Case Name: Dale McCOURT, Plaintiff-Appellee, v. CALIFORNIA SPORTS, INC., and the Los Angeles Kings, Inc., Defendants-Appellants; Dale McCOURT, Plaintiff-Appellee, v. CALIFORNIA SPORTS, INC., et al., Defendants, National Hockey League, Defendant-Appellant; Dale McCOURT, Plaintiff-Appellee, v. CALIFORNIA SPORTS, INC., et al., Defendants, National Hockey League Players' Association, Defendant-Appellant
Court: United States Court of Appeals for the Sixth Circuit
Jurisdiction: United States
Decision Date: 1979-05-22
Citations: 600 F.2d 1193
Docket Number: Nos. 78-1462 to 78-1464
Parties: Dale McCOURT, Plaintiff-Appellee, v. CALIFORNIA SPORTS, INC., and the Los Angeles Kings, Inc., Defendants-Appellants. Dale McCOURT, Plaintiff-Appellee, v. CALIFORNIA SPORTS, INC., et al., Defendants, National Hockey League, Defendant-Appellant. Dale McCOURT, Plaintiff-Appellee, v. CALIFORNIA SPORTS, INC., et al., Defendants, National Hockey League Players’ Association, Defendant-Appellant.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 600
Pages: 1193–1218

Head Matter:
Dale McCOURT, Plaintiff-Appellee, v. CALIFORNIA SPORTS, INC., and the Los Angeles Kings, Inc., Defendants-Appellants. Dale McCOURT, Plaintiff-Appellee, v. CALIFORNIA SPORTS, INC., et al., Defendants, National Hockey League, Defendant-Appellant. Dale McCOURT, Plaintiff-Appellee, v. CALIFORNIA SPORTS, INC., et al., Defendants, National Hockey League Players’ Association, Defendant-Appellant.
Nos. 78-1462 to 78-1464.
United States Court of Appeals, Sixth Circuit.
Argued Oct. 19, 1978.
Decided May 22, 1979.
Rehearing Denied June 27, 1979.
Avern Cohn, William G. Christopher, Honigman, Miller, Schwartz & Cohn, Detroit, Mich., Richard M. Mosk, Mitchell, Sil-berberg & Knupp, Los Angeles, Cal., for defendants-appellants in No. 78-1462.
Laurence D. Connor, Roger K. Timm, Dykema, Gossett, Spencer, Goodnow & Trigg, John A. Entenman, Ted T. Amsden, Detroit, Mich., Brian M. Smith, Brian M. Smith & Associates, P.C., Troy, Mich., for plaintiff-appellee.
Fred W. Freeman, Kenneth J. McIntyre, Dickenson, Wright, McKean, Cudlip & Moon, Detroit, Mich., Harry L. Shniderman, Bingham B. Leverich, Covington & Burling, Washington, D.C., for defendant-appellant in No. 78-1463.
Joseph A. Sullivan, Bodman, Longley & Dahling, Detroit, Mich., Lawrence Latto, Benjamin Boley, Shea & Gardner, Wendy S. White, Washington, D.C., for defendant-appellant in No. 78-1464.
Before EDWARDS, Chief Judge, and ENGEL and MERRITT, Circuit Judges.

Opinion:
ENGEL, Circuit Judge.
The reserve system, in professional athletics, has been the subject of exhaustive and spirited discussion both in the sports and in the legal world. Its supporters urge that it stimulates athletic competition between the teams of a sports league; its opponents urge that it stifles economic competition among those same teams. We have no doubt that there is a measure of truth in both claims.
I. NHL RESERVE SYSTEM
Involved in this appeal is the validity, under federal antitrust laws, of the reserve system currently in effect in the National Hockey League. In its present form, the system has been termed a "modified Rozelle Rule" because it closely resembles the rule promulgated for the National Football League by its commissioner, Pete Rozelle, but has been modified to the extent that arbitration is not by the commissioner himself but by a professional and independent arbitrator.
At the heart of the NHL reserve system is By-Law Section 9A, which is attached as Appendix A. This section provides the rules governing the acquisition of free agents of other clubs in the league and is specifically made applicable to the players in the league by paragraphs 17 and 18 of the Standard Players Contract, which each player in the NHL is required to sign. Fur ther, the Standard Players Contract, expressly including Paragraph 17, was approved by both the NHL team owners and the National Hockey League Players Association (NHLPA) in the current collective bargaining agreement, Sections 9.03(a) and (b).
As can be seen from its terms, By-Law Section 9A mandates that when a player becomes a free agent and signs a contract with a different club in the league, his original club has the right under the ByLaw to exact an "equalization payment" from the acquiring club. That payment may be by the assignment of contracts of players, by the assignment of draft choices, or "as a last resort," by the payment of cash. If mutual agreement is not reached, each club submits a proposal to a neutral arbitrator, selected by majority vote of the Board of Governors of the League, who then must select, without change, one of the two proposals submitted.
II. THIS LITIGATION
On October 10, 1977, Dale McCourt, a 21-year-old hockey player from Canada, signed a NHL Standard Players Contract (1974 form) with the Detroit Hockey Club, Inc. to play professional hockey for three years with the Detroit Red Wings. McCourt was to be paid $325,000 over three years. He subsequently played his rookie year, 1977-78, with the Red Wings and was the leading scorer.
