Brown v. Pro Football Services: Widening the Field but Staying in-Bounds


LegalBrief Law Journal Issue 1, Article 2

cite as: Lance Formwalt, Brown v. Pro Football Services: Widening the Field but Staying in-Bounds, 1 LegalBrief L.J. 2, par. # (1997) <http://www.LegalBrief.com/formwalt.html>
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Brown v. Pro Football Services, Inc.: Widening the Field but Staying in-Bounds SIDENOTES
LegalBrief Sidenote Citation (2nd ed. 2003)

By Lance Formwalt

I. Introduction

{1} At the heart of litigation involving union-management relations are the competing policies of the federal antitrust and labor laws.1 In 1890, Congress passed the Sherman Act with the aim of promoting free competition and restricting restraints on trade.2 Since the enactment of that law, Congress passed a series of laws, beginning with the Clayton Act in 1914 and concluding with the National Labor Relations Act (NLRA) in 1947, designed to promote collective bargaining and encourage unionism.3 These labor laws resulted in the sanction of a direct restraint on free competition.4 For example, one of the functions of unions is to reduce competition for wages and to set a uniform wage scale for all union members, something which, if not for congressional sanction under the labor laws, would be a clear violation of the antitrust laws.5

{2} Because of the competing policies of the antitrust and labor law, whenever a dispute arises between a union and management questions arise regarding the applicable law. This situation in part occurs because the victor in an antitrust cause of action is awarded treble damages.6 When this issue arises, the proper application of the policies behind these laws are required.7

{3} Congress and the courts have attempted to resolve this issue through the creation of two exemptions for labor law from the antitrust laws: the statutory labor exemption and the nonstatutory labor exemption.8 The statutory exemption draws from both the Norris-LaGuardia Act and the Clayton Act and applies to only a narrow band of labor-management relations, such as protection of the right to strike.9 In an effort to gradually broaden the scope of the exemption, the Supreme Court, in a series of cases from the 1940's-60's, created the nonstatutory exemption.10 However, even though it created the exemption, the Court did not clearly set forth its parameters. Consequently, the circuit courts have created a variety of approaches.11

{4} The application of the nonstatutory labor exemption in the context of the professional sports arena involves an unusual circumstance in that the team owners usually raise the exemption as a defense to an antitrust action brought by the union or player's association, while the opposite situation usually exists in the context of most other labor-management disputes.12 Since the Supreme Court cases setting forth the exemption all took place in the context of a union seeking to use the exemption as a defense, application and determination of the scope of the exemption as it applies to management is even murkier than usual. Additionally, application of antitrust law to sports leagues, outside the labor law context, creates some unique dilemmas which suggest that the courts grant more deference to labor law in this context than in other business sectors.13

{5} In the sports context, courts generally agree that the exemption is in effect at least during the life of the collective bargaining agreement (CBA)14 with regard to the terms contained in the agreement.15 Disputes have arisen as to how much farther the exemption should extend.16 Most recently, in Brown v. Pro Football Services, Inc.17, the D.C. Circuit extended the exemption to its furthest point to date. The court essentially held that as long as the action taken by either the unions or the management is legal within the labor laws, it will be exempt from the antitrust laws.18

{6} This Comment will examine the reasoning behind the decision of Brown and assess its impact on the scope of the nonstatutory labor exemption in the context of professional sports. The Comment will discuss the competing policies of the labor and antitrust laws accompanied by an overview of the Supreme Court cases that shaped the nonstatutory labor exemption and the several circuit court cases that have shaped the exemption in the context of professional sports.19 Second, the facts of the case and the court's analysis are presented.20 Third, the Comment will analyze the reasoning of the Brown court and the impact of the case.21 This Comment will propose that the position of the D.C. Circuit is defensible and appropriate, both in light of the legislative scheme created by Congress and the fact that the test may be easily applied.22 Finally, the Comment will argue that using the same principles found in Brown, an alternate framework for viewing this type of case should be adopted by the courts; this framework would treat the entire action within the antitrust law.23

II. Background
A. The Antitrust and Labor Laws
1. Statutory Scheme

{7} Federal antitrust law is primarily contained in two statutes: the Sherman Act and the Clayton Act.24 Of primary concern in the sports context is the sweeping language contained in section one of the Sherman Act declaring illegal "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce ... "25 However, in effect, the language of the statute is not really that sweeping since the alleged activity must be an unreasonable restraint on trade.26

{8} The courts employ two tests when hearing an antitrust action. Generally, the courts will apply the Rule of Reason which gives the parties an opportunity to present to the court the purposes behind the alleged restraint.27 In using the Rule of Reason, the courts determine whether there is a less restrictive alternative in existence.28 Because the process of determining what is reasonable can be rather cumbersome and time-consuming, the courts have developed an alternate approach: the per se violation.29 Among other things, courts have ruled the following restraints as illegal per se: price-fixing30, division of markets31, concerted refusals to deal32, group boycotts33.

