Collective Bargaining in Professional Sports: The Duel Between Players and Owners and Labor Law and Antitrust Law
Abstract and Keywords
This chapter examines the complex collective bargaining process in professional sports leagues. The labor negotiations between players and owners present unique conflicts between labor and antitrust law. The resolution of these conflicts will have a significant impact on the future of collective bargaining between players and owners. This chapter provides a brief overview of the relevant principles of labor law, briefly traces the history of collective bargaining in professional sports, identifies and analyzes the conflict between labor and antitrust law, examines the recent conflicts in the NBA and NFL labor negotiations, and looks forward to future negotiations between players and owners.
The history of collective bargaining negotiations in professional sports is dotted with long periods of labor strife. In many ways, collective bargaining in professional sports is a mirror image of collective bargaining in traditional, non-sports industries—management and labor exercise their economic weapons, including strikes and lockouts, to gain leverage at the bargaining table. Professional sports leagues and players associations, however, have unique attributes that present complex challenges and legal issues in the collective bargaining context. Like virtually every aspect of sports in our modern culture, labor struggles and potential work stoppages in professional sports leagues play out in the heat of the public spotlight. The true uniqueness and complexity in sports labor negotiations, however, emanates from the clash of labor law and antitrust law that is at the heart of many of the collective bargaining struggles between players and owners. Most recently, this clash played out in the National Football League (NFL) labor negotiations that led to Brady v. National Football League and the National Basketball Association (NBA) negotiations that led to Anthony v. NBA. Most of the questions raised in those cases about the conflict between labor and antitrust law remain unanswered. It is largely inevitable, however, that this conflict will arise again, and the resolution of these issues could help shape the future of collective bargaining in professional sports. This chapter will provide a brief background of the basic principles of labor law and the unique aspects of professional sports leagues and their athletes, present a summary of the history of collective bargaining in the “Big Four” U.S. sports leagues (the National (p. 210) Football League, National Basketball Association, National Hockey League, and Major League Baseball), and analyze the recent labor battles and the evolution of the law in this area. The chapter concludes with a look forward to the potential future of labor negotiations between players and owners in professional sports leagues.
2. Federal Labor Law Background
The fundamental policy underlying collective bargaining is to encourage management and labor to enter voluntarily into collective bargaining agreements without government interference. Federal law seeks to promote two primary goals as part of this overall policy: good faith bargaining between labor and management and the opportunity for both labor and management to gain concessions from each other at the bargaining table. Federal labor law thus provides unions and employers with roughly equal bargaining power and creates a process that facilitates the ability of the parties to create the terms of their own agreements. Labor law attempts to create a balance of bargaining power by providing employees with the right to strike and employers the right to lock out their employees. A strike is the right of the employee to withhold his or her services, while the lockout is the employer’s countervailing right to exclude the employee from employment.
Courts have recognized that these economic weapons help induce voluntary agreements between management and unions (LeRoy, 2012). The role of the government is thus to serve only as the “referee” in the economic struggle between the parties (LeRoy, 1996). As Professor Weistart has explained, “[f]ederal labor policy accepts that the prevailing principle should be freedom of contract: the parties can agree to whatever terms they wish, and courts will not inquire into the wisdom or reasonableness of the bargain struck” (Weistart, 1981, 131).
In the late nineteenth and early twentieth centuries, however, a power imbalance existed between labor and management, with employers maintaining significant control and leverage over their employees. This imbalance was amplified by the fact that courts consistently held strikes to be illegal under antitrust law and enjoined strikes to force the employees to return to work. Amidst the backdrop of this management-tilted power imbalance, Congress enacted a series of laws designed, in part, to level the playing field between labor and management. The Norris-LaGuardia Act, passed in 1932, limited the jurisdiction of district courts to issue an injunction “in a case involving or growing out of a labor dispute,” thus preventing courts from enjoining striking employees (29 U.S.C. § 101 (2006)).
The National Labor Relations Act (NLRA) (also known as The Wagner Act, 29 U.S.C. § 151) and the Labor Management Relations Act (LMRA) (also known as the Taft-Hartley Act, 29 U.S.C. § 141) were then passed to establish collective bargaining as the process and regime to govern the relationship between employers and unionized employees. The NLRA and LMRA require employers and employees to negotiate in good faith with (p. 211) respect to wages, hours, and other terms and conditions of employment. Both the NLRA and the LMRA reflect Congress’s intent to allow the parties, free from governmental or judicial interference, to reach the terms of their own agreements through the carefully regulated collective bargaining process. A key development of this process has been the rise of the employer lockout, which we explore in the next section.