Rogatien Vachon had been a star goaltender for the Los Angeles Kings for six years when he became a free agent in 1978. After rejecting a substantial offer by the Kings, Vachon entered into a contract with the Red Wings at a salary of $1,900,000 for five seasons. By signing Vachon, the Red Wings obligated itself to make an equalization payment under By-Law Section 9A to the Kings and, when no agreement was reached, each club submitted to arbitrator Houston a proposal pursuant to By-Law Section 9A.8. The Red Wings offered two of its players as compensation and the Kings proposed that McCourt's contract be assigned to it. The arbitrator selected the Kings' proposal and accordingly, the Red Wings assigned McCourt's contract to Los Angeles. Rather than report to the Kings, however, Dale McCourt brought suit in the United States District Court for the Eastern District of Michigan.
Named as defendants in that suit were the National Hockey League, the Los Ange-les Kings, the National Hockey League Players Association, and the Detroit Red Wings. Count I of McCourt's complaint alleged that the reserve system, and consequently the assignment of his contract to the Los Angeles Kings as the compensation for free agent Vachon, violated Section 1 of the Sherman Act, 15 U.S.C. § 1 (1976), and sought injunctive relief under Sections 4 and 10 of the Clayton Act, 15 U.S.C. § 15 and 26 (1976), to prevent the defendants from enforcing the arbitration award and to require that his contract be reassigned to the Detroit Red Wings.
On September 19, 1978, following an extensive evidentiary hearing, the district court entered a preliminary injunction restraining the defendants from enforcing the arbitration award and from penalizing McCourt for refusing to play professional hockey with the Los Angeles Kings pursuant to the award. This appeal followed.
In an opinion accompanying the preliminary injunction and reported at 460 F.Supp. 904, the district judge held that By-Law Section 9A unreasonably restrains trade in commerce, in violation of Section 1 of the Sherman Act:
Like the "Rozelle Rule," bylaw 9A applies to all players without regard to status or ability; it applies to the average player and to the superstar alike; it is unlimited in duration and acts as a perpetual restriction upon a player's ability to freely contract for his services. Bylaw 9A cannot be justified by any legitimate business purpose to achieve the NHL's announced goal of maintaining competitive balance. It inhibits and deters teams from signing free agents, decreases a player's bargaining power in negotiations, denies players the right to sell their services in a free and open market, and it depresses salaries more than if competitive bidding were allowed. Thus, we conclude that plaintiff has sufficiently established that bylaw 9A, as applied, unreasonably restrains trade and commerce and is violative of Section 1 of the Sher man Act. See Mackey v. National Football League, 543 F.2d 606 (8th Cir. 1976).
460 F.Supp. at 907 (footnote omitted).
Having thus ruled, the trial judge went on to hold that the defendants were not entitled to the benefit of the non-statutory labor exemption from antitrust sanctions because "[t]he preponderance of evidence . establishes that bylaw 9A was not the product of bona fide arm's length bargaining over any of its anticompetitive provisions. The evidence establishes that the bylaw was unilaterally imposed upon the NHLPA and was incorporated into the collective bargaining agreement in the identical language it contained when it was first adopted by the League." 460 F.Supp. at 910.
III. ANTITRUST LIABILITY
While the Supreme Court has ruled that other professional sports do not enjoy the unique exemption from antitrust laws which has historically been reserved for the game of baseball, Flood v. Kuhn, 407 U.S. 258, 92 S.Ct. 2099, 32 L.Ed.2d 728 (1972), it has never directly ruled upon whether the reserve system common to most professional athletics comes within the ban of the Sherman Act, nor has it expressly determined whether the reserve system is a mandatory subject of collective bargaining and, therefore, exempt under federal labor policy from the operation of the federal antitrust laws.
Assuming without deciding that reserve systems such a those here are subject to Section 1 of the Sherman Act and could otherwise be violative of it, we proceed to determine whether the non-statutory labor exemption applies upon the facts here.
IV. LABOR EXEMPTION
A. Legal Standards
The trial court and the parties before us in this appeal have all relied upon Mackey as properly enunciating the governing principles in determining whether the non-statutory labor exemption applies to the reserve system provisions of a collective bargaining agreement in professional sports. Mackey v. National Football League, 543 F.2d 606 (8th Cir. 1976), cert. dismissed, 434 U.S. 801, 98 S.Ct. 28, 54 L.Ed.2d 59 (1977). There Judge Lay set forth three broad principles:
We find the proper accommodation to be: First, the labor policy favoring collective bargaining may potentially be given pre-eminence over the antitrust laws where the restraint on trade primarily affects only the parties to the collective bargaining relationship. See Connell Co. v. Plumbers & Steamfitters, supra [421 U.S. 616, 95 S.Ct. 1830, 44 L.Ed.2d 418 (1975)]; Meat Cutters v. Jewel Tea, supra [381 U.S. 676, 85 S.Ct. 1596,14 L.Ed.2d 640 (1965)]; Mine Workers v. Pennington, supra [381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965)]. Second, federal labor policy is implicated sufficiently to prevail only where the agreement sought to be exempted concerns a mandatory subject of collective bargaining. See Meat Cutters v. Jewel Tea, supra; Mine Workers v. Pennington, supra. Finally, the policy favoring collective bargaining is furthered to the degree necessary to override the antitrust laws only where the agreement sought to be exempted is the product of bona fide arm's-length bargaining. See Meat Cutters v. Jewel Tea, supra. See also Smith v. Pro-Football, 420 F.Supp. 738 (D.D.C.1976); Philadelphia World Hockey Club v. Philadelphia Hockey Club, 351 F.Supp. 462, 496-500 (E.D.Pa.1972); Boston Professional Hockey Ass'n, Inc. v. Cheevers, 348 F.Supp. 261, 267 (D.Mass.), remanded on other grounds, 472 F.2d 127 (1st Cir. 1972).
