the challenged rules

would seem to be unnecessary if members in different countries truly are unable to

18 compete with one another. Thus, the district court’s reading of the complaint might

be thought ungenerous.

But on appeal, the journalists have not meaningfully addressed the district

court’s reasoning, argued that the court misunderstood their complaint, or

suggested how they might amend the complaint to solve the problem the court

identified. We therefore agree with the district court that the complaint defeats its

own market-division theory.

C

Because the HFPA’s membership practices are not unlawful per se, we

apply the rule of reason. The rule of reason involves “a fact-specific assessment of

‘market power and market structure . . . to assess the [restraint]’s actual effect’ on

competition.” American Express, 138 S. Ct. at 2284 (alteration in original)

(quoting Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 768

(1984)). The purpose of that inquiry is to “distinguish[] between restraints with

anticompetitive effect that are harmful to the consumer and restraints stimulating

competition that are in the consumer’s best interest.” Leegin Creative Leather

Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007). Under the rule of reason, “a

plaintiff must allege that the defendant has market power within a ‘relevant

market.’ That is, the plaintiff must allege both that a ‘relevant market’ exists and

19 that the defendant has power within that market.” Newcal Indus., Inc. v. Ikon Off.

Sol., 513 F.3d 1038, 1044 (9th Cir. 2008).

In the amended complaint, the journalists proposed a market definition of

“reporting on news, events, and personalities related to American movies for media

outlets outside the United States,” and they asserted that individual foreign

countries constitute discrete geographic submarkets. The district court rejected that

market definition as “artificially narrow” and “hopelessly muddled.” The district

court also concluded that the amended complaint did not plausibly allege that the

HFPA possesses market power or that its membership policies harm competition.

Assuming, without deciding, that the journalists pleaded a legally cognizable

market definition (or that they could amend their complaint to do so), we

nevertheless conclude the district court correctly dismissed the journalists’ antitrust

claims under the rule of reason. We agree with the district court that the HFPA

lacks market power in any reasonably defined market.

“A failure to allege power in the relevant market is a sufficient ground to

dismiss an antitrust complaint.” Rick-Mik Enters., Inc. v. Equilon Enters., LLC,

532 F.3d 963, 972 (9th Cir. 2008). Though courts define “market power” in

various ways, it is commonly understood as “the power to control prices or exclude

competition.” Paladin, 328 F.3d at 1158; accord Areeda & Hovenkamp, 13

Antitrust Law ¶ 2211c, at 318 (noting that “the power to exclude [competitors]

20 from the market” is the critical inquiry in a case involving allegations of an

unlawful refusal to deal). We rely on market power to help distinguish between

restraints that are likely to substantially impair competition and those that are not.

See Indiana Fed’n of Dentists, 476 U.S. at 460–61 (noting that market power is a

“surrogate for detrimental [competitive] effects” (citation omitted)); Qualcomm,

969 F.3d at 989.

The HFPA lacks market power in the journalists’ proposed market—or any

other reasonably defined market. The HFPA has 85 members, and according to the

complaint, only half of those 85 members are “active” journalists, and only “[t]wo

or three dozen” members “are legitimate, respected media figures.” The rest are

“intermittent freelancers at best.” The complaint contains no quantitative

allegations suggesting that this small group of journalists possesses market power

in the global market for news about American movies or entertainment, and while

that omission is not fatal by itself, the journalists have not pleaded any other facts

that would move the hypothesis of market power “across the line from conceivable

to plausible.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Nor is it

plausible that the handful of HFPA members (often, only a single member)

“assigned” to report for a given country possesses market power in any country-

specific submarket. As the district court observed, the journalists “do not describe

an organization wielding market power of global proportions.” And despite a

21 vague statement that they “should be allowed to amend their claims,” the

journalists have not offered any explanation of how further amendment of the

complaint could buttress their allegations of market power.

To the contrary, the journalists describe a healthy and competitive market

that is responsive to shifting consumer preferences and technological change. The

journalists complain that the limited interview slots once available to non-HFPA

members now go to “bloggers and social media influencers,” driving traditional,

print journalists out of the market. That is nothing more than the competitive

process at work: Presumably in response to growing consumer demand for online

content, some market participants, like bloggers and social media influencers, have

become more successful, while others have become less successful. Consumers

abroad seeking news about American movies and entertainment are not lacking in

choices, and the complaint does not allege otherwise. In addition to news produced

by HFPA members, the complaint says that consumers can turn to news produced

by non-HFPA journalists like Flaa and Gamazo (who, despite limited access to

Hollywood talent, have successfully produced entertainment journalism for years),

content produced by the “bloggers and social media influencers” we have already

mentioned, and wire-service reporting. The presence of so many market

participants suggests that there is robust competition within any reasonably defined

market.

