As sports fans and legal nerds try to make sense of the Eighth Circuit's ruling earlier today regarding the NFL Lockout, here are a few things to keep in mind:
1) This is a limited decision. The owners raised several arguments in their briefs. The Eighth Circuit only ruled on one, holding that the lower court did not have jurisdiction to lift the lockout as to players under contract. The Appeals Court suggested that the lockout could be invalidated as to rookies and free agents, but the issue was not yet resolved (see #2)
2) Rookies and free agents cannot start signing contracts. They are still locked out. The Eighth Circuit said, in effect, the following: "The lockout might be invalid as to rookies and free agents, but the lower court has to have a full hearing on this issue." So until and unless the lower court holds a hearing and rules that the lockout is invalid, even rookies and free agents are locked out (unless, of course, the owners voluntarily end the lockout).
[By the way, what would it mean if they could sign? The Eighth Circuit has said that players under contract could be locked out. So a team could sign a free agent, and then immediately lock him out! I suppose this might give teams some certainty, knowing they've signed a particular free agent, but it is sort of a crazy outcome.]
3) The players aren't completely out of options. The Eighth Circuit said that the players are not entitled to an injunction, that is, an order lifting the lockout. But they can still go forward with their antitrust lawsuit, which might entitle them to tens or hundreds of millions of dollars in damages. And in theory, they could appeal the Eighth Circuit's ruling, either by way of an "en banc" appeal to the full Eighth Circuit (this decision was made by a three-judge panel) or by an appeal to the U.S. Supreme Court. But that would stretch the litigation onward for months. As to the negotiations...
4) The balance of power has shifted. Over the last week or two, we've been hearing that the League has been meeting with players' representatives and getting close to a deal. The Eighth Circuit's ruling drops a bomb in the middle of those talks. The biggest question I have is whether the owners will try to "claw back" some of the concessions they've made (such as splitting revenue almost 50-50) in light of their legal win today. Still,
5) The best hope for football is a negotiated deal. Yes, the players might take this up to the Supreme Court (and maybe even win). Yes, the owners might have to lift the lockout for rookies only. Yes, the players might win hundreds of millions of dollars in an antitrust suit.
But all of these options take time--lots of time. The best hope for us fans is that the two sides treat today's ruling as if it never happened and keep going with their negotiations. We've heard that they're close. If, instead of pushing across the finish line, they start taking a hard stance in light of the ruling, we will probably be farther from a deal than we've been for about the last three weeks.
An assortment of all things interesting (and possibly useless) in the legal profession
Showing posts with label Antitrust Law. Show all posts
Showing posts with label Antitrust Law. Show all posts
Friday, July 8, 2011
BREAKING: Huge win for NFL Owners; lockout continues
The Eighth Circuit has just ruled that the Norris-LaGuardia Act prohibits federal courts of entering injunctions in labor disputes. As I've discussed before, the owners have said that this doctrine means that Judge Nelson's order issuing an injunction against the lockout--holding in effect that the lockout was invalid--should be null and void. Today, the Eighth Circuit agreed with the owners, handing them a huge win.
Some people had suggested that the Court would "stand down" while mediated talks were ongoing, particularly because those talks seemed to be making good progress. (At least at the district court level, Chief Magistrate Judge Boylan, who has been overseeing discussions, has entered orders on the docket that are sealed (i.e., not public), which I assume relate to the status of the confidential talks.) Today's decision means (1) the lockout can continue and (2) the balance of power has shifted dramatically in the negotiations. We'll see whether this is seen as a setback by the players, and if the owners try to "claw back" some of their previous concessions in light of today's ruling.
Updates to follow...
UPDATE 7/8/2011, 11 am: As expected, this decision broke down among 2-1 lines, just like every other Eighth Circuit decision to date. The majority held that the Norris-LaGuardia Act, which generally prohibits injunctions in the context of labor disputes, applied here, and so Judge Nelson did not have jurisdiction to issue an injunction lifting the lockout. The Court notably did not reach the other arguments raised by the NFL. This means, for example, that the League might still be liable for violations of the antitrust laws and be forced to pay money damages. (I can't, however, imagine that this will go on for that long.)