543 F.2d at 614-15 (footnotes omitted).
We see no reason to disagree with the judgment of the district court and of the attorneys on both sides that the proper standards are set out in Mackey. In short, it was proper to apply Mackey's standards; the issue is whether those standards were properly applied.
B. Application of legal standards
We have little difficulty in determining that the first two policy considerations favor the exemption. Clearly here the restraint on trade primarily affects the parties to the bargaining relationship. It is the hockey players themselves who are primarily affected by any restraint, reasonable or not. Second, the agreement concerning the reserve system involves in a very real sense the terms and conditions of employment of the hockey players both in form and in practical effect. As Mackey correctly points out, the restriction upon a player's ability to move from one team to another within the league, the financial interest which the hockey players have and their interest in the mechanics of the operation and enforcement of the rule strongly indicate that it is a mandatory bargaining subject within the meaning of the National Labor Relations Act, Section 8(d), 29 U.S.C. § 158(d) (1976).
The issue, therefore, in our judgment is narrowed to whether, upon the facts of this case, the agreement sought to be exempted was the product of bona fide arm's-length bargaining. The court in Mackey held under the circumstances before it that such arm's-length bargaining was missing. So did the district court here. The underlying facts in the two cases, however, are quite different.
In Mackey it was shown that the National Football League Players Association, at least prior to 1974, had stood in a relatively weak position with respect to the clubs. The Rozelle Rule had remained unchanged in form since it was unilaterally promulgated in 1963, even before the Players Association was formed. The Eighth Circuit specifically found that the Rozelle Rule was not bargained over in the negotiations leading to the 1968 or 1970 collective bargaining agreements:
At the outset of the negotiations preceding the 1968 agreement, the players did not seek elimination of the Rozelle Rule but felt that it should be modified. During the course of the negotiations, however, the players apparently presented no concrete proposals in that regard and there was little discussion concerning the Rozelle Rule. At trial, Daniel Shul-man, a bargaining representative of the players, attributed their failure to pursue any modifications to the fact that the negotiations had bogged down on other issues and the union was not strong enough to persist.
The 1968 agreement incorporated by reference the NFL Constitution and Bylaws, of which the Rozelle Rule is a part. Furthermore, it expressly provided that free agent rules shall not be amended during the life of the agreement.
At the start of the negotiations leading up to the 1970 agreement, it appears that the players again decided not to make an issue of the Rozelle Rule. The only reference to the Rule in the union's formal proposals presented at the outset of the negotiations was the following:
The NFLPA is disturbed over reports from players who, after playing out their options, are unable to deal with other clubs because of the Rozelle Rule. A method should be found whereby a free agent is assured the opportunity to discuss contract with all NFL teams.
There was little discussion of the Rozelle Rule during the 1970 negotiations.
543 F.2d at 612-13.
Upon the expiration of the 1970 agreement, however, the NFL players obviously found themselves in a much stronger bargaining position than they previously enjoyed. Although the court in Mackey was not concerned with the 1974 collective bargaining negotiations, it noted that:
[sjince the beginning of the 1974 negotiations, the players have consistently sought the elimination of the Rozelle Rule. The NFLPA and the clubs have engaged in substantial bargaining over that issue but have not reached an accord.
543 F.2d at 613.
Regarding these 1974 negotiations, of particular interest is the Eighth Circuit's subsequent opinion in Reynolds v. National Football League, 584 F.2d 280 (8th Cir. 1978). Reynolds developed when the National Football League Players Association in a class action sought damages and other relief for the alleged injury caused by the anti-competitive effects of the Rozelle Rule, which had earlier been outlawed in Mackey. A settlement of the class action in the district court had been contested by 15 dissenting football players who challenged the validity of the settlement reached. In upholding the settlement, the Eighth Circuit expressly noted that it had been the subject of collective bargaining. The settlement included not only cash payments but a modification of the Rozelle Rule, particularly with a better and refined formula for determining the compensation to be paid the old club when a free agent player is signed by a new club. Reynolds, therefore, represents a reaffirmation of the Eighth Circuit's holding in Mackey:
We emphasize today, as we did in Mack-ey, supra, that the subject of player movement restrictions is a proper one for resolution in the collective bargaining context. When so resolved, as it appears to have been in the current collective bargaining agreement, the labor exemption to antitrust attack applies, and the merits of the bargaining agreement are not an issue for court determination. The bargaining agreement is subject to change from time to time as it expires and is up for renegotiation.
584 F.2d at 289.
Returning to the area of professional hockey, we find its history well chronicled by Judge Higginbotham in Philadelphia World Hockey Club, Inc. v. Philadelphia Hockey Club, Inc., 351 F.Supp. 462 (E.D.Pa.1972). The district judge's opinion in the instant case picks up the history of the reserve system and the National Hockey League where Judge Higginbotham left it in Philadelphia World Hockey Club, Inc. The district judge here stated:
Mr. John Ziegler, President of the National Hockey League, testified that in March 1973, after discussions between the NHL and the NHLPA, the Board of Governors authorized a special committee to negotiate a new reserve clause. NHL Exh. 1 at 2-4. At a meeting on March 19, 1973, the owners and player representatives tentatively agreed upon a new reserve clause pending ratification by the players. NHL Exh. 2 at 3. The tentative agreement provided, among other things, that a player with five or more years in the NHL could elect to become a free agent. See NHL Exh. 3 for the full text of the proposed reserve clause. In June 1973, the NHLPA rejected the proposed reserve clause. Thereafter, the NHLPA, on advice of counsel, refused to attend a meeting on August 28, 1973 to further discuss the proposed reserve clause. Plaintiff Exh. 2 at 3. The NHLPA elected instead to await the final outcome of the World Hockey Association's suit attacking the old reserve clause. See Philadelphia World Hockey Club, Inc. v. Philadelphia Hockey Club, Inc., supra. When the positions of the parties solidified, the NHL unilaterally adopted bylaw 9A on November 27, 1973. Plaintiff Exh. 2 at 3.
