By Erick V. Posser, Villanova School of Law 2L and Staff Member of the Villanova Sports and Entertainment Law Journal.
The NBA is finally back and for NBA fans, this news comes with a gigantic sigh of relief. After a 149-day NBA lockout consisting of decertification strategies, antitrust lawsuits, proper venue discussion, and unfair labor practices, America can once again root for their favorite NBA stars on a nightly basis. On Saturday, the NBA and the NBA Players Association agreed in principle on a new, tentative collective bargaining agreement that features an opt out clause for both parties after year six of the deal.[i] The agreement features many changes to the NBA’s structure, especially in regards to free agency movement.[ii]
Prior to the new agreement, the NBA players were determined to place the future of the NBA into the hands of the federal courts. On November 16th, a group of named NBA players, including Carmelo Anthony, Steve Nash, Kevin Durant, and Chauncey Billups, filed antitrust lawsuits in both the Northern District of California and the U.S. District Court of Minnesota seeking an end to what they claimed was an illegal boycott of the NBA workforce.[iii] The players sought $6 billion in monetary damages for lost wages, among other things.[iv] Eventually, the Players amended their federal complaint and consolidated their efforts to the U.S. District Court in Minnesota.[v]
Heading into litigation, the NBA players were represented by attorney David Boies, who also represented the NFL in last spring’s NFL lockout litigation. Coincidentally, the NFL case was also tried before the U.S. District Court in Minnesota, and was later appealed to the U.S. Eighth Circuit Court of Appeals. Boies was determined that the NBA lockout violated federal antitrust laws because the NBA owners were refusing to let the players work.[vi] Moreover, NBA Commissioner David Stern’s ultimatum to the players to accept the deal on the table or face a harsher deal down the road strengthened the players’ case because that arguably constituted an end to the collective bargaining relationship between both parties.[vii]
Generally, it is unknown to the average sports fan of the role that federal antitrust laws play in professional sports. On its face, the NBA’s lawsuit seemed awfully similar in nature to the lawsuit filed by the NFL players last March, which was ultimately decided in July by the Eighth Circuit in Brady v. NFL.[viii] The Eighth Circuit ruled in favor of the NFL by holding that a federal court could not enjoin the NFL owners’ lockout of its players due to the express provisions set forth in the Norris LaGuardia Act (29 U.S.C. § 101).[ix] Upon this ruling, both parties immediately resumed talks toward a new CBA, and settled on a deal in time to save the 2011 NFL season. For the NBA, however, the result may have been different.
In an attempt to gain leverage in their respective collective bargaining negotiations, both the NBA and NFL owners effectively locked out their professional athletes upon expiration of their collective bargaining agreements. In response, both the NFL and NBA Players Associations disbanded their unions and filed for decertification. The NFL players immediately filed for decertification upon the expiration of their CBA, and sought an injunction against the NFL owners’ lockout. The NBA players, however, did not elect to decertify until nearly four months after the expiration of their CBA. The NBA players initially wanted to settle on an agreement without having to go through with an expensive antitrust lawsuit. The timing of these decisions is precisely what distinguishes the two cases.
By seeking an injunction, the NFL players had to face the stringent provisions set forth in the Norris LaGuardia Act. In short, the NLGA prohibits a federal court from issuing an injunction in an action growing out of or involving a labor dispute.[x] Upon a review of the facts, the Eighth Circuit determined that both parties were involved in an action growing out of a labor dispute, and therefore the court did not grant the Players’ injunction.[xi] As for the NFL players’ antitrust claims, the Eighth Circuit elected not to speak on the merits of those allegations, which provided hope for the NBA players going forward.[xii]
In the NBA’s situation, however, the NBA players did not seek an injunction. According to Boies, the players did not seek a preliminary injunction because “the lockout grew out of prior collective bargaining discussions,” and it would be very difficult to get a court to immediately halt the lockout (i.e. Brady v. NFL).[xiii] Instead, the players filed a lawsuit seeking monetary damages due an illegal boycott, price fixing agreement, and/or restraint of trade in violation of the Sherman Act.[xiv] Moreover, the players argued that the owners’ final offer would have effectively wiped out the competitive market for NBA free agents.[xv] Thus, the NBA players would not have confronted the NLGA if they were to appear before the District Court of Minnesota. Instead, the NBA players’ case would have been centered on a labor law doctrine known as the nonstatutory labor exemption.
For the collective bargaining process to be effective, labor law affords employers a doctrine known as the nonstatutory labor exemption. In short, the nonstatutory labor exemption protects the product of collective bargaining from attack under antitrust law. Without this doctrine, certain rules and conditions that are essential to the functionality of the collective bargaining process would be considered anti-competitive under the antitrust laws. The key point to the exemption, however, is that even in the absence of a current CBA, the doctrine remains applicable as long as there is evidence showing that the collective bargaining relationship still exists between the parties involved. In order for the NBA players to lower this protective shield, they were forced to effectively end this relationship. In the NBA players’ case, they were set to argue that disbanding their union, in conjunction with Commissioner Stern’s ultimatum, was sufficient proof that the collective bargaining relationship had ended.