The majority relied on Section 4(a) of the Act, which prohibits injunctions against "remain[ing] in any relation of employment". The Appeals Court ruled that players were in a "relation of employment" with owners, the owners decided not to "remain" in that relationship any longer, and so the Act prohibited an injunction. But the Court also held that this rule does not apply to free agents and rookies. Because free agents and rookies are not currently employed, they cannot "remain" in a state of employment. Thus, the lockout could be potentially invalid regarding free agents and rookies. However, Judge Nelson did not hear from live witnesses on this point (she only took paper submissions), and the Appeals Court sent the matter back for a hearing. In theory, Judge Nelson could rule that the lockout is invalid as to free agents and rookies, and we could have a bizarre situation where veterans are locked out but rookies and free agents are not.
Later today I'll explore some of the practical implications of this decision.
Some people had suggested that the Court would "stand down" while mediated talks were ongoing, particularly because those talks seemed to be making good progress. (At least at the district court level, Chief Magistrate Judge Boylan, who has been overseeing discussions, has entered orders on the docket that are sealed (i.e., not public), which I assume relate to the status of the confidential talks.) Today's decision means (1) the lockout can continue and (2) the balance of power has shifted dramatically in the negotiations. We'll see whether this is seen as a setback by the players, and if the owners try to "claw back" some of their previous concessions in light of today's ruling.
Updates to follow...
UPDATE 7/8/2011, 11 am: As expected, this decision broke down among 2-1 lines, just like every other Eighth Circuit decision to date. The majority held that the Norris-LaGuardia Act, which generally prohibits injunctions in the context of labor disputes, applied here, and so Judge Nelson did not have jurisdiction to issue an injunction lifting the lockout. The Court notably did not reach the other arguments raised by the NFL. This means, for example, that the League might still be liable for violations of the antitrust laws and be forced to pay money damages. (I can't, however, imagine that this will go on for that long.)
The majority relied on Section 4(a) of the Act, which prohibits injunctions against "remain[ing] in any relation of employment". The Appeals Court ruled that players were in a "relation of employment" with owners, the owners decided not to "remain" in that relationship any longer, and so the Act prohibited an injunction. But the Court also held that this rule does not apply to free agents and rookies. Because free agents and rookies are not currently employed, they cannot "remain" in a state of employment. Thus, the lockout could be potentially invalid regarding free agents and rookies. However, Judge Nelson did not hear from live witnesses on this point (she only took paper submissions), and the Appeals Court sent the matter back for a hearing. In theory, Judge Nelson could rule that the lockout is invalid as to free agents and rookies, and we could have a bizarre situation where veterans are locked out but rookies and free agents are not.
Later today I'll explore some of the practical implications of this decision.
Tuesday, May 10, 2011
NFL Lockout, Day 59: What's New?
Today we're in the middle of Day 59 of the NFL Lockout, which started on March 12. So where do things stand today? The short answer: the status quo continues, as the Eighth Circuit has not yet ruled. (There is a minor, non-stay-related, update below)
As I explained last week, both the owners and players share the responsibility for the current state of affairs. And because things are in limbo right now, I don't expect a resolution in the next couple of days -- I think next week is the best hope for us fans -- as the legal process continues to wind on.
I'm going to start by discussing the football implications of where we stand. Further on, I'll go into a little more depth on the legal posture of the case. Law nerds can jump ahead.
One minor update from when this was first posted: Late this afternoon, the "NFL Players' Reserve", an entity purporting to represent entering rookies, filed a motion to intervene in the appeal as a defendant, i.e., on the owners' side. Although this may seem significant at first blush, I wouldn't read too much into it. First of all, I can't find any reference to the NFLPR on the Internet. Secondly, the brief is, well, brief -- only 7 pages -- it never explains exactly what players the "pro se attorney" claims to represent. Finally, the complaint in Brady v. NFL includes Von Miller, an entering rookie, as a plaintiff, specifically so the suit could be on behalf of incoming rookies. The complaint explicitly mentions a "Rookie Subclass". (See, e.g., para. 25.) So, while the "NFLPR"'s motion to intervene sounds like a big deal, it probably won't change the landscape in any meaningful way.
