NFL Lockout Lifted Pending Players’ Antitrust Suit

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

A group consisting of professional and prospective professional football players alleging that the National Football League and its 32 separately-owned teams engaged in a concerted refusal to deal in violation of Sec. 1 of the Sherman Act by imposing a "lockout" was entitled to preliminary injunctive relief lifting that lockout, the federal district court in St. Paul, Minnesota ruled yesterday.

According to the players, the lockout at issue was an anticompetitive agreement aimed at shutting down the entire free agent marketplace and boycotting both rookies and players currently under contract.

Lockout

A lockout occurs when an employer lays off or locks out its unionized employees during a labor dispute to bring economic pressure in support of the employer's collective bargaining position, the court noted.

In the present dispute, the league and teams declared the lockout after negotiations for a new collective bargaining agreement with the players' union broke down on March 11. The players voted to decertify and reorganize as a trade association that prohibited its members from engaging in collective bargaining with the league, its teams, or their agents—a necessary step to enabling antitrust action against the league, as such suits had been barred under the terms of a negotiated settlement in a previous labor dispute among the same parties.

Jurisdictional Questions

As a preliminary matter, the court rejected the NFL's arguments that the Norris-LaGuardia Act—which restricts the authority of federal courts to issue injunctive relief in labor disputes—precluded any injunctive relief. Regardless of whether the provisions of the Norris-LaGuardia Act should be extended or interpreted to protect the NFL (a matter of which the court was not convinced), the Act did not apply because the players' union had effectively renounced its status as the players' negotiating agent.

Any assertion that the Act continued to apply in the post-collective-bargaining, post-union world of employment law would "seem to run headlong into the rights of employees, seemingly without exception or limitation, to choose not to organize into a union, or having been once represented by a union, to decertify that organization or otherwise disclaim its function as their negotiating agent," in the court's view.

The court also rejected the defendants' contention that it should have deferred the matter, or at least a portion of it, to the National Labor Relations Board under the doctrine of primary jurisdiction. There was no issue in the case within the NLRB's exclusive statutory jurisdiction.

Preemption

Furthermore, the action was not governed by the preemption doctrine espoused in the U.S. Supreme Court's decision in San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959), which addressed whether a state court could enjoin a union from picketing and award damages for losses sustained. Moreover, any benefit that might be derived from seeking the NLRB's expertise was clearly outweighed by the delay involved, especially since the players were incurring ongoing irreparable harm.

The union's disclaimer of any further role as the players' agent in collective bargaining was unequivocal and effective, according to the court. The disclaimer presented an entirely separate issue than a labor law negotiating impasse, the court added. There was no issue of "impasse occurring within an ongoing, or likely to continue, process of collective bargaining," the court held. Rather, the parties had moved beyond "mere impasse," as they had "moved beyond collective bargaining entirely."

Balancing of Harms

Even on the preliminary record, the complaining players demonstrated not only that they "likely would suffer" irreparable harm absent the requested preliminary injunction, but also that they "are in fact suffering such harm" already, the court said. According to the players, because they faced constant pressure to prove their physical and economic worth, the loss of an entire year in a short professional athletic career could not be recaptured and, therefore, could not be adequately compensated by damages.

Moreover, they alleged, the diminishment of skills resulting from time spent off the playing and practice fields could shorten or end the careers of some players.

Evidence presented by the players regarding the short duration of NFL players' careers and the difficulty in determining the salary and benefits each player might have earned in a competitive marketplace –compounded by the players' unique abilities and circumstances—showed that damages could not fully compensate the players, the court found. This evidence sufficed to establish that the players would suffer irreparable harm by the perpetuation of the lockout, according to the court.

Rejected was an implied contention by the league and teams that, as a byproduct of the lockout, players would avoid suffering any harm from career-ending injury or physical wear-and-tear. Aside from the threat of harm in the form of lost playing time and its performance consequences, a lockout deprived the plaintiffs of their abilities to negotiate and market their services as free agents or even as entering players. This irreparable harm to the players outweighed any harm an injunction would cause the NFL, the court added.

Public Interest

Additional factors supporting the injunction were that the public interest did not favor a lockout and that the players established a fair chance of success on the merits of their injunction request. The public interest favored the enforcement of the antitrust laws and their underlying pro-competition policy, particularly given that the countervailing labor-law policy favoring collective bargaining was no longer implicated, the court concluded.

Chance of Success on Merits

Regarding the players' chances of success, the merits of the players' claims that various restrictions imposed by the league and teams violated the Sherman Act were not the issue, the court clarified. The players' motion was confined to a very precise and narrow matter as to only one of the antitrust claims: whether the NFL could lawfully lock the players out after the union disclaimed its role as their collective bargaining agent.

As the NFL's defense to the legality of the lockout was confined to the argument that the non-statutory labor exemption continued to protect them from antitrust liability, and the court had repudiated this argument, the league had identified no current defense against the claim. That the policies and decisions of the individual teams constituted concerted action seemed plain. Accordingly, the players had shown at least the requisite "fair chance" of success on their claim that the lockout constituted a violation of Sec. 1 of the Sherman Act.

The April 25 decision in Brady v. National Football League, Civil No. 11-639 (SRN/JJG), will appear in CCH Trade Regulation Reporter.