3. Brief Overview of the Lockout as Management’s Economic Weapon
To get a clear picture of modern labor negotiations in sports and non-sports industries, it is important to understand the evolution of the lockout from a defensive maneuver to an offensive tactic designed to give the employer leverage at the bargaining table. The employer’s right to lock out was recognized under common law, prior to the passage of the NLRA. Although the term “lockout” has never been explicitly defined by the federal labor statutes, the generally accepted definition of a lockout is the “cessation of the furnishing of work to employees in an effort to get for the employer more desirable terms” (Feldman, 2012, 837–38 (quoting Iron Molders’ Union No. 125 of Milwaukee, Wisconsin v. Allis-Chalmers Co., 166 F. at 52)). Conversely, a strike is generally defined as the “cessation of work by employees in an effort to get for the employees more desirable terms” (Feldman, 2012, 838. (quoting Iron Molders’ Union No. 125 of Milwaukee, Wisconsin v. Allis-Chalmers Co., 166 F. at 52)). These weapons “set up a game of labor/management chicken—a contest to see which side can hold out the longest before economic pressure forces one of them to concede at the bargaining table” (Feldman, 2012, 838).
Historically, however, an asymmetry existed between strikes and lockouts. The lockouts receive no explicit statutory protection under labor law, while strikes are expressly protected by the NLRA. This reflected the NLRB’s early view that strikes and lockouts were not equal counterparts. Instead, the NLRB viewed the strike as a mechanism for reducing the economic disparity between union and management, while the lockout was seen as an aggressive (rather than corrective) tactic (Johannesen, 1964; Feldman, 2012). Early commentators highlighted that employers had other economic weapons to use during negotiations. For example, employers were permitted to hire replacement workers during a strike, a tactic used by the NFL owners in 1987 to pressure the NFL players to end their strike.
Early on, the NLRB held that lockouts were only permitted when motivated by legitimate business considerations and where the lockout did “not impinge upon the employees’ rights to organize and to engage in other concerted activity protected by the Act” (Feldman, 2012 839 (quoting Great Falls Employers’ Council, Inc., 123 N.L.R.B. at 978)). Lockouts designed to interfere with or harm unions were viewed as destructive to the collective bargaining process and held illegal.
The NLRB eventually concluded that this restricted view of the lockout created an imbalance of bargaining power that tipped the scales too far in favor of employees. The (p. 212) Supreme Court expanded the permitted uses of the lockout in NLRB v. Truck Drivers Local Union No. 44, allowing employers to lock out striking employees to pressure them to return to work. The Supreme Court’s approval of this “defensive lockout” signaled the end of the presumption of illegality of lockouts and replaced it with a more symmetrical view of labor law that sought to balance management and labor interests. This view ultimately paved the way for employers to use lockouts in a variety of different defensive ways.
The approval of the use of the “offensive lockout” marked the next, and most significant, step in the evolution and expansion of the lockout. In American Ship Building Co. v. NLRB, the Supreme Court held that employers can lock out employees as a tactic for gaining leverage at the bargaining table. The Court held that “there is nothing in the Act which gives employees the right to insist on their contract demands, free from the sort of economic disadvantage which frequently attends bargaining disputes” (313). The Court noted that permitting offensive strikes but not defensive lockouts created an unfair and unnecessary asymmetry in labor negotiations and concluded that “the employer’s use of a lockout solely in support of a legitimate bargaining position is [not] in any way inconsistent with the right to bargain collectively or with the right to strike” (310).
The NLRB further expanded the use of lockouts with two key rulings. First, in Darling & Co., the Board announced that management could lock out employees prior to impasse. Second, in Harter Equipment, Inc. v. Local 825, the Board held that the use of temporary replacement works was permitted during offensive lockouts. Allowing employers to lock out their employees prior to impasse helped transform the lockout from a weapon of “last resort” to an offensive weapon, while use of temporary replacement workers provided additional strength to this weapon. Both rulings legitimized the lockout as an offensive economic weapon that could be used by employers to gain leverage during a negotiation and marked a “critical stage in the evolution of the lockout from a purely defensive tactic to a weapon that served as a corollary to the strike and led to the modern era in labor-management relations” (Feldman, 2012, 842). In the sports industry (and labor management relations in general), the offensive lockout has thus evolved into the weapon of choice by employers. The next section highlights the rise of the lockout in professional sports and provides a brief overview of the labor struggles between players and owners.