Several months later, in February 1974, the district court approved a consent decree in the World Hockey Association suit. The NHLPA then threatened to file its own antitrust action to challenge the validity of bylaw 9A. To forestall that suit, the NHL agreed on July 9, 1975, that it would not assert laches or equitable estoppel as a defense. See Plaintiff Exh. 3 at 1; Exh. 4 at 1. At a subsequent meeting, on August 13, 1975, Mr. Ackerman, counsel for the NHL, implied that there would be no collective bargaining agreement until the dispute over bylaw 9A was resolved. The NHLPA, however, persisted in its refusal to negotiate on the clause. Plaintiff Exh. 5 at 1-2. The NHLPA's threat of an antitrust suit did not alter the NHL's firm position on bylaw 9A. On August 15, 1975, the members of the owner-players' council were advised that:
Mr. Eagleson stated that the commencement of this type of action was still being considered. I replied that decision was, of course, up to them, but that the owners would not negotiate from fear of that possibility. Pl.Exh. 5 at 2.
On May 4, 1976, the NHL and the NHLPA signed their first collective bargaining agreement retroactive from September 15, 1975. Collective Bargaining Agreement (CBA) § 2.01. The collective bargaining agreement provides that paragraph 17 of the Standard Player's Contract and bylaw 9A are "fair and reasonable terms of employment." CBA § 9.03(b).
460 F.Supp. at 910-11.
We believe that in holding that the reserve system had not been the subject of good faith, arm's-length bargaining, the trial court failed to recognize the well established principle that nothing in the labor law compels either party negotiating over mandatory subjects of collective bargaining to yield on its initial bargaining position. Good faith bargaining is all that is required. That the position of one party on an issue prevails unchanged does not mandate the conclusion that there was no collective bargaining over the issue. NLRB v. American National Insurance Co., 343 U.S. 395, 404, 72 S.Ct. 824, 96 L.Ed. 1027 (1952).
In a case where the collective bargaining negotiations proceeded much like those on By-Law Section 9A, our circuit followed American National Insurance Co. to hold that good faith bargaining did not require the employer to alter its position. NLRB v. United Clay Mines Corp., 219 F.2d 120 (6th Cir. 1955). There the NLRB sought enforcement of its order directing the company to bargain collectively with the union. The court refused, holding:
In the present case, the respondent promptly met with the Union at its request, and interposed no objections or delays to later meetings whenever requested by the Union. Its negotiators were fully authorized to act. It submitted a proposed contract which it was willing to execute. The Union's proposals and its own proposals were discussed in detail in lengthy sessions. From the start respondent made its position clear that it would insist upon certain provisions, which, in its opinion, were basically important to the continued successful operation of the Company, such as the unqualified no-strike clause and settlement of grievances by Company management without compulsory arbitration. The Company's position on these issues was not acceptable to the Union. The Union's counterproposals on these issues were not acceptable to the Company. The negotiations, after a period of months, finally resulted in a tentative agreement with respect to all matters except the settlement of grievances. The failure to execute a contract was not because of a failure or refusal to negotiate, but in the final analysis was because the parties would not agree on one remaining issue, considered by both of them as basically important. To say that the Company should have accepted the Union's proposal on this issue is to ignore the language of the statute that the obligation to bargain collectively "does not compel either party to agree to a proposal or require the making of a concession."
The board also stresses the fact that the Company refused to submit alternate proposals about the grievance issue at the request of the Union after it had refused to accept the Company's original proposal, and that the inflexible attitude of the Company contributed nothing to the success of the negotiations. But the statutory right to decline to make a concession includes the right to firmly stand on a proposal previously made and not accepted.
In our opinion, the matter resolves itself into purely a question of hard bargaining on the part of the respondent. It is not for the Board or the Court to determine what in their opinion the respondent should have agreed to, and, in effect, make the contract for the parties. To decree enforcement of the order, would, as a practical matter, force the respondent to make a concession or be proceeded against for contempt of court. While the Act compels negotiations, which usually result in reaching an agreement, it contains no authority to force an agreement where the parties have reached an impasse. N. L. R. B. v. American Nat. Ins. Co., supra; N. L. R. B. v. Landis Tool Co., 3 Cir., 193 F.2d 279; N. L. R. B. v. Norfolk Shipbuilding & Drydock Corp., 4 Cir., 195 F.2d 632.
219 F.2d at 125-26. See also Fetzer Television, Inc. v. NLRB, 317 F.2d 420 (6th Cir. 1963).
As the Fifth Circuit succinctly observed:
If the insistence is genuinely and sincerely held, if it is not mere window dressing, it may be maintained forever though it produce a stalemate. Deep conviction, firmly held and from which no withdrawal will be made, may be more than the traditional opening gambit of a labor controversy. It may be both the right of the citizen and essential to our economic legal system . of free collective bargaining.
NLRB v. Herman Sausage Co., 275 F.2d 229, 231 (5th Cir. 1960).
