Threading the Needle: How the Supreme Court Fit Itself Into the NFL Labor Dispute
Professional sports are undoubtedly an essential piece of American culture and tradition, on par with Thanksgiving and the Fourth and July as annual rites of passage. While baseball has historically been referred to as “America’s Pastime,” few modern day Americans can argue that the National Football League has moved to the forefront of the national sports consciousness. That is why the labor lockout that loomed over the 2011 season was an almost unfathomable for the insatiable fans of the league. The negotiations over a new Collective Bargaining Agreement (CBA) had been ongoing for years but on March 4th, when the previous CBA expired, the league was officially stalled. The proposed 18-game schedule and rookie salary cap were just some of the points of contention delaying an agreement. Perhaps the most crucial, yet extreme tool at the NFLPA’s disposal was a recent Supreme Court decision.
In May 2010, the Supreme Court unanimously ruled against the NFL in American Needle, Inc. v. National Football League. The issue in that case dealt with a manufacturing deal between the NFL and apparel merchandiser American Needle. American Needle, a small manufacturer based in Buffalo, New York, claimed that the NFL superseded its contract with the manufacturer by giving exclusive headwear manufacturing rights for all 32 teams to athletic apparel juggernaut Reebok in 2001. American Needle claimed that this exclusive deal was a violation of §1 of the Sherman Antitrust Act, which makes illegal “every contract combination in the form of a trust or otherwise, or, conspiracy, in restraint of trade” The contention proposed by American Needle’s counsel was that the NFL is made up of 32 separate businesses that could not collude to make blanket contracts that license out each franchise’s intellectual property. The NFL, which sought the writ of certiorari, argued that it was one single business, akin to a corporation that owns a family of subsidiaries. However, the Court distinguished the NFL’s argument from certain case law.
In determining the legitimacy of American Needle’s argument, the Court used the standard set forth in Copperweld Corp v. Independence Tube Corp. In essence, the Court set aside the claim that the NFL was a single business and focused on whether the “agreement in question ‘joins together separate economic actors pursuing separate economic interests’” in such a way that deprives the marketplace from independent hubs of decision making, therefore limiting potential competition. While the court acknowledged the necessity of the League’s functions as a scheduling coordinator and the shared interests of each of the 32 franchises, they ultimately found that each franchise represented a separate competitive enterprise. The Court found that each franchise individually competes to maximize profits, including profits derived from licensing their own intellectual property. Therefore, the League’s claim of joint venture anti-trust immunity was held to be inaccurate, making them vulnerable to Sherman Antitrust prohibitions. While the American Needle case may only seem to affect licensing issues, the implications of the Court’s ruling played a larger role in future CBA negotiations.
In lieu of a new CBA, the NFLPA had the option to employ a drastic countermeasure. By acquiring pre-approval to decertify from each NFL team roster, the NFLPA has the ability to transform itself from a legally recognized union into a nebulous collection of non-union workers. Therefore, the NFLPA would have forced the League’s hand by tempting it to cross over to anti-trust territory. Without a player-inclusive union, the League would have needed to craft blanket rules regarding player free agency, salary enforcement, and the NFL amateur draft. Such actions may have been challengeable in the Supreme Court, where the American Needle case would have played an integral role in any suit filed by the union. In theory, the union may have made a myriad of claims against universal rules pertaining to the economic interests of the individual franchises, stalling the League in a perpetual cycle of legal contests. Although League officials may have viewed such a gambit as nothing more than an empty threat, the potential leverage it would have given the NFLPA at the negotiating table would have been a frightening prospect for Commissioner Goodell and the rest of NFL management. Whether or not the union would have been successful on any of its potential antitrust claims should not have precluded NFL management from guarding against a threat to the future purveyance of professional football. The Supreme Court had already shown its willingness to wrangle the NFL under Sherman Antitrust provisions. Despite the potential antitrust exceptions the Court seemed to suggest at the end of the American Needle opinion, the league would not have been wise to invite the Court to make individual decisions regarding the merits of each business decision related to the NFL, the 32 franchises, and the bunches of players that make up team rosters.
The antitrust albatross that hung around the neck of the NFL could also effect future labor negotiations of other sports leagues. The NHL, which recently underwent a damaging labor lockout in 2004, and the NBA, which entered into its own lockout in July, amongst other leagues, filed amicus briefs in support of the NFL during the American Needle proceedings. There is no doubt that antitrust limitations have heavily influenced negotiations throughout many American sports leagues.