{9} Prior antitrust case law dictates that if antitrust law applies directly to the situation in Brown,34 a court would undoubtedly rule that it falls under the category of price-fixing and therefore is a per se violation of the Sherman Act.35 While several restraints on trade are considered per se illegal in most businesses, courts, although they have applied the antitrust laws to the professional sports leagues,36 have generally refrained from applying the per se rule, instead turning to the Rule of Reason.37

{10} The labor law scheme is primarily found in the NLRA (also known as the Wagner Act).38 Because it purposes to encourage collective bargaining between labor and management, the labor laws allow certain actions that are decreed illegal by the antitrust laws.39 The NLRA sets forth several rights and responsibilities which govern labor-management relations.40 Rights of employees and players include "the right to self-organization, to form, join or assist labor organizations, to bargain collectively through representation of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid and protection, and ... to refrain from any or all such activities ...."41

{11} An extensive list of rights and duties exists with regard to the collective bargaining process that the NLRA was designed to foster. First, when the parties enter into a collective bargaining relationship, they have a duty to bargain in good faith.42 This duty extends to so-called "mandatory subjects" for collective bargaining43, requiring that the parties must bargain collectively and "meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment ...."44 Additionally, if the parties form a collective bargaining relationship, the two representatives become the exclusive negotiators and the subsequent agreement binds all employees regardless of whether they are members of the union or disagree with the terms.45 Furthermore, the duty to bargain in good faith only lasts until the parties reach an impasse in the negotiations.

{12} Impasse is "the deadlock reached by the bargaining parties 'after good-faith negotiations have exhausted the prospects of concluding an agreement.'"46 Following impasse, the parties may then utilize various economic weapons without fear of being subjected to an unfair labor practice charge.47 These weapons are available to both sides. The employees may strike48, and the employers may lock out the employees49 and make unilateral changes in the collective bargaining relationship which were "reasonably comprehended within his pre-impasse proposals."50

2. Policies of the Antitrust and Labor Laws

{13} The following is simply a quick review of the various policies behind the antitrust and labor laws. Policy issues will be examined more thoroughly in the analysis of Brown.51 Some of the policies for each law are similar while others conflict.

{14} The Sherman Act and other antitrust laws promote unfettered competition and the free flow of commerce.52 The labor law scheme (embodied in the NLRA) has several policy objectives. First, the scheme promotes the free flow of commerce.53 Second, the statute incorporates a fundamental respect for the freedom of contract.54 Third, the labor law should insure industrial peace and reduce strife and work stoppages which harm productivity.55 Fourth, and finally, the labor law should give finality to the parties' agreements since failure to do so will make it more likely that one or both of the parties will view the final terms of the agreement as unsatisfactory. This will lead to attempts to subject the terms of the agreement to judicial intervention, which in turn would inhibit the free flow of commerce.56

B. Establishment of the Nonstatutory Labor Exemption57

{15} As discussed earlier, although the Supreme Court created the nonstatutory labor exemption, it has not precisely defined the contours of the exemption.58 However, the Court has provided some guidance on the applicable principles in the cases discussed below. The first significant case to define some principles governing a labor exemption is United States v. Hutcheson.59 This case involved two unions, each of which thought they had a contract with an employer to do certain construction work.60 The employer awarded the work to members of one union; and in response, the other union called a strike, which apparently violated an agreement with whom to arbitrate controversies such as this one.61 Although Hutcheson dealt with the narrow issue of which actions would fall within the statutory labor exemption, the Court suggested that there may be an exemption (in the context of labor law) from the antitrust laws "so long as a union acts in its self-interest and does not combine with non-labor groups."62

{16} In United Mine Workers v. Pennington,63 the Court began to examine the possible exemption (of the substance of a CBA) from antitrust laws, thereby beginning the formation of the nonstatutory labor exemption. Here, along with large coal companies, a union of coal miners entered into a CBA that called for higher wages. To prevent the larger operators from being harmed by lower wages given to workers at smaller coal facilities, the union agreed to seek the same wages from the smaller operator.64 The Court refused to exempt the provision from antitrust liability.65 In its decision, the Court seemed concerned not only that the provision at issue went beyond affecting the immediate labor market into the product market, but also because there was a conspiracy to indirectly affect the entire product market.66 Indeed, the Court appeared willing to accept a similar indirect effect on the product market as long as the conspiracy element between a union and an employer bargaining unit was not involved.67

{17} In Meat Cutters Local 189 v. Jewel Tea, the Supreme Court had to determine whether the nonstatutory labor exemption applied to a situation in which there was no conspiracy between a union and an employer to affect another employer.68 In this case, a butchers' union imposed through bargaining agreements with several employers marketing restrictions on retail stores.69 Under threat of a strike, the plaintiff (Jewel Tea) agreed to the restrictions and then challenged them under antitrust law.70 The Court employed a balancing test, first looking to see if the disputed provision constituted a mandatory subject of bargaining.71 Once the Court determined that the marketing hours restriction was a mandatory subject, then the Court examined whether it

{18} is so intimately related to wages, hours, and working conditions that the unions' successful attempts to obtain that provision through bona fide, arm's-length bargaining in pursuit of their own labor union policies, and not at the behest of or in combination with nonlabor groups, falls within the protection of the national labor policy and is therefore exempt from the Sherman Act.72

{19} The Court found no wrongful association between the union and nonlabor groups during negotiations and that the provisions met the required intimacy of the disputed provision to "wages, hours, and working conditions", therefore exempting the marketing hours restriction.73