4. Brief History of Collective Bargaining in Professional Sports
Collective bargaining agreements in professional sports govern a wide range of terms and conditions of employment, including the player entry draft, free agency restrictions, minimum and maximum salaries, salary caps and luxury taxes, revenue sharing, roster sizes, player discipline, drug testing, practice times, season length, travel expenses, health benefits, and myriad other issues impacting the players and owners. All these (p. 213) terms are the product of the collective bargaining struggle between players and owners, and the trajectory of collective bargaining across the “Big Four” professional sports leagues has followed a similar arc. In the early days of each of the players associations, players fought for basic economic rights, including pensions, health benefits, minimum salaries, and greater ease of movement between teams. As the players gained more rights and more leverage, the battleground shifted to percentage of league-generated revenues and salary caps and other limits on player salaries.
Major League Baseball (MLB) experienced a tumultuous stretch of labor management relations from the inception of the Major League Baseball Players Association (MLBPA) through the late 1990s. The key issues at stake in the MLB collective bargaining negotiations included pension payments, minimum salaries, free agency, salary caps, and revenue sharing. The players engaged in strikes in 1972, 1980, 1981, 1985, and 1994–1995, while the owners locked out the players in 1973, 1976, and 1990 (Levinstein et al., 2007). Several of work stoppages led to missed games, including the 1994–1995 strike, which resulted in the cancellation of 920 games as well as the entire postseason and World Series. Following the 1994–1995 strike, however, MLB and the MLBPA have experienced over twenty years of relative labor peace without a single work stoppage.
The NFL, NBA, and National Hockey League (NHL) have all experienced similar patterns of labor strife. From 1968–1994, the NFL, NBA, and NHL experienced seven work stoppages—all seven of them were player strikes. As in baseball, the key issues were pensions, minimum salaries, and free agency (Feldman, 2012). Since, 1994, the NFL, NBA, and NHL have experienced seven additional work stoppages—all seven of these have been lockouts. Although the specific issues varied from league to league, owners across all three leagues often claimed “poverty” and locked out the players to gain reductions in player salaries and benefits (Feldman, 2012). These lockouts have led to significant numbers of missed games, including the 2004 NHL lockout, which resulted in the cancelation of the entire season and postseason, including the Stanley Cup finals.
This shift in the dynamics of the labor struggle—from player strikes to employer lockouts—is a microcosm of the transformation of labor relations in traditional, non-sports contexts, keyed by the evolution of the lockout from a defensive shield to a sanctioned offensive weapon for employers. Despite the similar arc of labor relations in sports and non-sports industries, there are unique aspects of collective bargaining in professional sports that could alter the balance of power between players and owners. The next section discusses the unique aspects of labor relations in professional sports.
5. Unique Aspects of Collective Bargaining in Professional Sports
On its surface, the labor strife between players and owners is not dissimilar to the periods of strikes and lockouts suffered in other industries. Beneath the surface, however, the conflict between antitrust and labor law presents a unique battleground for labor (p. 214) negotiations in professional sports. Although there are many distinctions between the collective bargaining relationship in professional sports leagues and other non-sports industries, this section focuses on two key distinctions.
First, professional athlete unions are unique compared to traditional industrial unions. In traditional, non-sports industries, employees possess relatively homogeneous skills and are relatively easy to replace. Most professional athletes, in contrast, have highly specialized skills that are difficult to replace. Additionally, professional athletes—and NFL players in particular—have relatively short careers. In addition to short careers and nontransferable skills, most top-flight professional sports leagues in the United States have significant market share, which leaves athletes with a limited employment market. For example, the NFL has a virtual monopoly in the production of elite professional football and a virtual monopsony in the labor market for elite professional football players. Thus, buyers (e.g., consumers) have no substitutes when buying the professional sports product, and sellers (e.g., the players) have no alternatives when selling their services to professional teams. The lack of employment options for players outside their respective leagues deprives them of the leverage they would have if they could “jump,” or threaten to jump, to a rival employer. These factors also virtually eliminate the strike as a viable option for most professional athletes. As Professor Lock has noted:
Strikes . . . jeopardize a disproportionate percentage of career earning potential for players with short careers and, in many cases, few alternative career opportunities. The [absence of other employment options] of the players further limits their ability to withstand a strike and, consequently, the union's leverage at the bargaining table. With no competing league, most players have no legitimate alternative job opportunity and thus, are unlikely to outlast management in a labor dispute.