Football Implications
As I explained last week, both the owners and players share the responsibility for the current state of affairs. And because things are in limbo right now, I don't expect a resolution in the next couple of days -- I think next week is the best hope for us fans -- as the legal process continues to wind on.
I'm going to start by discussing the football implications of where we stand. Further on, I'll go into a little more depth on the legal posture of the case. Law nerds can jump ahead.
One minor update from when this was first posted: Late this afternoon, the "NFL Players' Reserve", an entity purporting to represent entering rookies, filed a motion to intervene in the appeal as a defendant, i.e., on the owners' side. Although this may seem significant at first blush, I wouldn't read too much into it. First of all, I can't find any reference to the NFLPR on the Internet. Secondly, the brief is, well, brief -- only 7 pages -- it never explains exactly what players the "pro se attorney" claims to represent. Finally, the complaint in Brady v. NFL includes Von Miller, an entering rookie, as a plaintiff, specifically so the suit could be on behalf of incoming rookies. The complaint explicitly mentions a "Rookie Subclass". (See, e.g., para. 25.) So, while the "NFLPR"'s motion to intervene sounds like a big deal, it probably won't change the landscape in any meaningful way.
Football Implications
- Football is still going on. The owners' lockout means that the NFL's "league year" has not started. As a result, free agency has not begun; teams are not making trades, and so on. But that doesn't mean there is nothing going on. Several players are taking it upon themselves to organize workouts so that they can stay in football shape (although there is a question of exactly how useful these workouts are).
- That doesn't mean it's business as usual. Perhaps those hardest hit are newly-drafted rookies, who have not been able to meet with team personnel, get into film study, access teams' medical and exercise facilities, etc. Particularly if the lockout stretches into the summer, I will be interested to see how this year's rookie class does. Each year, there are several rookies that are selected to the Pro Bowl. It wouldn't be surprising to me if there were few or no rookies selected this year.
- There is a lot of litigation still in store. Who knows if it will all actually happen -- a settlement could wipe them all out -- but they are at least on the radar for now. On May 12, Judge Doty will hear arguments in a dispute involving TV revenues. Judge Doty has said that the owners are liable for damages; the question on Thursday will be exactly how much. A decision in that case could take a few weeks. Then, on Monday, the two sides will sit down for a mediation session in Minnesota -- the first time they will negotiate face to face since talks broke down on April 20. The players' brief in the Eighth Circuit appeal is due on May 20. The NHL filed a friend of the court brief on Monday in support of the owners. It will be interesting to see if the players have people in their corner as well.
- First, some procedural wrangling. On Monday, the owners filed their opening brief in the Eighth Circuit as to the merits of the underlying appeal. Remember, Judge Nelson issued a preliminary injunction, lifting the lockout, two weeks ago. The Eighth Circuit granted a "temporary stay" of that order on April 29, and that "temporary stay" is still in place. At the time, I wrote that the order would reinstate the lockout "only for a few days", while the Court decided whether to issue an actual "stay pending appeal" (which would last through the pendency of the appeal, and could potentially last for months). Clearly, I was wrong (though not alone in thinking as I did); no decision on the stay pending appeal has been issued and it is now almost two weeks after the temporary stay went into place.
- The owners' brief says what you would expect. The owners make four main points in their appeal, and three of them would dismiss the case without reaching the merits. I find this to be an interesting tactic. Obviously, good lawyers raise all meritorious arguments. But of the 61-page brief, only the last nine or so pages address the preliminary injunction standard. The bulk of the owners' brief argues that the injunction should be vacated because (1) the Norris-LaGuardia Act, which prohibits injunctions against lockouts, applies here; (2) the Court should have deferred to the NLRB under the doctrine of "primary jurisdiction", because the owners have a pending complaint against the (now-disbanded) union before that agency; and (3) the nonstatutory labor exemption, which is a judicially-created doctrine that essentially prohibits antitrust actions by a union against an employer, applies. Note that all three of these arguments hinge on the union's decertification in March: if the decertification was valid, (1) and (3) are resolved in the players' favor. Point (2) turns on who has jurisdiction, but the owners' complaint before the agency is that the union's decertification is a sham, so that point hinges on the decertification issue as well. The owners -- who have suffered a string of legal defeats -- have pinned most of their hopes on this one aspect of the dispute. But it is not irrational; if the decertification was, in fact, a sham, the players' strategy falls apart.