{20} While the Supreme Court has not addressed the scope of the nonstatutory labor exemption as it applies to management in the sports context, several circuit and district courts have addressed the issue. Scope of the nonstatutory labor exemption in the sports context was first examined by an appellate court in Mackay v. National Football League.74 Importantly, the court explicitly stated that the nonstatutory labor exemption applies to employers as well as employees.75 The court held that three requirements must be met in order for the exemption to apply: "First, ... where the restraint on trade primarily affects only the parties to the collective bargaining relationship ... Second, federal labor policy is implicated sufficiently to prevail only where the agreement sought to be exempted concerns a mandatory subject of collective bargaining ... Finally, the policy favoring collective bargaining is furthered to the degree necessary to override the antitrust laws only where the agreement sought to be exempted is the product of bona fide arms length bargaining."76 While the language of the court seemed to suggest that the exemption only applied while the CBA was in force (i.e., there was union consent), the court refused to determine whether or not the exemption could apply after the expiration of the CBA.77 Instead, it held that the challenged restraint was not the product of "bona fide arms length bargaining" since the owners unilaterally imposed it on a weak labor union, even though the union gave formal consent. Thus, the court found that the exemption did not apply.78

{21} Another case that addressed the nonstatutory labor exemption in the area of professional sports was Bridgeman v. National Basketball Association.79 In this case, Judge Debevoise decided to extend the exemption beyond Mackay and introduced a new formulation as to the length of the exemption by turning to a reasonableness test.80 Debevoise stated that the exemption "survives only as long as the employer continues to impose that restriction unchanged, and reasonably believes that the practice or a close variant of it will be incorporated in the next agreement."81 Thus, while provisions of the old CBA could now remain in effect indefinitely, this test would not protect the unilateral imposition of new provisions.

{22} Powell v. National Football League82, adopted a different approach but reached a result like that of Bridgeman. Once again, the nonstatutory labor exemption protected a player restraint embodied in an old National Football League (NFL) CBA.83 The court held that as long as the restraint was part of an agreement conceived in an ongoing collective bargaining relationship, the exemption would remain effective, even beyond an impasse in the negotiations.84 Furthermore, although the court said that the owners receive the benefit of the nonstatutory labor exemption in this case, the ruling did not mean that once union and management enter into collective bargaining that management was "forever exempt."85

{23} Recently, in National Basketball Association v. Williams86, the owners won a declaratory judgment stating that various player restraints (e.g., the college draft and the right of first refusal contract provision) found in the old CBA may be imposed by the owners even after impasse since they are subject to the nonstatutory labor exemption.87 The court held that multi-employer bargaining was legal, relying primarily on NLRB v. Truck Driving Local Union No. 449.88 Additionally, the court stated that the owners, acting jointly, could also unilaterally impose the old CBA terms on the players after negotiations broke down.89 To find otherwise, the court reasoned, would put employers in an impossible position. The court felt it must rule this way because the owners have an obligation under labor law to maintain the status quo in good faith negotiations, but they are placed in a difficult position if, to comply with the labor law, they must impose terms that violate the antitrust laws.90

III. Decision of the Court

{24} The latest case to address the scope of the nonstatutory labor exemption is Brown v. Pro Football, Inc.91, the subject of this Comment. This case arose after the owners and the players had reached impasse in the collective bargaining process.92 During negotiations, the owners had proposed including in the new CBA a new provision which would restrict the salaries of players on the practice squad to $1000/week.93 In other words, these players, unlike non-practice squad players, would not be able to negotiate for a higher salary.94 The players rejected this proposal, and after impasse, the owners chose to unilaterally impose this term onto the players as they were allowed to do by the labor laws because it was contained in their pre-impasse proposals.95

{25} In its decision, the D.C. Circuit held that the nonstatutory labor exemption should protect the entire collective bargaining process, not just the agreement itself.96 The Court thought this view was consonant with the Congressional aims of the NLRA.97 The court stated that it would protect from antitrust liability any steps legally taken within the bounds of the labor laws as long as the restraints imposed "operate primarily in a labor market characterized by collective bargaining."98 The court cited several reasons for its decision. First, it examined the related Supreme Court opinions and derived from them two principles which served to support the decision: 1) "the exemption must be broad enough in scope to shield the entire collective bargaining process" and 2) "the case for applying the exemption is strongest where a restraint on competition operates primarily in the labor market and has no anti-competitive effect on the product market."99 Second, the court noted recent decisions favor broadening the exemption to cover the collective bargaining process and not just the agreement.100 Third, and finally, the court felt that in the collective bargaining context, the labor laws themselves provided a sufficient remedy.

IV. Critique of the Court's Analysis
A. Critique

{26} The court, by taking the position it does, has extended the exemption beyond the parameters of other courts and the proposals of most commentators.101 However, the extension of the exemption appears defensible and consistent with recent case law.102 The court's view of the exemption should be valued for its simplicity and clarity, while at the same time, it appears to not tilt the playing field too far to one side or the other. Simply put, if an action taken by a party is legally within the scope of the labor laws, this court would exempt it from antitrust scrutiny.103 Although this ruling takes away a potential weapon from the players, it does not appear that Congress intended the antitrust law to be one of the weapons encompassed in the NLRA.104 Indeed, allowing such claims leads to seemingly incongruous results as the NLRA would allow certain action to be taken only to have those actions be declared invalid by the antitrust laws.105

{27} In its resolution of the case, the Brown court set forth the following test: "we conclude that the nonstatutory labor exemption shields from antitrust challenge alleged restraints on competition imposed through the collective bargaining process, so long as the challenged actions are lawful under the labor laws and primarily affect only a labor market organized around a collective bargaining relationship."106 To break this down, the Brown test essentially has four components: 1) the restraints must be imposed through the collective bargaining process, 2) the restraints must be legal under the labor laws, 3) the restraints must primarily affect the labor market and 4) the labor market involved must be "organized around a collective bargaining relationship" (i.e., the dispute must involve only the parties to the collective bargaining relationship).107