22 The HFPA’s lack of market power is also shown by its inability to “exclude

competition” like Flaa and Gamazo, who have enjoyed professional success for

years even without HFPA membership. See Paladin, 328 F.3d at 1158. For

example, Flaa hosts a widely viewed celebrity-interview series on YouTube

(notwithstanding the fact that the complaint asserts that non-HFPA members have

been effectively excluded from interviewing Hollywood talent), and has received

numerous journalism awards and accolades. Gamazo has reported “for outlets

around the world,” produces celebrity interviews, and serves as a correspondent for

several Spanish newspapers. While “the fact that an agreement to restrain trade

does not inhibit competition in all of the objects of that trade” is not dispositive,

Flaa and Gamazo’s success still supports the conclusion that the HFPA does not

control any relevant market. Associated Press, 326 U.S. at 17.

The journalists argue that their past success is irrelevant to the question of

whether the HFPA has the power to exclude competitors because the market is

rapidly evolving, making HFPA membership more essential now than it once was.

But the complaint does not allege that the increased importance of HFPA

membership has anything to do with an increase in the HFPA’s market power.

Rather, it seems that the newfound “necessity” of HFPA membership has been

driven by developments in the market, such as the rising prominence of online

23 content producers and reluctance by media outlets to pay for on-site entertainment

journalists based in Los Angeles.

Because the complaint does not plausibly allege market power, we need go

no further. We therefore need not consider the possible pro-competitive

justifications for the HFPA’s policies—though as mentioned above, several are

apparent. Nor need we consider whether the journalists have adequately alleged

antitrust injury. See Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328,

334 (1990). The HFPA’s lack of market power is fatal to the journalists’ claims

under the rule of reason.

III

We now turn to the journalists’ claim based on California’s right of fair

procedure. In California, the “common law right to fair procedure . . . protect[s], in

certain situations, against arbitrary decisions by private organizations.” Potvin v.

Metropolitan Life Ins. Co., 997 P.2d 1153, 1156 (Cal. 2000). The right protects

individuals “seeking membership in, or expelled by, private organizations that

occupy positions of special importance in society.” California Dental Ass’n v.

American Dental Ass’n, 590 P.2d 401, 405 (Cal. 1979). When the right of fair

procedure attaches, the organization’s decision making “must be both substantively

rational and procedurally fair.” Pinsker v. Pacific Coast Soc’y of Orthodontists,

526 P.2d 253, 260 (Cal. 1974).

24 The right of fair procedure is a limited one that applies to the decisions of

only a relatively small class of private organizations. Specifically, it applies only to

private entities that “affect[] the public interest” such that they are viewed as

“quasi-public in nature.” Potvin, 997 P.2d at 1159 (citation omitted). To determine

if an organization is quasi-public, California courts look to factors such as whether

the organization produces particularly important products or services, provides

express or implied representations to the public, receives legislative recognition of

its public character, or possesses superior bargaining power. See id. Examples of

quasi-public organizations include labor unions and medical and dental licensing

organizations. Ezekial v. Winkley, 572 P.2d 32, 35 (Cal. 1977); Potvin, 997 P.2d at

1157–59.

Under California law, the HFPA is not a quasi-public organization. The

HFPA does not provide “important products or services” to the public, does not

make representations about the qualifications of its members (as a licensing entity

does), and has received no legislative recognition as a quasi-public association. See

Potvin, 997 P.2d at 1159 (citation omitted). Unlike the organizations to which

California courts have applied the right, the HFPA is not open to all qualified

members of a profession (as a labor union or medical association is), nor does it

“foreclose from practice one who had already obtained a professional license.”

Ezekial, 572 P.2d at 35. Rather, the HFPA is a small, private, and voluntary

25 association of journalists which, according to the complaint, exists primarily for

the benefit of its members, not the public. It is not an organization that is “tinged

with public stature or purpose,” Salkin v. California Dental Ass’n, 224 Cal. Rptr.

352, 357 (Ct. App. 1986) (citation omitted), or that occupies a “position[] of

special importance in society,” California Dental Ass’n, 590 P.2d at 405. The

journalists cite no case applying the right of fair procedure to an organization even

remotely similar to the HFPA.

The journalists contend that the right applies to the HFPA because their

exclusion from the organization “greatly impair[s]” their careers as entertainment

journalists. But as demonstrated by the limited group of organizations to which

California courts have applied the right, it is not enough that exclusion produces

professional or economic harm. See Potvin, 997 P.2d at 1159 (“The private

organizations in our [fair procedure cases] . . . all shared an attribute of

significance. . . . Each one was a private entity affecting the public interest.”).