- Both sides were gearing up for litigation. The owners filed a complaint before the NLRB in March, arguing that the union was not negotiating in good faith, because it was making to disband and bring an antitrust action (which it did). But the owners had more at stake than just an ideal of good faith negotiation. The owners' complaint is what sets up Point (2) in their argument now -- that the federal courts should defer to the NLRB. Thus, just as the union was preparing to decertify so it could sue, the owners, I'm sure, filed this NLRB complaint to set up a future argument that the federal courts should stay out of the issue altogether.
- The NHL has jumped in. The NHL's amicus brief is an interesting read (or skim). The NHL says, in effect, "If you let the District Court decision stand, all players' unions will decertify, or threaten to decertify, to extract concessions from owners". Now, enlisting allies to file amicus briefs is nothing new. But I was struck by the unusual positions people are taking in this case. Usually, we have employees alleging that employers are not negotiating in good faith. Usually, we have employers seeking to disband a union while employees fight to keep it in place. Usually, people representing employees think unions are a good thing. Here, the usual positions are exactly flipped.
Labels:
Antitrust Law,
collective bargaining,
lockout,
NFL,
NFLPA,
Sports
Thursday, May 5, 2011
Speaking of football and antitrust...
The Blog of Legal Times reports that the Department of Justice has sent NCAA President Mark Emmert a letter asking him "to provide information about why college football does not use a playoff system to determine a national champion". The theory -- propounded most forcefully by Utah Attorney General Mark Shurtleff -- is that the BCS system is set up to favor large conferences at the expense of smaller and midlevel schools. Stay tuned to see how this plays out; after all, the BCS system has critics from President Obama on down. That being said, don't assume that the BCS setup is illegal; Michael McCann has written than an antitrust challenge will probably fail and that the BCS actually may enhance competition in several ways. In any case, I'll keep an eye on things and let you know how things develop.
Tuesday, May 3, 2011
BREAKING: Eighth Circuit Grants Expedited Appeal; No Word on Stay Pending Appeal
The Eighth Circuit this afternoon granted the NFL's motion for an expedited appeal, as expected. The NFL's brief is due May 9, the players' response is due May 20, and the NFL's reply is due May 26. The case will be argued before Judges Bye, Colloton and Benton June 3.
Much of this is not new or particularly earth-shattering. The one interesting point to note is that the three judges who will decide the appeal are the same ones who decided the temporary stay request. Although the panel granted the stay, 2-1, Judge Bye (the Democratic appointee) dissented, writing that the owners would suffer no irreparable harm if the lockout were lifted. It will be interesting to see how this plays out; the other two judges did not opine on the merits of the stay, writing simply that they were granting the stay so that they could study the papers more closely.
Much of this is not new or particularly earth-shattering. The one interesting point to note is that the three judges who will decide the appeal are the same ones who decided the temporary stay request. Although the panel granted the stay, 2-1, Judge Bye (the Democratic appointee) dissented, writing that the owners would suffer no irreparable harm if the lockout were lifted. It will be interesting to see how this plays out; the other two judges did not opine on the merits of the stay, writing simply that they were granting the stay so that they could study the papers more closely.
Labels:
Antitrust Law,
collective bargaining,
lockout,
NFL,
NFLPA,
Sports
Monday, May 2, 2011
Five Things to Know about the NFL Lockout
Today has been a slow day in the NFL (and, of course, a very big day for other -- much more important -- news). In large part, it seems like people on all sides are recovering from the flurry of activity last week and over the weekend. So during this pause in the action, let's take stock of where things stand. Here are five things to know about the NFL Lockout: how we got here, what the two sides are saying, and what to expect down the road.