(Lock, 1989, 346)
Similarly, the relatively short careers and lack of options for professional athletes magnify the impact of a lockout because a work stoppage (either via a lockout or strike) jeopardizes a disproportionately large percentage of their playing careers and earning potential (Feldman, 2012).
Second, professional sports leagues engage in “multiemployer bargaining,” whereby the separately owned teams join together to negotiate with the players as one unit. Multiemployer bargaining is not limited to sports leagues and is actually fairly common across different industries. The reason for engaging in multiemployer bargaining is, however, unique to sports leagues. In non-sports industries, firms engage in multiemployer bargaining because it allows them to offer programs jointly that they could not offer on their own and reduces the transaction costs of multiple negotiations. Although professional sports teams also benefit from the efficiencies of a single multiemployer bargaining unit, professional sports teams bargain as one unit (the league) because of the highly interdependent nature of the teams and the need for uniform rules across the league. For example, leagues must have uniform schedules, rules of the game, mechanisms for signing and trading players, and other terms and conditions of employment. Allowing the teams to negotiate as a single unit ensures that these rules will be consistent (p. 215) and uniform across the league and allows the game itself to exist. After all, teams cannot play a game unless they agree to play the game at a certain time in a certain place under certain rules. Multiemployer bargaining is thus necessitated (or at least consistent with) the interdependence of the teams and inherent need for cooperation across team owners.
While multiemployer bargaining is an efficient mechanism for professional teams, it does raise potential antitrust issues, because the multiemployer unit is essentially an agreement among owners. Collective bargaining agreements in professional sports leagues thus represent not only an agreement between the players and the league but also an agreement among the teams within the league. For example, free agency restrictions in the NFL are the product of an agreement between the players and the owners and between the owners themselves (as part of the multiemployer bargaining unit). Labor tactics of the multiemployer unit—including lockouts—also represent an agreement among owners. These agreements, in turn, are subject to scrutiny under Section 1 of the Sherman Act.
Section 1 of the Sherman Act condemns “[e]very contract . . . or conspiracy, in restraint of trade or commerce among the several States.” A threshold issue in Section 1 cases is whether the challenged conduct constitutes a “contract, combination . . . or conspiracy” (15 U.S.C. § 12). For purposes of Section 1, a “contract” requires an “agreement,” and an agreement requires more than one entity. For years, professional sports leagues argued that they were single entities incapable of reaching an agreement under Section 1. Although, as discussed earlier, courts have recognized that sports teams are uniquely interdependent, they routinely rejected the leagues’ single-entity argument and held that a professional sports league is a combination of teams that is capable of reaching an agreement in violation of Section 1. In 2010, the Supreme Court definitively held that NFL teams—despite their often-overlapping interests—are not single entities and therefore their agreements are subject to scrutiny under Section 1 (American Needle, Inc. v. National Football League). MLB was historically protected from antitrust attack under the anomalous baseball antitrust exemption, thus eliminating the conflict between labor law and antitrust law for baseball owners and players. Congress repealed this exemption in the Curt Flood Act of 1998, giving baseball players the same access to antitrust law as other professional athletes going forward (15 U.S.C. § 26b (2006)).
The collective bargaining agreements between players and owners—which encompass agreements among the owners themselves—thus present a unique conflict between federal antitrust and labor law. The next section of this chapter fleshes out and highlights these conflicts.
6. Antitrust Law vs. Labor Law
There is an inherent conflict between federal antitrust and labor law. On the one hand, antitrust law promotes competition and prohibits cooperation among competitors. On (p. 216) the other hand, federal labor law encourages cooperation among competitors. In fact, a foundational principle of federal labor law is that employees may form unions to gain leverage at the bargaining table by eliminating competition among themselves. Courts and Congress have struggled with this conflict. For more than twenty years after the passage of the Sherman Act, courts routinely held that unions were illegal restraints of trade in violation of antitrust law.
