Multiemployer bargaining, antitrust law, and team sports: the contingent choice of a broad exemption.

• Author: Harper, Michael C.

1. INTRODUCTION

Twenty-four years after pronouncing that "Congress[,] . . . not . . . this Court[, must remedy] any inconsistency or illogic" in the long standing exemption of baseball, but not other sports from the reach of the antitrust laws,(1) the Supreme Court last term reduced substantially the uniqueness of Major League Baseball's control over its labor market. The Court did so not by exposing baseball to antitrust attack, but rather by clarifying that restrictions on player labor mobility and freedom of contact imposed by all North American leagues of professional sports teams(2) also enjoy an exemption from antitrust scrutiny as long as their labor markets are subject to collective bargaining.(3)

In Brown v. Pro Football, Inc.,(4) the Court held that employers could conspire and agree to take actions to impose controls on a labor market, if those actions "grew out of" and were "directly related to" a multiemployer bargaining process, did not offend the federal labor laws that sanction and regulate the process, affected terms of employment subject to compulsory bargaining, and concerned only parties to the collective bargaining relationship.(5) All major professional team sports clubs have joined with other league clubs to bargain in multiemployer units with unions representing the athletes that they employ. As long as a multiemployer bargaining relationship exists, league-imposed restraints on player labor markets should easily meet the Court's other conditions. The Brown holding, therefore, effectively enables leagues in every sport to be as free of antitrust constraints in order to control player mobility and salaries as Major League Baseball has been under its special, long standing antitrust exemption.(6)

How one greets Brown inevitably will depend in part on how one views the antitrust challenges that players have made against such league-imposed labor market restraints as restrictions on mobility between teams,(7) rookie drafts,(8) and salary caps.(9) Those individuals who think that the antitrust laws should be concerned only with restraints on product markets, and not with restraints on input markets in general or with labor markets in particular, may welcome Brown's exemption of labor market restraints.(10) Those individuals who think that the labor market restraints typically imposed by sports leagues are reasonable under an antitrust analysis that weighs heavily the contributions of such restraints to maintaining athletic balance that enhances the league's competitiveness with other forms of entertainment also may welcome the decision.(11) Others who believe that the antitrust laws should protect a player's negotiation of a free-market wage for any extraordinary services the player provides should give Brown a cold reception. This should be true for those concerned with the ultimate impact on the sports product of restraints discouraging talent development(12) and for those concerned with insuring the extraction of a "just" wage for labor from a cartel of employers.(13)

Regardless of their inclinations on these ultimate issues of antitrust law, however, both sports fans and lawyers (including those who are both), have reason to lament the result in Brown. For reasons elucidated in the final section of this Article,(14) sports fans interested primarily in uninterrupted presentations of athletic competition are likely to be disappointed by more work stoppages in professional sports as a result of Brown. For lawyers, whether sports fans or not, the Brown decision should be most troubling because it failed to provide a proper clarification of how antitrust law should accommodate federal labor law. The accommodation that Brown did articulate sacrificed antitrust goals to a degree unnecessary to the service of labor law goals.

As explained more fully below, in order to protect established and legally approved multiemployer collective bargaining in myriad industries other than sports, the Court properly rejected the players' lawyers' formulation of a limited antitrust exemption that would not have protected the concerted employer action challenged in Brown.(15) The Court, however, could have found that the challenged concerted action in Brown was not exempt from antitrust challenge under a different theory that would not have threatened multiemployer bargaining in any industry. That theory would have distinguished between joint employer actions in most industries designed to resist union efforts to use collective employee power to obtain supracompetitive wages, and those joint employer actions, as in the sports industry, unilaterally to impose restraints on free, individual employee bargaining.