1. The Owners Forced the Issue. In 2006, the players and owners negotiated a collective-bargaining agreement. In 2008, the owners opted out of the CBA, because they felt like it was not adequately accounting for the increasing costs that owners faced. If the owners had not opted out of the CBA, we wouldn't be here today, becuase the 2006 CBA would have, by its terms, run through the 2012 season.
2. The Players Aren't Making Things Any Easier. The NFL Players' Association, almost from the beginning, was making preparations to "decertify". Antitrust law prevents competitors -- the 32 NFL clubs -- from acting together in an anticompetitve manner. So, for example, rules about the draft, free agency, the salary cap, etc., could potentially violate antitrust law. But a union cannot sue an employer for antitrust violations. The NFLPA "decertified" so that individual players could sue the NFL. (That's why the lawsuit is captioned "Brady v. NFL", rather than "NFLPA v. NFL".) Decertification typically takes place when employees are dissatisfied with a union. Here, decertification was more of a legal tactic.
3. The Legal Battle is Far From Over. When the union decertified, the owners imposed a lockout and the players sued. The players asked for, and got, a "preliminary injunction", which lifted the lockout. The owners asked the district court for a "stay" -- which would have put the ruling on hold pending appeal -- but the court denied it. The owners have asked the Appeals Court for a stay, and that request is pending. But in the meantime, the Appeals Court has issued a temporary stay. This reinstates the lockout temporarily, while the court decides if it should lift the lockout or allow it to remain in place while the owners challenge the underlying order granting a preliminary injunction. A decision on the preliminary injunction appeal will take weeks if not months. Judge Nelson's district court decision granting the injunction was a big step; the appeals court's decision on the stay will be the next big step.
4. Players Are Feeling the Effects of the Lockout Already. In their brief, the owners argue that we are in the NFL's offseason, so the players are not suffering "irreprable harm". This may be true from a legal standpoint; "irreparable harm" is a term of art. But it is undisputed that players -- particularly incoming rookies -- are feeling the effects of the lockout. For example, in the few days the lockout was "lifted" (between Judge Nelson's order and the Eighth Circuit's temporary stay) there was serious talk of a draft-day deal involving Philadelphia Eagles Quarterback Kevin Kolb. The Eagles likely could have gotten a first-round pick for Kolb, maybe even a top-10 pick. The Eagles reportedly have a first-round offer for 2012 for Kolb, but that is much less valuable than a guaranteed top-10 pick. (Teams are ranked within each round in reverse order of their record. If a team with a top-10 pick in 2011 did very well in the upcoming season, their pick next year might wind up being in the 20s, and thus much less valuable to the Eagles.)
Over the weekend, 254 players were drafted by 32 teams. But every year, undrafted rookie free agents sign with teams, and many make a big splash. Undrafted free agents can be quite productive -- the Packers won the Super Bowl with three undrafted free agents among their 22 starters. But those types of player transactions cannot occur during a lockout.
Even drafted players feel the pinch. Rookies cannot work out with teammates, study playbooks or film at team facilities or meet with coaches. NFL football is much more complicated than college football, and these rookies may be behind the curve even if the year starts on time. On the other hand, the owners are right: you can't unscramble eggs. What if free agency opened, only to have it close again a few weeks later? Would trades be invalidated? Would free agent signings be undone?
5. Parties Bargain in the Shadow of the Law. In an earlier post, I wrote about an article (in a different context) where two law professors wrote that the law does not impose obligations; instead, it sets up a framework and parties negotiate within that framework. I suspect that's what will happen here. The Eighth Circuit will issue a stay pending appeal, or not. Within that framework, the parties will negotiate a settlement that reflects each side's new-found (or lost) leverage. For us poor fans, the next best chance of a settlement will be later this month, when the parties re-convene for a mediation on May 16. Presumably by then the Eighth Circuit will have decided one way or another on the stay, and the losing party will want to get to a resolution quickly.
