Justice John Paul Stevens with the unanimous opinion.
***This antitrust case comes from an Illinois based apparel company that lost out on a clothing contract when the league decided to entire into a contract with Reebok covering all 32 teams.***
***This is not a total loss for the NFL because the opinion says the League may engage in some activities as a single entity and disputes over those actions need to be judged on a case-by-case basis but “the activity at issue in this case is still concerted activity covered for [Sherman Antitrust Act] purposes.”
From the opinion: “While teams have common interests such as promoting the NFL brand, they are still separate profit-maximizing entities, and their interest in licensing team trademarks are not necessarily aligned.”
BACKGROUNDER
Lee Ross
– FOXNews.com
– January 13, 2010
Supreme Court Tackles Dispute Over NFL Authority
In a fight as fierce as any seen in the Super Bowl, lawyers on Wednesday tussled with Supreme Court justices in a case examining the fundamental operations of the 32-team National Football League.
In a fight as fierce as any seen in the Super Bowl, lawyers on Wednesday tussled with Supreme Court justices in a case examining the fundamental operations of the 32-team National Football League.
The NFL asserts that as a legal joint venture it operates as a single entity in making key decisions that impact all of its member teams.
But a lawyer representing a small apparel company that sued the league for supposedly violating the Sherman Antitrust Act argued the teams are independent actors free to enter into business contracts as they see fit.
Labor unions, including the one representing NFL players, contend a ruling in the league’s favor will give it too much power at the expense of the men on the field and fans.
New Orleans Saints quarterback and union representative Drew Brees recently wrote that team owners would use a high court victory to restrict player free agency, raise prices on merchandise and stadium tickets and freeze coaches salaries. Others have suggested that a ruling for the league will lead to increased labor strife and strikes that could lead to cancelled games.
It was difficult to discern from Wednesday’s arguments how the justices will resolve the dispute, possibly sending it back to lower courts for further development. But the wholesale victory the NFL asked for and the unions fear does not appear to be likely.
“You are seeking through this ruling what you haven’t gotten from Congress: An absolute bar to an antitrust claim,” Justice Sonia Sotomayor said to the NFL’s lawyer.
The case started as a lawsuit from American Needle Inc., an Illinois based company that over the years had produced logoed clothing for several NFL teams. But a decade ago the NFL signed an exclusive contract with Reebok to cover every team. American Needle was shut out and sued saying the contract with Reebok violated antitrust laws.
“The 32 teams of the National Football League are separately owned and controlled profit-making enterprises,” American Needle lawyer Glen Nager said at the beginning of his case. It was a point he returned to repeatedly throughout the morning.
The issue over competition took an interesting twist when Justice Stephen Breyer wondered why a fan of a particular team would have any interest in buying merchandise featuring another.
“I don’t know a Red Sox fan who would take a Yankees sweatshirt if you gave it away,” Breyer said after stating he is more of baseball fan than football but his analogy applies just the same.
Later in the argument, Justice John Paul Stevens, who specialized in antitrust law in his early career, focused on the league’s agreement to equally share revenues. He said that fact would “support the conclusion that this is basically a pro-competitive agreement because it tends to make competition stronger on the playing field…and that’s the end of the ball game.”
The key for the justices may come down to their determination over how vital the selling of logoed merchandise is to the purpose of the league to play games and promote the NFL which would be permissible under the Sherman Act.
It’s an issue Chief Justice John Roberts suggested needed further review.
“If there is a factual dispute about whether a particular activity of the league is designed to promote the game or is designed simply to make more money, than that is the sort of thing that goes to trial,” Roberts said.
***Lower courts had dismissed the attempts of the American Needle company from pursuing legal action against the NFL. Today’s ruling allows the legal action to go forward.