Contrary to the trial judge's conclusion, the very facts relied upon by him in his opinion illustrate a classic case of collective bargaining in which the reserve system was a central issue. It is apparent from those very findings that the NHLPA used every form of negotiating pressure it could muster. It developed an alternate reserve system and secured tentative agreement from the owner and player representatives, only to have the proposal rejected by the players. It refused to attend a proposed meeting with the owners to discuss the reserve system further. It threatened to strike. It threatened to commence an antitrust suit and to recommend that the players not attend training camp.
For its part, the NHL, while not budging in its insistence upon By-Law Section 9A, at least in the absence of any satisfactory counter proposal by the players, yielded significantly on other issues. It agreed as a price of By-Law Section 9A to the inclusion in the collective bargaining agreement of a provision that the entire agreement could be voided if the NHL and the World Hockey Association should merge. The undisputed reason for this provision was player concern that with a merger of the two leagues, the reserve system would be rendered too onerous because the players would, by the merger, lose the competitive advantage of threatening to move to the WHA. Likewise, the NHL team owners obtained a provision voiding the entire agreement should the reserve system be invalidated by the courts.
The trial court, while acknowledging that the new collective bargaining agreement contained significant new benefits to the players, held that they were not "direct ly related to collective bargaining on bylaw 9A." This observation and the trial court's conclusion that "the NHLPA never bargained for bylaw 9A in the first instance" typifies its approach. It is true that the NHLPA did not "bargain for" By-Law Section 9A; it bargained "against" it, vigorously. That the trial judge concluded the benefits in the new contract were wrung from management by threat of an antitrust suit to void the By-Law merely demonstrates that the benefits were bargained for in connection with the reserve system, although he opined that the threat of a suit was a more effective bargaining tool than the threat of a strike. And while we agree with the trial judge that inclusion of language in the collective bargaining agreement that the reserve system provisions .were "fair and reasonable" would not immunize it from antitrust attack, it is manifest from the entire facts found by the court that there was no collusion between management and the players association. Thus, the trial court found that "[t]he NHLPA agreed to include bylaw 9A in the collective bargaining agreement only after the NHL conceded that the NHLPA could terminate the entire agreement if the NHL merged with the World Hockey Association." 460 F.Supp. at 911. The trial court also credited the testimony of John Ziegler that "the owners took a strong stand toward equalization, that they believed bylaw 9A was fair, and that they wanted it incorporated into the collective bargaining agreement. . . . " Finally, the trial court found that "[t]he NHLPA's acceptance of bylaw 9A was essential to get the parties off dead center. The players had no other alternative. The Standard Player's Contract required them to accept all the bylaws adopted by the NHL." 460 F.Supp. at 911.
From the express findings of the trial court, fully supported by the record, it is apparent that the inclusion of the reserve system in the collective bargaining agreement was the product of good faith, arm's-length bargaining, and that what the trial cpurt saw as a failure to negotiate was in fact simply the failure to succeed, after the most intensive negotiations, in keeping an unwanted provision out of the contract. This failure was a part of and not apart from the collective bargaining process, a process which achieved its ultimate objective of an agreement accepted by the parties.
V. CONCLUSION
Assuming without deciding that the reserve system incorporated in the collective bargaining agreement was otherwise subject to the antitrust laws, whether the good faith, arm's-length requirement necessary to entitle it to the non-statutory labor exemption from the antitrust laws applies is to be governed by the developed standards of law applicable elsewhere in the field of labor law and as set forth in Mackey, supra. So viewed, the evidence here, as credited by the trial court, compels the conclusion that the reserve system was incorporated in the agreement as a result of good faith, arm's-length bargaining between the parties. As such it is entitled to the exemption, and the trial court's conclusion to the contrary must be deemed clearly erroneous.
The injunction is vacated, and the cause remanded for entry of judgment in favor of defendants upon Count I of the complaint. The cause is also remanded for further proceedings not inconsistent herewith.
No costs.
APPENDIX A
NATIONAL HOCKEY LEAGUE BY-LAW SECTION 9A
FREE AGENTS AND EQUALIZATION
(Adopted November 27, 1973)
Free Agents
9A. 1. A player who becomes a "free agent" pursuant to subsections 2 or 3 of this By-Law shall have the right to negotiate and contract with any Member Club or with any club in any other league.
9A. 2. A player who enters into a 1974 Form Standard Player's contract shall have the right to become a free agent in accordance with the terms of Section 17 of said contract and in accordance with the Player's Option contract to which said Section 17 refers.
9A. 3. Any other player under contract to any Member Club on the date this ByLaw is adopted, the final year of whose contract ends on or after September 30, 1974, shall become a free agent on June 1 of the final year of that contract, except that any such player whose contract is a 1972 Form Standard Player's contract whose final year ends on September 30, 1974, shall become a free agent on June 1, 1975. For purposes of this subsection 3, the "final year" of a contract shall be the last year of its fixed term specified in Section 1 of said contract, including, however, any period added to that term by any addendum or exercised special option contracted for by the Member Club and player.
9A. 4. The foregoing subsection 3 shall not be construed to derogate in any way from the rights of any player under any contract but constitutes instead a waiver of any and all rights by each Member Club under the contracts to which said subsection is applicable to require the services of players for periods beyond those set out in said subsection.