I am still optimistic that the parties will work something out. But then again, in 1992, the players went to trial, and won, on antitrust claims against the owners. Although trial is extremely unlikely -- some 95% of cases in general settle -- it is always a lurking possibility. Jim Quinn, an attorney for the players, was the players' trial counsel in 1992, so he is no stranger to this process.
1. The Owners Forced the Issue. In 2006, the players and owners negotiated a collective-bargaining agreement. In 2008, the owners opted out of the CBA, because they felt like it was not adequately accounting for the increasing costs that owners faced. If the owners had not opted out of the CBA, we wouldn't be here today, becuase the 2006 CBA would have, by its terms, run through the 2012 season.
2. The Players Aren't Making Things Any Easier. The NFL Players' Association, almost from the beginning, was making preparations to "decertify". Antitrust law prevents competitors -- the 32 NFL clubs -- from acting together in an anticompetitve manner. So, for example, rules about the draft, free agency, the salary cap, etc., could potentially violate antitrust law. But a union cannot sue an employer for antitrust violations. The NFLPA "decertified" so that individual players could sue the NFL. (That's why the lawsuit is captioned "Brady v. NFL", rather than "NFLPA v. NFL".) Decertification typically takes place when employees are dissatisfied with a union. Here, decertification was more of a legal tactic.
3. The Legal Battle is Far From Over. When the union decertified, the owners imposed a lockout and the players sued. The players asked for, and got, a "preliminary injunction", which lifted the lockout. The owners asked the district court for a "stay" -- which would have put the ruling on hold pending appeal -- but the court denied it. The owners have asked the Appeals Court for a stay, and that request is pending. But in the meantime, the Appeals Court has issued a temporary stay. This reinstates the lockout temporarily, while the court decides if it should lift the lockout or allow it to remain in place while the owners challenge the underlying order granting a preliminary injunction. A decision on the preliminary injunction appeal will take weeks if not months. Judge Nelson's district court decision granting the injunction was a big step; the appeals court's decision on the stay will be the next big step.
4. Players Are Feeling the Effects of the Lockout Already. In their brief, the owners argue that we are in the NFL's offseason, so the players are not suffering "irreprable harm". This may be true from a legal standpoint; "irreparable harm" is a term of art. But it is undisputed that players -- particularly incoming rookies -- are feeling the effects of the lockout. For example, in the few days the lockout was "lifted" (between Judge Nelson's order and the Eighth Circuit's temporary stay) there was serious talk of a draft-day deal involving Philadelphia Eagles Quarterback Kevin Kolb. The Eagles likely could have gotten a first-round pick for Kolb, maybe even a top-10 pick. The Eagles reportedly have a first-round offer for 2012 for Kolb, but that is much less valuable than a guaranteed top-10 pick. (Teams are ranked within each round in reverse order of their record. If a team with a top-10 pick in 2011 did very well in the upcoming season, their pick next year might wind up being in the 20s, and thus much less valuable to the Eagles.)
Over the weekend, 254 players were drafted by 32 teams. But every year, undrafted rookie free agents sign with teams, and many make a big splash. Undrafted free agents can be quite productive -- the Packers won the Super Bowl with three undrafted free agents among their 22 starters. But those types of player transactions cannot occur during a lockout.
Even drafted players feel the pinch. Rookies cannot work out with teammates, study playbooks or film at team facilities or meet with coaches. NFL football is much more complicated than college football, and these rookies may be behind the curve even if the year starts on time. On the other hand, the owners are right: you can't unscramble eggs. What if free agency opened, only to have it close again a few weeks later? Would trades be invalidated? Would free agent signings be undone?
5. Parties Bargain in the Shadow of the Law. In an earlier post, I wrote about an article (in a different context) where two law professors wrote that the law does not impose obligations; instead, it sets up a framework and parties negotiate within that framework. I suspect that's what will happen here. The Eighth Circuit will issue a stay pending appeal, or not. Within that framework, the parties will negotiate a settlement that reflects each side's new-found (or lost) leverage. For us poor fans, the next best chance of a settlement will be later this month, when the parties re-convene for a mediation on May 16. Presumably by then the Eighth Circuit will have decided one way or another on the stay, and the losing party will want to get to a resolution quickly.