{28} The test of the Brown court extending the exemption essentially comports with sound policy and gives deference to precedent.108 First, the court was correct in asserting that the entire collective bargaining process should be protected by an exemption as the NLRA itself declares that it is "the policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce and to mitigate and eliminate these obstructions when they have occurred by encouraging the practice and procedure of collective bargaining ...."109 The fact that Congress listed prevention of interruption of the free flow of commerce as a goal of the NLRA persuasively demonstrates that Congress meant for the law to be applicable and not subject to antitrust law.110 It would be foolish to pass the NLRA and then have certain provisions rendered meaningless by a much older statute (the Sherman Act) which has the same stated policy goal as the NLRA.111 Additionally, not only did Congress state that the policy of the NLRA was to encourage the process of collective bargaining, but the Supreme Court has previously ruled that the economic weapons that may be used by the parties after negotiations break down are also part of the collective bargaining process: "the presence of economic weapons in reserve, and their actual exercise on occasion by the parties, is part and parcel of the system ..."112

{29} The second component of the Brown test seems to unnecessarily restrict application of the nonstatutory labor exemption.113 If it is the opinion of the court that the labor law governs the entire collective bargaining process, then why is the exemption only available for actions lawful under the labor laws?114 It seems more consistent with the court's reasoning that the exemption should apply whenever labor law governs since the NLRA also provides remedies when a party asserts that the other party has violated the NLRA.115

{30} Prior parameters laid down by the Supreme Court were appropriately taken into consideration by the Brown court and constitute the third and fourth elements of its test. The Supreme Court considered two factors in its reference to the nonstatutory labor exemption: 1) the disputed provision did not affect the product market116 and 2) parties outside the negotiations were not involved in conspiring with one of the bargaining parties in order to have an adverse impact on the opposing parties.117 Brown respected these two concerns by stating that the exemption only applies if the two concerns are not present: "where, as here, an alleged restraint on competition imposed through the collective bargaining process affects only the bargaining parties, and has no impact on the product market, the nonstatutory labor exemption shields those parties from antitrust liability."118 Moreover, the exemption set forth by Brown seems to have implemented what has been called the unstated principle from prior Supreme Court opinions, namely that as long as the parties remain within the confines of the collective bargaining process, the parties generally have the freedom to contract into almost any provision they want.119

{31} One area in which the Brown test may be criticized is in its failure to limit application of the exemption to restraints that were mandatory subjects of bargaining. In failing to do so, the court ignored the Supreme Court's analysis in Jewel Tea when the Court examined whether the challenged restraints were "so intimately related to wages, hours, and working conditions [i.e., mandatory subjects of bargaining] ... [that it] falls within the protection of the national labor policy and is therefore exempt from the Sherman Act."120 Other cases and commentators have also articulated as a requirement for application of the nonstatutory exemption that the restraint involves a mandatory subject of bargaining.121

{32} Another reason that this reading of the exemption is proper and should be accepted is that its simplicity allows it to be easily applied. Other courts and commentators have suggested standards which make it difficult to determine if an action taken will be exempt.122 Such proposals often involve a determination of "reasonableness" or "impasse."123

{33} The contention by the dissent that "the reality is that today's decision sharply tilts the playing field in employers' favor, and because of that, will erode the vitality of collective bargaining itself ... "124 is a myopic view which fails to take into account the sweeping ramifications of this decision. In the context of sports,125 this contention might be arguable because the employees are usually the only party to bring an antitrust action, but the Court decided this case utilizing general labor and antitrust law policy concerns. Thus, while in the context of sports, the playing field may tilt slightly away from employees, in the rest of the business world, the party negatively impacted will usually be the employer, meaning that on the macro level the scope of the exemption is fair in its application.126

{34} Indeed, the ramifications of this will apparently extend beyond simply the sports industry. Brown will also likely impact other industries in which multiemployer bargaining is used. Such industries include the construction and entertainment businesses.127 The Supreme Court has also recognized the importance of this decision as it granted certiorari in this case on December 8, 1995.128

{35} Moreover, even with the result in this case, the players are not completely foreclosed from invocation of the antitrust laws.129 First, the Brown court did not address the question of whether a step taken by the owners which is determined to be an unfair labor practice in violation of the NLRA will be able to get protection from the exemption.130 It seems unlikely that the court would extend it this far since it felt that the exemption's purpose was to protect the collective bargaining process as established by Congress. Thus, an illegal action would not appear to be within the collective bargaining process and therefore maybe subject to antitrust liability. Second, the players may invoke the Sherman Act by forsaking the protection of the labor law and voting to decertify (the equivalent of dissolution) the union.131 Although the literature and some dissenting judges have protested that this does not significantly help the players and may not even be a viable alternative132, this option has been taken by the NFLPA fairly recently and turned out to be a successful lever in negotiating a new CBA.133 Following the expiration of a recent CBA, the players decided to decertify the union. In McNeil v. NFL, the court recognized that the union had in fact been decertified and that the nonstatutory labor exemption thus elapsed.134 The case was submitted to the jury and they returned a verdict in favor of the players, finding that the challenged provision was in violation of antitrust law.135

