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Restraint-of-trade litigation ramps up in California federal court

American federal law that seeks to ensure fair competition in the commercial realm is both robust and long-tenured, with so-called “antitrust” protections aimed at precluding monopolies and other business-choking strategies being well established and explicit.

State laws concerning things like noncompete agreements and restrictive covenants vary. As noted in a recent business article on trade restraints, courts in many jurisdictions across the country are comfortable in applying a “reasonableness” test when assessing challenged business conduct.

Not so California tribunals, as further pointed out in the above media piece. California law generally takes a very dim view of any business behavior that arguably impinges on the rights of third parties to compete. Absent “narrow restraints,” such conduct will be deemed as unlawful on grounds of public policy.

That is the precise outcome hoped for by an Oregon musical production company that recently sued Coachella Valley Music and Arts Festival promoters in a California federal court. The plaintiff wants the court to rule that a select contractual provision in agreements that the CVMAF inks with artists is so overly broad that it unlawfully bars competition.

What is specifically at issue is the boilerplate insertion of a preclusion rider. That clause prohibits Coachella Valley acts from performing at other venues within 1,300 miles of the Southern California site within five months of the annual CVMAF.

The Coachella principals argue that the provision is fair and that they have no intention to cave into demands to eliminate it.

Unsurprisingly, the Oregon enterprise and other promoters insist that the rider is flatly unlawful.

We’ll let readers know what the court concludes.

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