Free Agent List
9A. 5. On or before May 15 in each year each Member Club shall deliver to the President a report in writing, by TWX, telegram or by mail, (which report shall remain confidential until the issuance of the Free Agent List described below), setting forth the name of each player under contract to it who, unless signed to a new contract with said Club prior to June 1 of that year, will become a free agent as of that date. Each Member Club shall also furnish to the President after May 15 of such year, by immediate TWX or telegram, information as to any change of status of any such player. The President shall, on June 1 of such year, issue to all Member Clubs a Free Agent List setting forth the names of all players he finds to be free agents as of such date, together with the name of the Member Club with which each such player was last under contract, and shall thereafter promptly issue such bulletins correcting, amending, or updating such list as may be necessary to ensure its accuracy and currency. Except during a period that a player's name remains on the Free Agent List, no Member Club other than the Club with which he was last under contract may sign a contract or negotiate with such player, directly or indirectly, without the prior written consent of the Member Club with which he was last under contract, or otherwise take any action which would violate Section 15 of these By-Laws.
Obligation to make equalization payment
9A. 6. Each time that a player becomes a free agent and the right to his services is subsequently acquired by any Member Club other than the club with which he was last under contract or by any club owned or controlled by any such Member Club, the Member Club first acquiring the right to his services, or owning or controlling the club first acquiring that right, shall make an equalization payment to the Member Club with which such player was previously under contract, as prescribed by subsection 8 of this By-Law. Each Member Club may acquire the right to the services of as many free agents as it wishes, subject to the provisions of subsection 9 of this By-Law.
Determination of Equalization Payment Purpose
9A. 7. The purpose of the equalization payment shall be to compensate a player's previous Member Club fairly for loss of the right to his services when that player becomes a free agent and the right to his services is acquired by another Member Club or a club owned or controlled by another Member club.
Procedure
9A. 8. (a) The Member Club acquiring the services of a free agent, or owning or controlling the club ac quiring such services, shall immediately notify the player's previous Member Club and the President of that fact by TWX or telegram. The equalization payment shall be determined, if possible, by mutual agreement of the two Member Clubs involved. If no such agreement is reached within three business days after the date on which the player's services are acquired, each of the Member Clubs involved shall within two additional business days submit by TWX or telegram its proposal for an equalization payment to a neutral arbitrator selected from time to time by majority vote of the Board of Governors of the League.
9A. 8. (b) Within two business days after the deadline for receipt of the Clubs' proposals, the arbitrator shall, unless notified by both Clubs in writing, by TWX or by telegram that they have reached agreement on the equalization payment, select without change one of the proposals submitted to him, and his determination shall be final and not subject to review.
9A. 8. (c) The Clubs' proposals and the arbitrator's determination of equalization must be limited to:—
(i) the assignment of a contract or contracts for the services of a player or players binding upon such player or players for at least the next season; and/or
(ii) choices in any intra-league, inter-league and/or amateur drafts to be held at any time subsequent to such proposal and/or unsigned draft choices or negotiation nominees; and/or
(iii) cash.
In making his selection the arbitrator shall be governed by the policy that cash shall be used for equalization purpose only as a last resort.
9A. 8. (d) The contracts of all players under contract to the acquiring Club at the time a free agent is acquired shall be available for equalization purposes.
9A. 8. (e) The cost of the arbitrator shall be borne by the League.
9A. 8. (f) To facilitate a good faith effort to reach agreement on the equalization payment, the acquiring Club shall furnish to the Club entitled to that payment such information as may reasonably be required with respect to any player the assignment of whose contract is proposed by either party as an equalization payment, in whole or in part, including, but not limited to, the salary, bonus, and other compensation of such player, a copy of. the player's contract, and any adverse information with respect to the physical, mental, or emotional condition of such player.
9A. 8. (g) The details of the procedure to be followed in the event arbitration is required shall be set forth in the agreement entered into by the League and the arbitrator.
Satisfaction of Equalization Obligation
9A. 9. No Member Club, or any club owned or controlled by such Member Club, shall be entitled to sign or acquire the right to the services of any free agent until it has satisfied in full its equalization obligation under these By-Laws as to each other free agent, the right to whose services it has acquired, by assigning the player contracts and/or draft rights and otherwise consummating the equalization payment required by mutual agreement or by arbitration. It shall be the responsibility of the acquiring Club to notify the President that it has satisfied its equalization obligation.
9A. 10. The President shall disallow the right of any acquiring Member Club to use the services of any signed free agent if he has not received the notice specified in sub section 9 or otherwise finds that the equalization payment for that player or for any other free agent previously signed has not been fully satisfied by said Member Club in accordance with this By-Law.
. Mr. Ziegler, the President of the National Hockey League, testified concerning the objectives the National Hockey League's version of the reserve system is designed to serve. According to Ziegler, the reserve system prevents deterioration in competitive balance among the NHL teams, thereby allowing the presentation of an attractive form of competitive entertainment. We note, however, the effectiveness of a reserve system in preserving competitive athletic balance depends in great measure upon its restraint of the free market forces that would otherwise control player movement within the sports league. Historically and continuing to the present day, professional sports leagues have employed various forms of the reserve system. See, e. g., Flood v. Kuhn, 407 U.S. 258, 259 n. 1, 92 S.Ct. 2099, 32 L.Ed.2d 728 (1972) (baseball); Smith v. Pro-football, Inc., 193 U.S.App.D.C. 19, 593 F.2d 1173 (1978) (football); and Robertson v. National Basketball Ass'n., 389 F.Supp. 867, 874 (S.D.N.Y.1975) (basketball).
. Paragraph 17 describes a player's rights and duties upon the expiration of the term of his contract. In relevant part, Paragraph 17 states:
(a) The Club may no later than August 10th of the final year of this contract, tender the Player a Player's Termination Contract and notify him that he has the choice of executing said Player's Termination Contract and delivering it to the Club on or before September 10th of that year or automatically being unconditionally released from any further obligation to provide services under this contract as of midnight, September 10th of that year. The Player's Termination Contract shall be on the same terms and conditions as this contract except that it shall be for only one additional season at the Player's previous year's salary and shall provide for the Player's unconditional release from any further obligation to provide services under said Player's Termination Contract effective the following June 1st.