Thus, even if we were to conclude that membership in the HFPA is a “practical

necessity” to success as an entertainment journalist, Pinsker v. Pacific Coast Soc’y

of Orthodontists, 460 P.2d 495, 499 (Cal. 1969), the right still would not apply

because the HFPA is not a quasi-public organization.

The journalists argue that the HFPA is quasi-public because the

entertainment industry is economically significant. But the California Court of

26 Appeal has rejected a nearly identical argument. In Yari v. Producers Guild of Am.,

Inc., the court held that the Academy of Motion Picture Arts and Sciences and the

Producers Guild of America are not “quasi-public.” 73 Cal. Rptr. 3d 803, 805, 809

(Ct. App. 2008). The court recognized that “the movie industry is an important

industry” in which “the public is interested,” but it explained that those facts

themselves do not establish “that industry-related organizations like defendants

operate in the public interest.” Id. at 809.

Similarly misplaced is the journalists’ observation that “news reporting is in

the public interest.” It is not enough that an industry is important to the public;

rather, the right of fair procedure applies only when an organization possesses

characteristics that make it quasi-public in nature. See Potvin, 997 P.2d at 1159

(listing factors that an organization must possess to be quasi-public); Yari, 73 Cal.

Rptr. 3d at 809. The HFPA does not.

Finally, the journalists emphasize that the HFPA is a tax-exempt section

501(c)(6) organization. As the district court observed, accepting this theory would

“extend [the right] to all such non-profit organizations,” and the California courts

have given no indication that the fair-procedure doctrine applies so broadly. The

HFPA’s tax-exempt status cannot support a conclusion that the fair-procedure

doctrine applies.

IV

27 That leaves the claim for declaratory relief. The journalists seek a

declaration that the HFPA’s bylaws “are unlawful in light of the HFPA’s

commitments and obligations as a tax-exempt Section 501(c)(6) mutual benefit

corporation” because the HFPA’s bylaws serve to benefit its members rather than

the industry as a whole. The district court correctly dismissed that claim for lack of

subject-matter jurisdiction.

The Declaratory Judgment Act grants federal courts the power to “declare

the rights . . . of any interested party seeking such declaration,” but it expressly

provides that declaratory relief is unavailable “with respect to Federal taxes.” 28

U.S.C. § 2201(a). That language creates a jurisdictional bar to declaratory relief

related to federal tax controversies. See Bluetooth SIG Inc. v. United States, 611

F.3d 617, 619 n.1 (9th Cir. 2010); Gilbert, 998 F.3d at 413–15. The statute

provides an exception to the tax-related jurisdictional bar for “actions brought

under section 7428 of the Internal Revenue Code.” 28 U.S.C. § 2201(a). Section

7428, in turn, provides jurisdiction to determine whether an organization is entitled

to tax-exempt status, but only in actions brought by the organization itself. See 26

U.S.C. § 7428(a)(1)(E), (b)(1).

The journalists seek a declaration that the HFPA’s bylaws are inconsistent

with its tax-exempt status. Such a declaration is not permitted under section 7428,

which would provide jurisdiction only if the HFPA itself were to challenge its own

28 tax status. See 26 U.S.C. § 7428(b)(1); 28 U.S.C. § 2201(a). Because the

declaration the journalists seek is not covered by the exception to the jurisdictional

bar found in section 7428, and is otherwise a declaration “with respect to Federal

taxes,” 28 U.S.C. § 2201(a), the jurisdictional bar applies.

The journalists argue that they do not directly challenge the HFPA’s tax-

exempt status or the amount of taxes it owes, but merely seek a declaration that the

HFPA’s bylaws conflict with the “obligations flowing” from its tax-exempt status.

But a declaration that the HFPA’s bylaws conflict with its tax status would be

functionally equivalent to a declaration that the organization is violating the tax

laws. Such a declaration would necessarily imply that the HFPA is not entitled to

its tax-exempt status, and it would serve no purpose but to threaten the HFPA with

the loss of that status. Cf. Gilbert, 998 F.3d at 415 (applying the jurisdictional bar

because “the ultimate issue in this case is the parties’ tax obligations flowing from

their real estate transaction . . . even though [they] are not seeking to avoid tax

liability” (emphasis added)). The requested declaration is therefore one “with

respect to Federal taxes,” so the district court correctly dismissed the claim for lack

of subject-matter jurisdiction.

AFFIRMED.

29