Congress minimized this conflict by creating the “statutory labor exemption” in the Norris LaGuardia Act (29 U.S.C. § 101 (2006)) and Sections 6 and 20 of the Clayton Act (15 U.S.C. § 12). This exemption protects unilateral union conduct—including strikes and the formation of unions—from antitrust challenge. Section 6 of the Clayton Act states that the “labor of a human being is not a commodity or article of commerce” and the Norris-LaGuardia Act prevents courts from enjoining labor activities (Feldman, 2012). As the Supreme Court explained in United States v. Hutcheson, the statutory labor exemption establishes that “labor unions are not combinations or conspiracies in restraint of trade, and exempt[s] specific union activities . . . from the operation of the antitrust laws” (622).
The statutory exemption did not, however, eliminate the entire conflict between antitrust and labor law, because it did not reach agreements between unions and nonlabor parties (Connell Construction Co. v. Plumbers & Steamfitters Local Union No. 100,). In other words, the statutory exemption did not immunize the collective bargaining process or the terms of the collective bargaining agreement from antitrust attack. The Supreme Court filled this gap through the creation of the “non-statutory labor exemption” (421 U.S. at 621–622).
As the Supreme Court explained in Brown v. Pro Football, Inc.:
As a matter of logic, it would be difficult, if not impossible, to require groups of employers and employees to bargain together, but at the same time to forbid them to make among themselves or with each other any of the competition-restricting agreements potentially necessary to make the process work or its results mutually acceptable. . . . [and] some restraints on competition imposed through the bargaining process must be shielded from antitrust sanctions . . . to give effect to federal labor laws and policies and to allow meaningful collective bargaining to take place. (518 U.S. at 237)
The non-statutory labor exemption recognizes that antitrust law must give way to labor law when necessary to allow the collective bargaining process to work. This implied repeal of antitrust law in favor of labor policy reflects a preference for resolving labor disputes through voluntary agreement (and labor policy) rather than through judicial interference (and antitrust law). The Supreme Court first established the nonstatutory labor exemption in Local Union No. 189, Amalgamated Meat Cutters & Butcher Workmen of North America v. Jewel Tea Co.. In Jewel Tea, employers argued that a term in the collective bargaining agreement prohibiting meat markets from operating during certain hours was an antitrust violation. Justice White, in a plurality opinion, held (p. 217) that the agreement was immune from antitrust attack because it was “of immediate and direct” concern to the employees and only tangentially or indirectly harmful to competition in the product market (691). Justice Goldberg, authoring a separate plurality opinion, determined that nonstatutory labor exemption protects all “collective bargaining activity concerning mandatory subjects of bargaining under the Labor Act” (710). The Court later clarified the scope and rationale of the exemption in Connell Construction Co., explaining that “a proper accommodation between the congressional policy favoring collective bargaining under the NLRA and the congressional policy favoring free competition in business markets requires that some union-employer agreements be accorded a limited non-statutory exemption from antitrust sanctions” (421 U.S. at 625–626). But, the Court made clear that the exemption does not apply where the agreement has substantial anticompetitive effects that “would not follow naturally from the elimination of competition over wages and working conditions” (421 U.S. at 625–626).
Although these early cases established the general framework for the nonstatutory labor exemption, it remained a relatively shapeless and amorphous doctrine. It has more fully developed over the last few decades through a series of cases involving the NFL and NBA. The next section highlights these cases and the further development of the nonstatutory labor exemption. It is important to note that the evolution of the exemption is not a theoretical matter—it has a significant impact on the leverage each side has during the labor negotiations.