(b) If the Club does not take the action permitted under subsection(a), it shall no later than September 1st of the final year of this contract (August 10th if the Player is a "protected" player or played at least fifty NHL games in the preceding season), tender the Player a new Standard Player's Contract upon the same terms and conditions (including this Section 17) as this Standard Player's Contract except that salary and the number of years of its fixed term may be different.
(c) Without regard to any action taken by the Club under subsections (a) or (b), the Player may notify the Club no later than September 10th of the final year of this contract that he wishes to sign a Player's Option Contract. If the Player gives such notice, the Club shall no later than September 25th of that year tender the Player a Player's Option Contract, and the Player shall forthwith enter into said contract. The Player's Option Contract shall be on the same terms and conditions as this contract except that it shall be for only one additional season at the Player's previous year's salary and shall provide that effective the following June 1st the Player will be a free agent, without any further obligation to provide services under said Player's Option Contract, and as such will have the right, as provided by Section 9A of the League By-Laws, the text of which Section is printed on the reverse side hereof, to negotiate and contract with any club in the League, or with any other club.
(d) If the Club does not take the action permitted under subsection (a) and the Player does not give notice to the Club in accordance with subsection (c), then the parties shall enter into a new Standard Player's Contract by mutual agreement or, failing such agreement, the parties shall enter into a new one-year Standard Player's Contract for the succeeding season upon the same terms and conditions (including this Section 17) as this Standard Player's Contract, except as to salary, which shall be determined by neutral arbitration under the applicable collective bargaining agreement providing a mechanism for such arbitration, provided, however, that if no such collective bargaining agreement is then in effect, the Player's salary shall be the same as his salary for the previous year. Paragraph 18 goes further. By Paragraph 18,
the parties "mutually promise and agree to be legally bound by the Constitution and By-Laws of the League and by all the terms and provisions thereof . .
. Section 9.03, in part, provides:
(a) Each hockey player employed by each Club in the National Hockey League shall enter into the form of Standard Players Contract, . . hereby recognized as valid and binding.
(b) The Association, recognizing that the Clubs have entered into this Agreement in reliance on Section 9.03(a), represents that it has been duly authorized to collectively agree to paragraph 17 of the Standard Players Contract . . and to the applicability of the provisions of Section 9A of the National Hockey League By-Laws as fair and reasonable terms of employment
The Association hereby so agrees in its capacity as the exclusive bargaining representative of hockey players in the National Hockey League under this Agreement.
. McCourt has claimed that the Red Wings admitted that his contract included an unwritten understanding with the club that he would not be involuntarily traded. Nevertheless, his contract provided, in Paragraph 11:
It is mutually agreed that the Club shall have the right to sell, assign, exchange and transfer this contract, and to loan the Player's services to any other professional hockey club, and the Player agrees to accept and be bound by such sale, exchange, assignment, transfer or loan, and will faithfully perform and carry out this contract with the same purpose and effect as if it had been entered into by the Player and such other Club .
If the Player fails to report to such other Club he may be suspended by such other club and no salary shall be payable to him during the period of such suspension .
The testimony was that such side agreements were not infrequent, but that any contract which formally incorporates a no-trade provision would automatically be rejected by the Commissioner. This is obviously true, since By-Law Section 9A.8(d), incorporated in McCourt's contract by Paragraphs 17 and 18, specifically provided that the contracts of all players under an acquiring club at the time a free agent is acquired shall be available for equalization purposes. The breach of contract counts have not as yet been decided below or appealed to this court.
. Three other counts in the complaint asserting state contract and antitrust claims and one count alleging a violation of the U.S. Arbitration Act, 9 U.S.C. § 1 et seq. (1976), are not the subject of this appeal.
. The defendants brought this appeal from the issuance of the preliminary injunction. Following oral argument, the parties filed a stipulation stating:
It is hereby stipulated by and between all the parties to this action: (1) that all parties waive their rights to a trial on the merits of this action as to Count I of plaintiffs Complaint; (2) that the record and the oral and
written findings of fact and conclusions of law now before this Court, which were developed at the hearing on plaintiffs motion for preliminary injunction, shall be deemed to constitute the final record and findings of fact and conclusions of law after a trial on the merits as- to such Count I; (3) that the appeals filed by defendants under 28 U.S.C. § 1292(a)(1) from the order granting a preliminary injunction may be treated by this Court as appeals, under 28 U.S.C. § 1291, from a final decision of the District Court and (4) that plaintiff may renew his remaining claims following this appeal.
