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Friday, June 03, 2011

The End of the NFL as We Know It


Greetings from the Thomas F. Eagleton Courthouse.  I was fortunate enough to attend the oral arguments for Brady v. National Football League this morning at the Eighth Circuit.  As you can tell from this notice, the Eighth Circuit was expecting quite a crowd; congrats to Clerk of the Court Michael Gans and his staff for their excellent handling of the event.  Since this is a football case, I feel free to use sports metaphors, so this morning's argument was like an all-star game -- nay, a heavyweight bout -- between two of the country's top attorneys. Paul Clement represented the League, and Theodore Olson represented the players.  It was a terrific show.  But more importantly, I was really struck by how huge this case is to the future of the NFL, and perhaps the future of all U.S. sports leagues.  Whether or not the league wins the battle over the injunction, there is a lot left to come.  And we could end up with a completely new landscape.

The case is a great example of how the law makes strange bedfellows.  The NFL is relying primarily on the Norris-LaGuardia Act to strike down the injunction against its lockout of the players.  Yes, that Norris-LaGuardia Act -- the one that was passed to prevent state federal courts from enjoining unions from forming.  Clement acknowledged as such in his argument, which I think was a savvy move, because the thrust of his argument was that this is all really a labor dispute and it should be treated as such.  Although he did not, until the very end, insinuate that the NFLPA's disclaimer was not legitimate, he essentially said that the union should not be allowed to jump back and forth between labor coverage and antitrust coverage as it suits their needs.  Collusive activity is perfectly legal and even encouraged in the nonstatutory labor exemption context, but suddenly it's illegal once the union has disclaimed.  Clement analogized this to turning a light switch off and on, and he made this back and forth seem unfair to the NFL.  After all, he argued, a lockout is one of the "classic tools" of labor law that employers can use in an attempt to resolve a dispute. 

Olson, representing the players, emphasized that the players had voted to get rid of the union, and it was gone.  "That union does not exist," he said, at least a few times, with emphasis.  The players were therefore entitled to antitrust protection.  Olson maintained that players could elect whether to have a union and enjoy collective bargaining rights under labor law, or disclaim the union and get the protection of the antitrust laws.  If not, players would be stuck in a "no man's land" where neither labor law nor antitrust protections applied.  Characterizing the NFL as antitrust "recidivists," Olson convincingly contended that the players needed some form of protection, and he made it clear that the decision to disclaim should mean that the antitrust protections apply.

The oral argument was fascinating to me, because it illuminated the jury-rigging that is necessary for modern sports leagues to exist in their current forms.  They are clearly collusive, and they clearly dominate their respective industries.  So antitrust liability seems to naturally follow.  The leagues have escaped this quandry (when it comes to the players) by falling under the nonstatutory labor exemption.  But what if the players don't want to play ball, as it were?  Brady v. NFL is the result.

That's why this injunction may not matter that much.  Let's say the court holds that Norris-LaGuardia prohibits the injunction.  Well, that only removes the injunction against the lockout; it does not mean that the NFL won't ultimately be liable for antitrust violations.  In fact, Judge Benton seemed to indicate that antitrust damages would continue to accrue even if the lockout could not be enjoined under the NLA.  Or, let's say that the injunction is lifted because the nonstatutory labor exemption still applies.  Well, even Clement admitted it can't apply forever -- so how long?  Clement seemed to be pushing for at least a year, but Benton seemed comfortable with six months -- which would be, according to his calculations, September 11.  Would the antitrust violations and the injunction kick back in then?

So the hearing ultimately convinced me that (a) the players took a truly radical move by disclaiming and (b) this problem is not going away, even after the Eighth Circuit rules on the injunction.  I had thought that the longer the lockout lasts, the more it favors the owners -- players need paychecks after all.  But what if the longer it lasts, the more antitrust damages that pile up against the league?  It's one thing for players to resist a deal in the hopes that the league will cave before they do.  That's a hard one to win, and I think the NBPA showed how disastrous such a strategy can be in the late 1990s.  But what if the players resist a deal in the hopes that one day soon, it will be all free agency all the time.  No draft, no salary cap, no restrictions whatsoever.  Could you hold on for a few more months in the hope that there's no salary cap -- hard, soft, or otherwise?  Seems like a lot more to fight for.

So for those of you -- like me -- who thought that the disclaimer was just a clever, but ultimately discardable, negotiating tactic, think again.  When the news went out that (former) NFLPA president De Smith was calling for "war," I now understand those ramifications.  I believe the league brought this upon itself by a series of moves: characterizing the last deal as way too player-friendly, hiring Bob Batterman, opting out of the deal early, and enforcing a lockout.  They opened the can of worms. But this could get away from the players, too -- do all players really want a world with no collective bargaining agreements?

In his argument, Clement said that the lockout would be "a self-inflicted wound" and "suicide" if it were not intended to ultimately bring about a settlement of the labor dispute.  He's right.  And I think the league now, far more than the players, needs to settle that dispute to save itself.

Posted by Matt Bodie on June 3, 2011 at 03:02 PM in Current Affairs, Sports, Workplace Law | Permalink


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great points but i disagree with only one point that the league needs to settle the dispute far more than the players. as far back as may players were borrowing hundreds of thousands of dollars at 30-50% interest. this must go on every year because why would players need to borrow $ if they don't get paid until the games start anyway? health insurance is no more than $3k/mo. even for NFL players. and i don't buy that the players were borrowing now in anticipation of going without pay. guys living hand to mouth don't plan that far ahead.

there is probably a large percentage of the NFL that does not save any money, not unlike many other americans, so the NFLPA knows they could never get to the point of missing many paychecks. all along, the players were just calling the owner's bluff to see what the best deal (smallest % wage cut) was available. demaurice smith is not stupid enough to go into a long war knowing that his soldiers have no staying power. what good is a huge pot of gold at the end of the rainbow if you have no gas in your car to get there?

the 8th circuit simply lit a fire under both sides by letting them know that "neither side will like our decision" and both sides quickly got religion.

Posted by: fred | Jun 15, 2011 1:52:22 AM

The players forget who ultimately pays for everything, the fans.
The players are losing the fans RAPIDLY. Totally free agency does not appeal to 99.9% of fans. No fans want too see major players skipping town constantly. Football is truly a team sport unlike baseball and the quality of play will drop significantly and the fans know it.

Posted by: tommy | Jun 11, 2011 7:26:05 PM

Michael: I think there's a terrific law review article waiting to be written on the issue you raise. Matt: Terrific post -- thanks! Rick

Posted by: Rick Bales | Jun 6, 2011 8:36:56 AM

NL reaches more than union-management relations. It extends to all peaceful labor disputes, as defined in extremely broad terms. The parties continue to gloss the question of union disclaimer. I think there is a very real primary jurisdiction issue: do courts get to say there is no question concerning representation before the NLRA weighs in? The cases cited in support of that proposition are not persuasive and have arisen in vastly different contexts. The deeper issue is one of multiemployer bargaining, which created exceptions to antitrust law before enactment of either the NLA or the Wagner Act. Multiemployer and coordinated bargaining (involving groups of unions) predate positive federal labor law.

Posted by: Michael C. Duff | Jun 5, 2011 2:58:48 PM

Mike: thanks a lot -- correction noted.

Posted by: Matt Bodie | Jun 4, 2011 11:02:15 AM

Thanks for this super helpful & interesting post.

Posted by: dave hoffman | Jun 3, 2011 11:38:32 PM

A slip of the pen -- Norris LaGuardia prohibits federal, not state, court injunctions in labor disputes.

Posted by: Mike Zimmer | Jun 3, 2011 11:37:35 PM

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