7. Harmonizing Labor Law and Antitrust Law: The Evolution of the Nonstatutory Labor Exemption in Professional Sports League Cases
The landmark professional sports league case in the evolution of the nonstatutory labor exemption was Mackey v. NFL, where the Eighth Circuit held that the exemption immunizes the terms of a collective bargaining agreement from antitrust attack. In Mackey, NFL players challenged a rule in the collective bargaining agreement (known as the “Rozelle Rule”) that severely restricted free agency. The Eighth Circuit recognized that employers (e.g., team owners) would have limited incentive to negotiate a collective bargaining agreement if the agreement itself could expose them to treble damages under antitrust law. The Eighth Circuit therefore held that the Rozelle Rule was immune from antitrust attack. A three-factor analysis, known as the “Mackey test,” emerged from that case to help courts determine if the nonstatutory exemption should apply. According to the Mackey test, the terms of a collective bargaining agreement are exempt from antitrust as long as three factors are met: (1) the terms of the agreement primarily impacted only the parties to the collective bargaining relationship; (2) the terms were mandatory (p. 218) subjects of bargaining; and (3) the agreement was the result of good-faith, arm’s-length negotiations. In such cases, antitrust policy must give way to federal labor policy and the collective bargaining agreement is exempt from antitrust scrutiny.
The scope of the exemption then expanded to protect the owners’ unilateral implementation of terms and conditions of employment after a collective bargaining agreement has expired (Powell v. NFL). In Powell, after the expiration of the collective bargaining agreement, the NFL owners unilaterally implemented the “right of first refusal” free agency restriction that was contained in the previous agreement. The players challenged the restriction under the Sherman Act, arguing that the nonstatutory labor exemption ended with the expiration of the collective bargaining agreement. The Eighth Circuit disagreed, holding that antitrust law must still give way to labor law after the expiration of the collective bargaining agreement because post-expiration union and employer conduct is still governed by a “comprehensive array of labor law principles” (1301). These principles strictly define the obligations and rights of the parties. For example, prior to impasse, each side has a continuing duty to bargain, and the employers are obligated to maintain the status quo with respect to wages and other terms of employment (Feldman, 2012). After impasse, an employer is permitted to, among other things, maintain the status quo or implement its “last, best offer,” which includes any new terms of employment that were “reasonably contemplated” within their pre-impasse proposals. Employees, in turn, are provided with their own rights under labor law, including the ability to file a number of unfair labor practice charges.
In other words, the collective bargaining process continues even after the expiration of a collective bargaining agreement (both pre- and post-impasse). As the Eighth Circuit explained in Powell, permitting the NFL players to challenge the owners’ decision to maintain the status quo would “improperly upset the careful balance established by Congress through the labor law” and would “treat a lawful stage of the collective bargaining process as misconduct by [the owners], and in this way conflicts with federal labor laws” (Powell, 930 F.2d at 1302).
The Supreme Court further expanded the scope of the nonstatutory labor exemption to cover new terms unilaterally implemented by the owners (post-impasse) as part of their “last, best offer” after the expiration of the collective bargaining agreement (Brown, 518 U.S. at 241–242). In Brown, the NFL unilaterally implemented—as contemplated by their last, best offer—a fixed salary for players on teams’ developmental squads. The NFL players challenged the terms under the Sherman Act, but the Supreme Court held that the exemption covers old and new terms lawfully (as defined under labor law) implemented after the expiration of the collective bargaining agreement.
To an extent, Brown is the natural extension of the reasoning in Powell. Implementation of the last, best offer—like maintenance of the status quo—is part of the heavily regulated collective bargaining process. Allowing the players to bring an antitrust suit challenging the implement of the last, best offer would interfere with the carefully calibrated balance between labor and management that is central to federal labor policy (Feldman, 2012). It would also place the owners in a no-win situation. If the owners exercised their right to implement their last, best offer, they would be (p. 219) exposed to antitrust liability. If the owners changed their offer, they would be exposed to labor law liability. The nonstatutory exemption does, however, have limits. As the Supreme Court explained in Brown, the exemption lasts only until the “collapse of the collective bargaining relationship,” which could occur through the dissolution of the union. (250).
Faced with the Eighth Circuit’s decision in Powell (and while Brown was still working its way through the courts), the NFL players took an extreme step to gain access to antitrust law. The NFLPA dissolved its union by disclaiming interest in serving as the players’ representatives. The NFL players then filed an antitrust suit in Minnesota challenging the league’s free agency restrictions. The district court judge in Minnesota held that the dissolution of the players’ union terminated the collective bargaining relationship between the players and owners, which terminated the non-statutory labor exemption, which allowed the players’ antitrust suit to proceed (McNeil v. NFL, 1992 WL 315292). A jury then found that the NFL’s free agency restrictions violated antitrust law and awarded the players over $30 million in damages.