I am still optimistic that the parties will work something out. But then again, in 1992, the players went to trial, and won, on antitrust claims against the owners. Although trial is extremely unlikely -- some 95% of cases in general settle -- it is always a lurking possibility. Jim Quinn, an attorney for the players, was the players' trial counsel in 1992, so he is no stranger to this process.
***
As always, I'll continue to keep an eye on things and let you know when I have any news. I've previously covered in more depth the legal issues presented by the lockout here and here.
Labels:
Antitrust Law,
collective bargaining,
labor law,
lockout,
NFL,
NFLPA,
Sports
Monday, January 10, 2011
Time for a College Football Playoff?
It'll take a collective antitrust lawsuit for that. Haven't we been down this road before?
Labels:
Antitrust Law,
BCS,
College Athletics,
College Football,
News
Thursday, October 22, 2009
BCS Update
Senator Hatch has asked President Obama to launch an antitrust investigation into the BCS. CBS Sportsline
I wrote an article last spring detailing the potential antitrust problems with the BCS system. Seems like Congress is getting serious.
I wrote an article last spring detailing the potential antitrust problems with the BCS system. Seems like Congress is getting serious.
Tuesday, October 13, 2009
The NFL and Rush Limbaugh

Congress granted the NFL an antitrust exemption by passing the Sports Broadcasting Act of 1961. See 15 U.S.C. §§ 1291-95. Sparing a detailed explanation, the Act essentially permits NFL teams to jointly agree to, and negotiate, television deals. Id. § 1291. Yet the provision further states that it does not otherwise limit "the applicability or nonapplicability of the antitrust laws to any act, contract, agreement, rule, course of conduct, or other activity by, between, or among persons engaging in, conducting, or participating in . . . organized professional . . . football." Id. § 1294. Thus, unless I am missing something, general antitrust principles such as the prohibition on anticompetitive group boycotts could ostensibly still apply to many business aspects of the NFL. It must also be noted, of course, that the Supreme Court will soon hear arguments clarifying the latter issue in American Needle, Inc. v. NFL, 538 F.3d 736 (7th Cir. 2008), cert. granted 2009 U.S. LEXIS 4899 (June 29, 2009), where it will review the Seventh Circuit's recent decision that the NFL is a single entity which is fully immune from antitrust liability under § 1 of the Sherman Act. Until this question is conclusively resolved, however, let's discuss the potential implications in this case.
In the modern approach to group boycotts, courts subject defendants who concertedly refuse to deal with a plaintiff to per se condemnation only if the plaintiff can show that the conduct simply has no redeeming merit, and that the group possessed market power or exclusive access to a critical competitive element--otherwise, the conduct should be judged under the sliding scale approach of the rule of reason. See Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 293-95 (1985) (distinguishing cases holding group boycotts subject to per se condemnation to be limited to their facts as concerted refusals to deal “[which] are so likely to restrict competition without any offsetting efficiency gains. . . .”); cf. FTC v. Indiana Federation of Dentists, 476 U.S. 447, 459 (1986) (applying the rule of reason approach because the Northwest factors were not met in a case where members of a dentists’ federation agreed to collectively refuse to provide patient x-rays to insurance companies, preventing them from evaluating the reasonableness of insurance charges, and from implementing other cost containment measures).
Commentators have analyzed whether some of the NFL's current policies would implicate the boycott rules under § 1 of the Sherman Act. But could a boycott of Mr. Limbaugh's bid to purchase the Rams--be it through a players' joint refusal to deal with him, an owners' boycott or otherwise--be subject to antitrust scrutiny? My hunch is that a boycott could be problematic, even under a favorable rule of reason analysis, because it does not seem to have much of an economic motivation. From current rhetoric--and perhaps understandably--the boycott would be based almost entirely on the controversial statements Mr. Limbaugh made regarding Donovan McNabb several years ago.
I invite our readers to chime in on this matter. I am not too sure how a court would resolve it, particularly given the uncertainty in the federal courts on the scope of the NFL's antitrust immunity. Perhaps the forthcoming Supreme Court decision will obviate the need for speculation.