B. An Alternative Framework

{36} In an effort to simplify the confusion resulting from the tangling of two types of law in cases such as Brown, this Comment proposes an alternate framework to assist future courts. Assuming that the exemption settled upon in Brown represents the proper scope of the nonstatutory labor exemption, this Comment proposes that a suit, such as the one brought by the players in Brown, be treated as an antitrust action only. Once the court does this, it may then decide whether the alleged restraint on trade was the result of an unfair labor practice.136 If the court finds that the action taken is lawful within the labor law, then the alleged restraint on trade should be treated as a conclusively reasonable restraint on trade and therefore found to not be an antitrust violation under the Rule of Reason.137

V. Conclusion

{37} In conclusion, the recent decision in Brown has extended the nonstatutory labor exemption further than any prior case. However, after review of the policies and prior decisions in the related case law, it appears that the court was within its bounds by extending the exemption. Furthermore, the test has as a virtue simplicity and easy administration. Moreover, this result does not completely foreclose the players from the possibility of redress under the antitrust laws. Finally, the extension of the exemption allows for the development of a simpler framework for analyzing this type of case that will enable courts to avoid the task of comparing the competing policies of the antitrust and labor laws.

1. A more in depth discussion of these policies will appear in Part III of the Comment.

2. 15 U.S.C. sec. 1-7 (1988).

3. 15 U.S.C. sec. 17 (1988); 29 U.S.C. sec. 102 (1988); 29 U.S.C. sec. 141-42 (1988); 29 U.S.C. sec. 151-63 (1988).

4. John C. Weistart & Cym H. Lowell, The Law of Sports 803 (1979) states that "specific provisions of the agreement may not be set aside as being in violation of the antitrust laws so long as they relate to wages, hours and working conditions, and were negotiated by the labor representatives in furtherance of its own objectives."

5. See 15 U.S.C. sec. 1 (1988): "[E]very contract ... in restraint of trade or commerce ... is declared to be illegal." Thus, any agreement on wages for all employees would violate the act because it would restrain one aspect of trade between employers and employees.

6. McNeil v. National Football League, 790 F. Supp. 871, 880 (D. Minn. 1992).

7. See, e.g., Brown v. Pro Football Inc., 50 F.3d 1041, 1048 (D.C. Cir. 1995), cert. granted, No. 95-388, 1995 U.S. LEXIS 8540 (Dec. 8, 1995) (holding that the policies of labor law outweigh antitrust law where a collective bargaining process is involved), National Basketball Ass'n, Inc., v. Williams, 45 F.3d 684, 687 (2nd Cir. 1995) (holding that a multiemployer bargaining group could impose the terms of an old collective bargaining agreement previously legal under labor law even though negotiations for a new agreement were at impasse; the court said imposition of the old terms would not violate antitrust law).

8. Weistart & Lowell, supra note 4, at 529.

9. Id.

10. See United Mine Workers v. Pennington, 381 U.S. 657, 662-64 (1965) (holding that nonstatutory labor exemption is not applicable where coal miners union and one employer conspired that union would demand similar wages from another employer); Meat Cutters Local 189 v. Jewel Tea Co., 381 U.S. 676, 689-90 (1965) (holding that nonstatutory labor exemption does apply in a situation where meat cutter's union did not conspire with non-labor groups in seeking a marketing hours restriction and where the provision sought was a mandatory subject of bargaining); United States v. Hutcheson, 312 U.S. 219, 232 (1941) (suggesting that a nonstatutory labor exemption from antitrust law might exist as long as a union acted in self-interest and did not involve non-labor groups).

11. Weistart & Lowell, supra note 4, at 525.

12. Id. at 526.

13. One author has written about the sports leagues and

antitrust law:

The dilemmas here are abundant: (a) if the antitrust laws are administered to afford protection to the professional athlete, then competition among the teams might lessen; (b) if the antitrust laws are administered to protect the teams and the leagues, players will necessarily be less free to compete with each other for positions on teams paying the highest salaries; (c) if the antitrust laws are administered so as to promote free competition for player resources among the leagues, then the quality of competition within the leagues may drop; but (d) if the antitrust laws are administered so as to protect the interests of a particular team or particular league as against newcomers, the protected team would enjoy a monopoly of that sport.

Warren Freedman, Professional Sports and Antitrust 4 (1987).

14. Hereinafter Collective Bargaining Agreement will be referred to as CBA.

15. The National Labor Relations Act describes collective bargaining in the following manner:

... to bargain collectively is the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment, or the negotiation of an agreement, or any question arising thereunder, and the execution of a written contract incorporating any agreement reached if requested by either party...

29 U.S.C. sec. 158(b)(7)(d) (1988).

16. See infra Part II.

17. 50 F.3d 1041 (D.C. Cir. 1995).

18. Id. at 1058.

19. See infra Part II.

20. See infra Part III.

21. See infra Part IV.

22. See infra Part IV.A.

23. See infra Part IV.B.

24. 15 U.S.C. sec. 1-7(1988) (Sherman Act); 15 U.S.C. sec. 12-27(1988) (Clayton Act).

25. 15 U.S.C. sec. 1; see also Freedman, supra note 13, at 5 (arguing that section one does not apply to the sport leagues because they may be deemed lawful joint enterprises by the courts and thus would not be a "contract, combination ... or conspiracy in restraint of trade or commerce" within section one; however, section two would still apply as it states that "every person who shall monopolize, or attempt to monopolize, or combine or conspire ... to monopolize" will be subject to liability.)(emphasis added). See, e.g., National Football League v. North American Soccer League, 459 U.S. 1074 (1982) (Rehnquist, J., dissenting) (implying that the National Football League owners are members of a lawful joint enterprise); Arizona v. Maricopa County Medical Soc., 457 U.S. 332 (1982) (stating that in the context of joint ventures, the participating parties are considered "a single firm competing with other sellers in the market").