8. The Current and Future Labor Battleground in Professional Sports: The Lockout vs. Antitrust Law
The conflict between antitrust and labor law in sports labor negotiations continued to evolve during the NFL and NBA lockouts in 2011, as both players and owners continued to jockey for leverage at the bargaining table. In both the NFL and NBA, progress stalled during collective bargaining negotiations, the owners locked out the players, and the players dissolved their unions and challenged the lockouts under antitrust law. The issues raised by the NBA and NFL conflicts were similar, but this section focuses on the NFL negotiations because the NBA-NBPA battle settled before any judicial decisions were issued, while the NFL-NFLPA struggle spawned multiple judicial opinions and a lengthy discussion of the relevant issues (Anthony v. NBA; Brady v. National Football League).
In the NFL-NFLPA negotiations, the NFL had made it clear that it planned to lock out the players if they did not reach a new collective bargaining agreement before the March 11, 2011, expiration of the previous deal. Shortly before the expiration of the collective bargaining agreement, the NFLPA informed the owners that it had dissolved its union (through a disclaimer of interest) and restructured itself as a professional trade association instead of a union. A group of nine NFL players (led, alphabetically, by Tom Brady) and one prospective NFL player (Von Miller) then filed a class action lawsuit arguing, among other things, that the lockout was a per se illegal group boycott and a price fixing violation designed to coerce the players “to agree to a new anticompetitive system of player restraints” that will economically harm them (Brady, 779 F. Supp. at 1042). The (p. 220) complaint also noted that “the players in the NFL have determined that it is not in their interest to remain unionized if the existence of such a union would serve to allow the NFL to impose anticompetitive restrictions with impunity” (21). The players also moved for a preliminary injunction to prevent the owners from locking them out. The owners locked out the players on March 12, 2011.
The NFL owners raised three primary arguments in response to the players’ request to enjoin the lockout. First, the owners argued that the Norris-LaGuardia Act strips federal courts of the power to enjoin lockouts. Second, they argued that the lockout was immune from antitrust attack under the nonstatutory labor exemption. Among other things, the owners contended that the NFLPA’s disclaimer of interest was a “sham” and that the collective bargaining relationship still existed. Third, they argued under the primary jurisdiction doctrine that the court should defer to the NLRB’s ruling on the validity of the NFLPA’s disclaimer of interest before proceeding with the case.
The district court rejected all of the league’s arguments and enjoined the lockout. Judge Nelson summed up the rationale for her decision as follows:
The nation’s labor laws have always applied only where an action involves or grows out of a labor dispute. Such a labor relationship exists only where a union exists to bargain on behalf of its members. Where those employees effectively renounce the union as their collective bargaining agent—and accept the consequences of doing so—and elect to proceed in negotiating contracts individually, any disputes between the employees and their employers are no longer governed by federal labor law (1042).
Judge Nelson held that the Norris LaGuardia Act’s restriction on injunctions only applied during “labor disputes,” and that this situation was no longer a labor dispute because the players had dissolved their union. Judge Nelson emphasized that the players had “sacrificed their union representation and the protection of labor laws” and added that it would be “ironic if a statute that had been enacted to protect the rights of individual employees from improper actions by employers and the courts were turned against those employees and used to justify the continued application of a system found illegal under the Sherman Act” (1026).
Judge Nelson also held that the nonstatutory labor exemption no longer applied because “the parties have left the collective bargaining framework entirely,” and “once the union disclaims its role as the bargaining agent for its members . . . the protection provided employers by the non-statutory labor exemption is lifted” (1040). Consistent with McNeil, Judge Nelson concluded that the dissolution of the union ended the collective bargaining relationship and thus ended the nonstatutory labor exemption. Once the union ceased to exist, the employees gave up their rights and protections under labor law and gained access to antitrust law and its protections against restraints of trade.
Relying on Mackey, Judge Nelson also noted that “federal labor policy trumps the contrary policies of the antitrust laws only where, among other requirements, the agreement sought to be exempted concerns mandatory subjects of collective bargaining” (1041). Because a lockout is not a subject of collective bargaining but rather a procedural (p. 221) tool of bargaining, Judge Nelson held that the application of the nonstatutory labor exemption was inappropriate. Judge Nelson further held that lost playing time was sufficient to constitute irreparable harm and noted that the harm “is underscored by the undisputed brevity and precariousness of the players’ careers in professional sports, particularly in the NFL” (1035) (internal quotation omitted).