Wednesday, March 25, 2009
BCS Antitrust Update

As I am sure some of our readers are aware, I wrote a piece analyzing the antitrust problems with the BCS a few weeks ago. Enjoy the update.
Monday, March 2, 2009
The BCS and the antitrust laws

The BCS, for those who are not college football maniacs, is the selection system that the NCAA uses in order to determine which two Division-I institutions will play in the national title game. It uses a complex formula that incorporates an average of six computer selection rankings, which judge, among other factors, the strength of schedule of participant institutions, along with human polls compiled by various college football coaches (the USA Today/Coaches Poll), members of the Associated Press (The AP Poll), and members of Harris Interactive (the Harris Poll). College football is presently the only NCAA-sponsored sport that does not utilize a tournament to determine its national champion.
The Supreme Court has held that some collaborative activity within the NCAA--which could otherwise produce illegal anticompetitive results in other contexts--is outside the scope of antitrust scrutiny. See Nat'l Collegiate Athletic Ass'n v. Bd. of Regents of Univ. of Oklahoma, 468 U.S. 85, 117 (1984) (concluding that the NCAA requires a “certain degree of cooperation . . . if the type of competition that . . . member institutions seek to market is to be preserved.”). But this case does not give the NCAA or its member institutions a carte blanche to institute whatever type of rule they want regardless of the potential for anticompetitive harm. See id. (suggesting that rules likely to be overtly anticompetitive may not be permissible).
Thus, Attorney General Shurtleff could conceivably prevail in a case like this if he could show that the likelihood of anticompetitive harm of the BCS's system for selecting a national champion outweighs its plausible pro-competitive benefits. There are, to be sure, substantial advantages associated with the joint collaboration of academic institutions; this is particularly true with respect to athletics (more on this below). But is any NCAA member institution (in Division I) really denied a legitimate shot at the national title under the current BCS system? And, if so, is there sufficient anticompetitive harm to outweigh any pro-competitive benefits the system offers? Probably not, as John Patashnik at The Plank notes:
There is an argument that can be made in this vein against the BCS--but the problem for Utah is that it doesn't happen to correspond to their particular grievance this year. Utah's current beef is that it was excluded form the national championship game despite its undefeated record. But, critically, in the context of the national championship game, the BCS doesn't discriminate against Utah or other members of non-BCS conferences. The national championship game matches the top two teams in the country, regardless of what conference they come from. . . . [A]s SMU law profession C. Paul Rogers III noted in a 2008 article in the Marquette Sports Law Review . . . it's unlikely a plaintiff could demonstrate that the BCS's conduct (as opposed to the conference structure of college football more generally) serves to exclude non-BCS schools from the championship game, which would be required under the Sherman Act.While I grant that the BCS computer selection process may itself pose a flaw that prevents meaningful substantive judgment of just who deserves a shot at the national title, the system does have some pro-competitive benefits. There are arguments both against, and in favor of, antitrust liability in this case, but these arguments have practical limitations and may, if taken too far individually, prevent college football from continuing to thrive. On the one hand, it is patently clear that collective rules are needed in order to choose a national champion; sports leagues simply need some means to do this. Further, there cannot be much doubt that the BCS presides over a status quo that, overall, provides exposure and massive financial benefits for a substantial number of Division I football institutions--i.e., the dozens of bowl games with televised contracts which create opportunities for participating universities to showcase their talents and educational programs. Yet, the current convoluted system, which is so complicated that it requires experts to explain its particular mechanics, would seem to militate in favor of adopting some sort of playoff system—a step which might introduce a level of predictability and fairness to the process of selecting teams to play in the championship. The Mountain West Conference is lobbying Congress for that precise solution, and even President Obama has weighed favorably on the issue.
It should be interesting to see if the system gets an overhaul. If a playoff is adopted, I hope that the NCAA finds a way to still provide some sort of a post season to the roughly 100 institutions that benefit from the current system. However, as it now stands, it is not likely that anything will happen until after 2010, when the BCS contract with Fox runs out.
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