26. Freedman, supra note 13, at 5.

27. George W. Schubert et al., Sports Law 47 (1986).

28. Id.

29. Id.

30. See Timken Roller Bearing Co. v. United States, 341 U.S. 593 (1951) (holding price-fixing of antifriction bearings to be per se illegal).

31. See generally, Note, Concerted Refusals to Deal Under the Federal Antitrust Laws, 71 Harv. L. Rev. 1531 (1958).

32. See Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207 (1959) (holding the concerted refusals of manufacturers and distributors of radios, refrigerators and other appliances to deal with a retail store to be per se illegal).

33. See United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940) (holding a group boycott in the gasoline industry to be per se illegal).

34. Briefly, Brown involved a situation where the owners unilaterally imposed on the players a term stating that players on the Developmental Squads would receive a fixed salary of $1000/week. Brown, 50 F.3d at 1045.

35. See e.g., United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940) (holding that agreements manipulating prices are conclusively unreasonable restraints on competition).

36. See Radovich v. National Football League, 352 U.S. 445 (1957) (applying antitrust law to the National Football League); Washington Professional Basketball Corp. v. National Basketball Assn., 147 F. Supp. 154 (S.D.N.Y. 1956) (applying antitrust law to the National Basketball Association); Peto v. Madison Square Garden Corp., 384 F.2d 682 (2nd Cir. 1958) (applying antitrust law to the National Hockey League). But see Federal Baseball Club of Baltimore Inc. v. National League of Professional Baseball Clubs, 259 U.S. 200 (1922) (exempting major league baseball from the antitrust laws, an anomalous situation when considered in light of court treatment of the other major professional sports leagues); Toolson v. New York Yankees, 346 U.S. 356 (1953) (reaffirming Federal Baseball Club on grounds of stare decisis); Flood v. Kuhn, 407 U.S. 258 (1972) (upholding baseball's antitrust exemption).

37. See, e.g., Kapp v. National Football League, 586 F.2d 644 (9th Cir. 1978) (holding several league rules (such as those pertaining to the draft and standard player contract) were found to be unreasonable restraints of trade under the Sherman Act); Mackay v. National Football League, 543 F.2d 606 (8th Cir. 1976) (refusing to find the Rozelle Rule, a rule which provided for compensation to a player's former team from the team signing him as a free agent, to be a per se violation); Dallas Cowboys Football Club, Inc. v. Harris, 348 S.W.2d 37 (Tex. Civ. App. 1961) (holding that a contract in which player agreed to play professional football for one club and where club had a renewal option for one year was not an unreasonable restraint on trade); contra Smith v. Pro Football, Inc., 593 F.2d 1173 (D.C. Cir. 1978) (holding the college draft system a per se violation as a group boycott).

38. 29 U.S.C. sec. 151-63.

39. See infra Part II.A.2.

40. 29 U.S.C. sec. 151-63.

41. 29 U.S.C. sec. 157.

42. 29 U.S.C. sec. 158(d).

43. There are also matters which fall outside this category and are termed "permissive subjects," which means that the parties may bargain about them but there is no duty to bargain in good faith. Schubert, supra note 27, at 164.

44. 29 U.S.C. sec. 158(d); Weistart & Lowell, supra note 4, at 803 define good faith in the following way: "it basically encompasses a willingness to enter into negotiations with an open and fair mind and with a sincere desire to find a basis of agreement ... [it] does not, however, mean that the parties are bound to reach agreement on the substantive term in question;" see generally NLRB v. Truitt Mfg. Co., 351 U.S. 149 (1956).

45. 29 U.S.C. sec. 159(a); Davis v. Pro Basketball, Inc., 381 F. Supp. 1 (S.D.N.Y. 1974).

46. NLRB v. McClatchy Newspapers, Inc., 964 F.2d 1153, 1164 (D.C. Cir. 1992); see also Taft Broadcasting Co., 163 N.L.R.B. 475, 478 (1967) where the Board stated:

"Whether a bargaining impasse exists is a matter of judgment. The bargaining history, the good faith of the parties in negotiations, the length of the negotiations, the importance of the issue or issues as to which there is disagreement, the contemporaneous understanding of the parties as to the state of the negotiations are all relevant factors to be considered in deciding whether an impasse in bargaining existed."

Id.

47. See, e.g., Southwestern Steel and Supply, Inc. v. NLRB, 806 F.2d 1111, 1113-15 (D.C. Cir. 1986) and NLRB v. Katz, 369 U.S. 736, 743 (1962) (both cases holding that a unilateral change in conditions contained in an old CBA prior to impasse is unlawful under the NLRA).

48. NLRB v. Washington Aluminum Co., 370 U.S. 9, 14 (1962); see also 29 U.S.C. sec. 163 ("nothing in this subchapter ... shall be construed so as either to interfere with or impede or diminish in any way the right to strike").

49. American Ship Bldg. Co. v. NLRB, 380 U.S. 300, 310-11 (1965).

50. McClatchy Newspapers, 964 F.2d at 1165 (Edwards, J., concurring in denial of petition for enforcement)(emphasis omitted).