. Jacobs and Winter, in Antitrust Principles and Collective Bargaining by Athletes: Of Superstars in Peonage, 81 Yale L.J. 1 (1971), strongly suggest that the antitrust issue is altogether irrelevant in considering the validity of the reserve system. This article and its conclusion were specifically noted, without comment, by Mr. Justice Blackmun in Flood v. Kuhn, supra. In Radovich v. National Football League, 352 U.S. 445, 77 S.Ct. 390, 1 L.Ed.2d 456 (1957), the Supreme Court reversed the dismissal of a complaint charging Sherman Act violations by the National Football League and in so doing held that a complaint by a former guard on the Detroit Lions team charging that the National Football League had boycotted him and prevented him from becoming a player-coach in the Pacific Coast League, adequately stated a cause of action under the antitrust laws. A majority of the Court made it clear that while Radovich was entitled to an opportunity to prove his charges, it expressed no opinion as to whether or not the respondents had in fact violated the antitrust laws. The precise language of the reserve system provisions does not appear to have been considered by the Supreme Court in Radovich, its emphasis rather having been to hold that its prior decisions relating to the game of baseball did not invariably apply to all team sports. Lower court activity has almost uniformly indicated that the restraints of the reserve system in sports other than baseball amount to a type of group boycott against a player who desires to sell his professional athletic services to another team after having earlier been engaged by a competing team. See, e.g., Smith, supra, 593 F.2d at 1177-1181; Mackey, supra, 543 F.2d at 618-22; Robertson, supra, 389 F.Supp. at 893; Kapp v. National Football League, 390 F.Supp. 73, 80-83 (N.D.Cal.1974), aff'd in part and appeal dismissed in part as moot, 586 F.2d 644 (9th Cir. 1978), cert. denied, - U.S. -, 99 S.Ct. 1996, 60 L.Ed.2d 375 (1979); Denver Rockets v. All-Pro Management, Inc., 325 F.Supp. 1049, 1056-57 (C.D.Cal.1971), injunction reinstated sub nom. Haywood v. National Basketball Ass'n., 401 U.S. 1204, 91 S.Ct. 672, 28 L.Ed.2d 206 (Douglas, J., in chambers, 1971). See generally 7 J. O. Von Kalinowski, Antitrust Law and Trade Regulation, § 50.01 et seq. (1978).
. Indeed, the most logical third party to complain about the reserve system, the World Hockey Association, expressly accepted this system in a settlement to the litigation which produced Philadelphia World Hockey Club, Inc. v. Philadelphia Hockey Club, Inc., 351 F.Supp. 462 (E.D.Pa.1972).
. Section 8(d) of the National Labor Relations Act, 29 U.S.C. § 158(d), describes good faith collective bargaining and makes it clear that the Act does not compél either party to alter its initial stance on an issue. Section 8(d), in relevant part, states:
(d) For the purposes of this section, to bargain collectively is the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment, or the negotiation of an agreement, or any question arising thereunder, and the execution of a written contract incorporating any agreement reached if requested by either party, but such obligation does not compel either party to agree to a proposal or require the making of a concession . . . (emphasis added).
. Other circuits have reached the same conclusions. NLRB v. Almeida Bus Lines, Inc., 333 F.2d 729 (1st Cir. 1964); NLRB v. Landis Tool Co., 193 F.2d 279 (3rd Cir. 1952); NLRB v. Norfolk Shipbuilding & Drydock Corp., 195 F.2d 632 (4th Cir. 1952); Chevron Oil Co. v. NLRB, 442 F.2d 1067 (5th Cir. 1971); Wal-Lite Div. of United States Gypsum Co. v. NLRB, 484 F.2d 108 (8th Cir. 1973); NLRB v. MacMillan Ring-Free Oil Co., 394 F.2d 26 (9th Cir.), cert. denied, 393 U.S. 914, 89 S.Ct. 237, 21 L.Ed.2d 199 (1968); NLRB v. Torneo Communications, Inc., 567 F.2d 871 (9th Cir. 1978).
. Since the NHLPA represented 100% of the players, such action would have a profound effect, and thereby, the threat must have carried substantial weight.
. Mr. Eagleson, the Executive Director of the NHLPA, testified that the union agreed to the provisions of By-Law Section 9A in return for many player benefits. In addition to the benefits described in the district judge's opinion, our review of the record indicates that the players bargained for substantial benefits: (1) increased pension benefits; (2) increased bonus money to players on teams finishing high in their divisions and participating in the Stanley Cup Playoffs; (3) sharing with the owners receipts from international hockey games; (4) greater salary continuation for players injured as a result of playing hockey; (5) increased training camp expense allowances; (6) modification of NHL waiver procedures; and (7) modification in scheduling of games and travel during the season.
. The collective bargaining agreement, Sections 9.03(c) and (e), provides that:
(c) It is expressly understood that if the National Hockey League enters into an agreement to merge with the World Hockey Association, the National Hockey League Players Association shall forthwith be entitled to terminate either this entire agreement, or its agreement contained in this Section 9.03 with respect to the said paragraph 17, and the said Section 9A upon written notice to the Clubs within 15 days after notice of said agreement to merge. If the Association elects to terminate as provided in the preceding sentence, the subjects covered by the said termination shall then be reopened for collective bargaining at the request of either party.
(e) The parties hereto recognize that recent court decisions affecting professional sports other than hockey, may give rise to uncertainty as to whether the provisions of Paragraph 17 of the Standard Players Contract . . . and Section 9A of the National Hockey League By-Laws are lawful subjects of collective bargaining. The Association further recognizes that the provisions of this agreement beneficial to the Association and the [sic] the players were entered into by both parties in the good faith belief that sub-paragraphs (a) and (b) above are lawful subjects of collective bargaining and are valid, and that the Clubs agreed to said beneficial provisions in reliance thereon. In the event of a final judicial determination not subject to appeal that Paragraph 17 of the Standard Players Contract . or Section 9A of the National Hockey League By-Laws are not lawful subjects of collective bargaining or are otherwise invalid, the Clubs may within 30 days thereafter terminate this Collective Bargaining Agreement upon written notice to the Association. If the Clubs elect to terminate as provided in the preceding sentence the parties shall promptly thereafter commence collective bargaining negotiations in an effort to arrive at a new collective bargaining agreement.