As for the merits of these claims, we will have to wait for the next labor dispute in a major professional sports league to find out if this strategy for the players can be effective. According to Boies, however, the NBA players seemingly had a winning argument.[xvi] Boies stated, “[h]ere you had an ultimatum from the owners that made absolutely clear that the collective bargaining process was over.” Boies added that Commissioner Stern’s threat “[was] not collective bargaining.”[xvii] These are statements from a lawyer, however, not from a federal district court judge. Even though the decertification strategy has led to successful antitrust lawsuits for NFL Players in prior labor disputes, it remains a question of fact to be determined on a case-by-case basis.
As for the NBA’s new CBA that will feature a 66-game regular season for 2011-12, the specifics of the deal can be seen here. It is hard to say whether the owners or the players “won” in this deal because it has not been ratified yet. Also, the financial success of the league will be evaluated and will dictate whether these cut backs deemed necessary. However, as the NFL’s situation displayed, the owners in professional sports typically come out victorious because they have the ultimate leverage within such collective bargaining negotiations. Furthermore, the NBA owners understand from an operational perspective what changes are essential in order for the NBA to maximize its competitive-nature. In the old system, players were making excessive salaries (i.e. Rashard Lewis, Eddy Curry, Gilbert Arenas), their contracts were too long, and the luxury tax system was not sufficient enough to deter high-spending teams from executing sign-and-trade deals in order to compete for championships (i.e. Dallas Mavericks, LA Lakers). With the small market teams left out to dry with little potential for an NBA title, the high-spending teams have dominated the NBA recently. The NBA has become a league focused on having multiple big star players on heavy-market teams, while the small market teams are left to rely on the NBA Draft, which provides rare hope (i.e. Kevin Durant/Thunder). One way to fix this, as highlighted in the new CBA, is the newly added amnesty clause. The amnesty clause allows each team to waive one player that is currently on their books, and the clause is limited to one per team for the life of the CBA. Therefore, a team can waive a player with a bad contract, the contract will no longer count on the team’s salary cap, and the team will pay that player his guaranteed salary over an extended period of years in order to decrease the financial hit on their books. This clause is a perfect example of a change in the NBA’s system that will result in balancing out the financial woes of multiple NBA franchises.
In this new CBA, both parties worked diligently to fix as many issues as possible without taking too much away from what the players had in the previous system. Hopefully this results in a more competitive league with more player movement. However, the evaluation process will play itself out over the life of this CBA, and who knows, maybe they’ll be right back here at square one after the potential opt-out in year six. But for now, NBA fans should just be relieved that the season is saved, and their favorite NBA stars will be returning to the basketball court on a nightly basis.
Mr. Posser can be reached at Eposser@law.villanova.edu
[i] See Wojnarowski, Adrian, Specifics of NBA’s Proposed Labor Deal, Yahoo! Sports, November 26, 2011, http://sports.yahoo.com/nba/news;_ylt=Ai5zMSxEFHGu8RVVc36a43PTjdIF?slug=aw-wojnarowski_nba_labor_deal_112611 (last visited November 28, 2011).
[ii] See id.
[iii] See NBA Players File Amended Federal Lawsuit Against League, Seattle Times, November 21, 2011 http://seattletimes.nwsource.com/html/othersports/2016821136_digs22.html (last visited November 28, 2011).
[iv] See Players File 2 Antitrust Suits vs. NBA, ESPN.com, November 17, 2011 http://espn.go.com/nba/story/_/id/7239168/nba-cancels-games-dec-15-players-file-2-antitrust-lawsuits (last visited November 28, 2011).
[v] See id.
[vi] See id.
[vii] See id.
[viii] See Brady v. NFL, 640 F.3d. 785 (8th Cir. 2011).
[ix] See id. at 682.
[x] See 29 U.S.C. § 101 (2006).
[xi] See Brady, 644 F.3d. at 673.
[xii] See Brady, 644 F.3d. at 682.
[xiii] See Players File 2 Antitrust Suits vs. NBA, ESPN.com, November 17, 2011 http://espn.go.com/nba/story/_/id/7239168/nba-cancels-games-dec-15-players-file-2-antitrust-lawsuits (last visited November 28, 2011).
[xiv] See id.
[xv] See id.
[xvi] See Players File 2 Antitrust Suits vs. NBA, ESPN.com, November 17, 2011 http://espn.go.com/nba/story/_/id/7239168/nba-cancels-games-dec-15-players-file-2-antitrust-lawsuits (last visited November 28, 2011).
[xvii] See id.