51. See infra Part II.A.

52. Northern Pacific Railway Co. v. United States, 356 U.S. 1 (1958).

53. 29 U.S.C. sec. 151 ("protection by law of the right of employees to organize and bargain collectively ... promotes the flow of commerce by removing certain recognized sources of industrial strife and unrest ... ").

54. See, e.g., Weistart & Lowell, supra note 4, at 548 ("A recurring theme of the labor law is that it is inappropriate for courts to involve themselves in determining whether the terms of the collective bargaining agreement are reasonable and fair").

55. 29 U.S.C. sec. 151; Weistart & Lowell, supra note 4, at 559.

56. Weistart & Lowell, supra note 4, at 559.

57. The statutory labor exemption exempts certain union action from the antitrust law such as strikes and boycotts, as well as some management actions. United States v. Hutcheson, 312 U.S. 219, 233, 236 (1941) (holding that any labor activity allowed under section twenty of the Clayton Act when construed in light of the NLRA is not a violation of the Sherman Act; the acts engaged in by the employees in this case fell within the following language of section twenty: "'terminating any relation of employment,' or 'ceasing to perform any work or labor,' or 'recommending, advising or persuading others by peaceful means so to do'"); See Weistart and Lowell, supra note 4, at 529. Discussion of the development and impact of the statutory labor exemption is beyond the scope of this Comment.

58. See supra Part I.

59. 312 U.S. 219 (1941).

60. Id. at 227-28.

61. Id.

62. Id. at 232.

63. 381 U.S. 657 (1965).

64. Id. at 657-61.

65. Id. at 662-64.

66. See Weistart & Lowell, supra note 4, at 534-35; Bernard D. Meltzer, Labor Unions, Collective Bargaining and the Antitrust Laws, 32 U. Chi. L. Rev. 659, 702-709 (1965).

67. 381 U.S. at 664. ("We think it beyond question that a union may conclude a wage agreement with the multi-employer bargaining unit without violating the antitrust laws and that it may as a matter of its own policy, and not by agreement with all or part of the employers of that unit, seek the same wages from other employers."

68. 381 U.S. 676 (1965).

69. Id. at 679-81.

70. Id.

71. Id. at 689.

72. Id. at 689-90.

73. Jewel Tea Co., 381 U.S. at 689-90.

74. 543 F.2d 606 (8th Cir. 1976).

75. The Court stated:

Since the basis of the nonstatutory exemption is the national policy favoring collective bargaining, and since the exemption extends to agreements, the benefits of the exemption logically extend to both parties to the agreement. Accordingly, under appropriate circumstances, we find that a non-labor group may avail itself of the labor exemption.

Id. at 612.

76. Id. at 614.

77. Id. at 616.

78. Id. at 623.

79. 675 F. Supp. 960 (D.N.J. 1987).

80. Id. at 967.

81. Id.

82. 930 F.2d 1293 (8th Cir. 1990).

83. Id. at 1304.

84. Id. at 1303-04.

85. Id. at 1303.

86. 45 F.3d 684 (2nd Cir. 1995).

87. Id. at 692-93.

88. 353 U.S. 87 (1957).

89. 45 F.3d at 693.

90. Id. at 691.

91. 50 F.3d 1041. Caldwell v. American Basketball Ass'n, Inc., 1995 U.S. App. LEXIS 27176 (2d Cir. September 21, 1995) just came down and also addresses the nonstatutory labor exemption. This case adopts the reasoning in Brown but adds nothing for the purpose of the analysis in this Comment.

92. Brown, 50 F.3d at 1044.

93. Id.

94. Id. at 1046.

95. Id. at 1044.

96. Id. at 1056-57.

97. Brown, 50 F.3d at 1056-57.

98. Id. at 1056.

99. Id. at 1051.

100. Id. at 1055.

101. See, e.g., Kieran M. Corcoran, When Does the Buzzer Sound?: The Nonstatutory Labor Exemption in Professional Sports, 94 Colum. L. Rev. 1045 (1994) (suggesting that "the exemption should extend until it becomes clearly unreasonable for both of the parties to believe the particular provision will continue to exist in that form in a succeeding agreement"); Ethan Lock, The Scope of the Labor Exemption in Professional Sports, 1989 Duke L.J. 339 ("The proper accommodation of federal antitrust and labor law requires that the labor exemption expire simultaneously with the collective bargaining agreement); But see, Gary R. Roberts, Reconciling Federal Labor and Antitrust Policy: The Special Case of Sports League Labor Market Restraints, 75 Geo. L.J. 19 (1986) (proposing that the nonstatutory labor exemption "should protect all conduct" by parties in the collective bargaining process).

102. See Williams, 45 F.3d 684 (holding that a multiemployer bargaining group could impose the terms of an old collective bargaining agreement previously legal under labor law even though negotiations for a new CBA were at impasse; the court said such a result would not violate antitrust law). However, the Brown court can be criticized for its misunderstanding of the statutory labor exemption. Brown asserted that the statutory exemption was not available to employers. Brown, 50 F.3d at 1048. Professor Roberts has asserted that the statutory labor exemption is not only available to employers but that its language exempts statutory purely labor market restraints from antitrust attack. Roberts, supra note 101 at 27-28. Indeed, in a nonsports case involving only a labor market restraint, the second circuit adopted this argument and held that a pure restraint on the labor market could be exempted from antitrust law by the statutory labor exemption and was available to employers. Kennedy v. Long Island Railroad, 319 F.2d 366 (2d Cir.), cert. denied, 375 U.S. 830 (1963).