As a result of Brown, individuals whose special, differentiated talent would enable them to achieve extraordinary wages in a free, competitive labor market will have to make an unnecessary choice between two sets of statutory rights, those secured by federal labor laws and those secured by antitrust laws. In the near term, this choice may be imposed only on professional athletes, who both are interested in the benefits of multiemployer collective bargaining and also confront joint employer schemes to restrict their labor market.(16) In the longer term, however, the choice demanded by Brown may also unnecessarily and improperly constrain others with differentiated talent in the entertainment industry. Moreover, the Court's failure in Brown to clarify the extent to which labor law requires the accommodation of antitrust law could lead to a further unnecessary expansion of the labor exemption and consequential sacrifice of antitrust goals.

II.

The Brown case involved a challenge under section 1 of the Sherman Act(17) to the NFL's 1989 imposition on its twenty-eight member clubs of a flat wage of exactly $1000 per week for any player employed by any member club on a "developmental squad."(18) In the spring of 1989, while attempting to negotiate a new collective bargaining agreement with the NFL Players Association (NFLPA), the NFL proposed that each team establish a squad of up to six rookie, or first-year, players to play in practice games, and perhaps in regular games, when regular team members were injured.(19) At the same time, the NFL proposed that each team would pay all developmental squad players the same $1000 weekly salary.(20) The NFLPA refused to agree to the fixed salary level; it insisted that developmental squad players receive the same benefits and protections afforded other NFL players, "includ[ing] the right to negotiate their own salaries."(21) After two months, the NFL declared negotiations over the issue of developmental squad salaries to be at an impasse and, without the agreement of the union, unilaterally implemented the $1000 weekly salary.(22) The NFL advised each club that any deviations from this pay rate would result in disciplinary action by the League, including the loss of draft choices.(23)

Two hundred thirty-five players who were employed on the developmental squads and who received the $1000 weekly wage during the 1989 season initiated the Brown litigation in 1990.(24) The players claimed that the member clubs of the NFL conspired to restrain trade unreasonably in violation of the Sherman Act by agreeing, through their association in the NFL, to pay the same wage and therefore not to compete for developmental squad players.(25) The district court rejected the NFL's and its member clubs' defense that their joint imposition of the flat wage was exempt from antitrust challenge.(26) The Court then granted summary judgment to the players on the issue of antitrust liability,(27) and after trial of the damages issue to a jury, entered judgment on an award of treble damages that exceeded thirty million dollars.(28)

The district court's decision to reject the claim of an antitrust exemption should not have surprised the NFL. The Supreme Court previously had confirmed two bases for exempting labor market restraints from the reach of the antitrust laws,(29) but neither exemption directly fit the owners' unilateral imposition of the flat weekly wage on the developmental squad players. At the time of the district court's ruling no lower court had interpreted either exemption broadly enough to cover this imposition.

The Supreme Court established the first of the two exemptions in 1941. In United States v. Hutcheson,(30) Justice Frankfurter interpreted the Norris-LaGuardia Act of (1932)(31) to provide labor unions with a broad exemption from the Sherman Act, allowing them to engage in economic pressure "[s]o long as a union acts in its self-interest and does not combine with non-labor groups."(32) Hutcheson was important because it ensured that workers, through their unions, could conspire together to engage in any form of economic pressure, whether "licit" or "illicit," in attempts to achieve enhanced wages or to negotiate other terms of employment without being vulnerable to treble damages, injunctions, or criminal prosecutions under the antitrust laws. Unions thought that they had achieved this kind of insulation with the passage of the Clayton Act in 1914,(33) but prior to Hutcheson the Court had interpreted the exemption of union economic weapons set forth in section 20 of that Act to be limited to union activities directed against an employer by its own employees.(34) In Hutcheson, Justice Frankfurter held that Congress intended to reject this limitation on union activities through its broad definition of a labor dispute in section 13 of the Norris-LaGuardia Act.(35)

The exemption established in Hutcheson, however, was not available to the employers in the Brown case. The Hutcheson decision concerned the Sherman Act's "application to trade union activities and the efforts to secure legislative relief from its consequences" for unions.(36) Justice Frankfurter's opinion addressed only union conduct and interpreted Congress's purpose in enacting Norris-LaGuardia as being...