The Eighth Circuit, in a divided panel, reversed the district court’s decision and dissolved the injunction, noting that a “labor dispute” does not require the existence of a union (Brady). The court did not address the existence of the nonstatutory labor exemption but held that the disclaimer of interest (regardless of its impact on the exemption) “did not suddenly [cause the labor dispute to] disappear just because the Players elected to pursue the dispute through antitrust litigation rather than collective bargaining” (673). Although the prevailing view had been that the anti-injunction protections in the Norris-LaGuardia Act were designed solely to protect unions and employees, the Eighth Circuit took an expansive view of the Act, holding that its protections were bilateral and protected both labor and employer conduct. The court thus held that the Norris-LaGuardia “deprives a federal court of power to issue an injunction prohibiting a party to a labor dispute from implementing a lockout of its employees” (680-81). The parties eventually settled the case, the players re-formed the NFLPA as a union, and both sides reached a new collective bargaining agreement.
The NBA-NBPA labor struggle in 2011 proceeded along a similar track, with the NBA owners locking out the players and the players dissolving their union and challenging the owners’ lockout under antitrust law (Anthony v. NBA, No. 11-5525 (N.D. Cal. Nov. 15, 2011)). The NBA owners and players, however, settled the litigation and reached a new collective bargaining agreement before any of the key legal issues were decided.
9. The Future of Collective Bargaining in Sports
The NFL-NFLPA labor struggle in Brady (and the comparatively brief NBA-NBPA struggle in Anthony v. NBA) clearly framed the key question in the latest stage of the evolution of the conflict between players and owners and between labor and antitrust law—does the nonstatutory labor exemption immunize a lockout from antitrust attack after the dissolution of a union? The resolution of this and related issues may help shape the collective bargaining relationship between players and owners for decades to come and tip the scales to either the players or the owners. If the nonstatutory labor exemption ends upon dissolution of the union, the owners’ lockout will lose some of its power as the players may choose to forego (or threaten to forego) their labor rights to gain access to antitrust law. If the exemption extends past dissolution, the lockout will maintain its strength and the aggressive bargaining of professional sports owners is likely to continue.
(p. 222) From the leagues’ perspective, immunizing post-dissolution lockouts (and other activity that would otherwise be legal under labor law) from antitrust attack is the logical extension of the nonstatutory labor exemption and provides the proper balance between labor and antitrust policy (Feldman, 2012). The leagues argue that the dissolution of the union in this context is a “sham,” designed solely to provide the players with leverage at the bargaining table, and that the union will immediately reform (and re-engage in collective bargaining) when they have gained that leverage. The leagues argue that the dissolve-and-sue strategy thrusts a “powerful new [labor] weapon” into the negotiations that would upset the carefully calibrated balance created by the labor process and would ultimately destroy the collective bargaining process (Brown, 518 U.S. at 237). And, ending the nonstatutory labor exemption at the point of union dissolution would leave the owners in a Catch-22: either accede to the demands of the players at the bargaining table or unilaterally agree on terms and conditions of employment (or labor tactics) that can be attacked under antitrust law (237).
The players, in contrast, argue that they have a statutorily protected right to choose not to be in a union and can make that choice at any time. They also contend that the dissolution of the union, regardless of when it happens or how long it lasts, is not a sham because it deprives them of their rights under labor law. At that point, the owners are free to implement any terms of employment they wish, subject only to potential scrutiny under antitrust law. Immunizing employer conduct from antitrust attack post-dissolution of a union would thus deprive the players both of their antitrust rights and their labor rights and frustrate both federal labor and antitrust policy (Feldman, 2012).
There are no simple answers to the questions raised by the conflict between antitrust and labor law that arise during labor negotiations in professional sports. The NBA and NFL lockouts in 2011 provided a preview of the issues, but most of the key questions remain largely unanswered. It is likely only a matter of time before the conflict arises again and the players respond to a lockout by dissolving their union and bringing an antitrust lawsuit. The resolution of that labor battle will not only impact the leverage in that particular negotiation but will also help dictate the strength of each side’s bargaining position for years to come.
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