103. Brown, 50 F.3d at 1057. "In our view, the nonstatutory labor exemption requires employees involved in a labor dispute to choose whether to invoke the protections of the NLRA or the Sherman Act."

104. Id.

105. An example can be found in Brown. It has been established through case law that the NLRA allows one party of the collective bargaining relationship to unilaterally impose a term on the other party as long as it was reasonably contained in their pre-impasse proposal. However, if this action is deemed invalid under the antitrust laws, the language of the NLRA would be rendered irrelevant.

106. Id. at 1047.

107. Id.

108. See supra notes 58-73 and accompanyting text for a discussion of the principles set forth by the Supreme Court in establishing the nonstatutory labor exemption in United States v. Hutcheson, 312 U.S. 219 (1941), United Mine Workers v. Pennington, 381 U.S. 657 (1965), and Meat Cutters Local 189 v. Jewel Tea Co., 381 U.S. 676 (1965). See infra notes 116-119 and accompanying text for a discussion of how the Brown Court adhered to these principles.

109. 29 U.S.C. sec. 151 (1988) (emphasis added).

110. See supra note 53 for the statutory language stating that the goal of the NLRA is the promotion of the free flow of commerce.

111. Compare the stated policy goals of the Sherman Act and the NLRA as set forth in supra notes 52-53 and accompanying text.

112. NLRB v. Insurance Agents' Int'l Union, 361 U.S. 477, 489 (1960).

113. See infra note 115 and accompanying text.

114. Brown, 50 F.3d at 1057.

115. See e.g., Roberts, supra note 101 at 63 (proposing that the nonstatutory labor exemption "should protect all conduct" by parties in the collective bargaining process).

116. Brown, 50 F.3d at 1054 (arguing that the Sherman Act was designed to deal with primarily unreasonable restraints on trade or commerce which generally were only those affecting the product market. In its analysis, the court relied on Reiter v. Sonotone, 442 U.S. 330, 343 (1979) (stating that Sherman Act should be conceived as a "consumer welfare prescription") and Archibald Cox, Labor and the Antitrust Laws--A Preliminary Analysis, 104 U. Pa. L. Rev. 252, 255 (1955) (stating that "the antitrust laws are not concerned with competition among laborers or with bargains over the price or supply of labor--its compensation or hours of service or the selection and tenure of employees")).

117See supra Part II.

118. Brown, 50 F.3d at 1058.

119. For purposes of the sports industry, perhaps the most important principle to emerge from these cases is one which is largely unstated. The Supreme Court seems to have assumed that labor and management enjoy very broad freedom to impose restraints upon themselves. Limitations on the parties' prerogatives in dealing with one another are a natural result of the process of collective bargaining. The Court has indicated no inclination to overturn the results of that process where it is only the participants who are affected.

Weistart & Lowell, supra note 4, at 540.

120. Jewel Tea, 381 U.S. at 689-90 (add rest of cite).

121. See Mackay, 543 F.2d 606 at 614; Roberts, supra note 101 at 63.

122. For examples of these standards, see supra notes 79-85, 101 and accompanying text.

123. See Bridgeman, 675 F. Supp. 960 (reasonableness) and Powell, 930 F.2d 1293 (CBA terms survive until impasse); See also Kieran M. Corcoran, When Does the Buzzer Sound?: The Nonstatutory Labor Exemption in Professional Sports, 94 Colum. L. Rev. 1045 (1994) (suggesting that "the exemption should extend until it becomes clearly unreasonable for both of the parties to believe the particular provision will continue to exist in that form in a succeeding agreement") and Ethan Lock, The Scope of the Labor Exemption in Professional Sports, 1989 Duke L.J. 339 ("The proper accomodation of federal antitrust and labor law requires that the labor exemption expire simultaneously with the collective bargaining agreement").

124. Brown, 50 F.3d at 1058-59 (dissenting opinion).

125. Weistart & Lowell, supra note 4, at 526.

126. See Weistart & Lowell, supra note 4 at 526 (stating that generally in the non-sports context, the exemption is almost always used by the union as a defense to antitrust suits and that in all prior Supreme Court cases addressing the nonstatutory labor exemption, the union asserted the exemption).

127. Top Court to Decide if Unions can File Antitrust Suits, The Legal Intelligencer, Dec. 12, 1995, at 7 ("the case could affect professional sports leagues and other industries, such as entertainment and construction, in which unions bargain with multiemployer groups").

128. Brown v. Pro Football Inc., No. 95-388 1995 U.S. LEXIS 8540 (Dec. 8, 1995).

129. See inra notes 130-35 and accompanying text for a discussion of alternative methods available to the players to invoke the antitrust laws.

130. See generally Brown, 50 F.3d at 1056.

131. Id.

132. Id. at 1059 (dissenting opinion).

133. McNeil v. National Football League, 790 F. Supp. 871 (D. Minn. 1992).

134. Id. at 871.

135. Carol T. Rieger & Charles J. Lloyd, The Effect of McNeil v. NFL on Contract Negotiation in the NFL - That was Then, This is Now, 3 Marq. Sports L.J. 45, 55 (1992).

136. 29 U.S.C. sec. 158 (1988) sets forth the criteria for the finding of an unfair labor practice within the NLRA.

137. See supra text accompanying notes 22-36 for a brief discussion of antitrust law.