Opinion ID: 6933483
Heading Depth: 2
Heading Rank: 1

Heading: The Players’ Antitrust Claim and the NBA Teams’ Defense

Text: The gravamen of the Players’ claim is not that the College Draft, Right of First Refusal, or Revenue Sharing/Salary Cap System result in a restraint on competition unique to those provisions (although they discuss the restrictiveness of those particular provisions with regard to the Rule of Reason issue). Rather, the vice on which their claim relies is that the NBA Teams have agreed jointly to impose these provisions as terms and conditions of employment pending agreement on a new CBA. Their “main point” is that “these are naked restraints between competitors; they prevent competition; they fix prices; they suppress salaries.” Appellants’ Brief at 11. At oral argument, counsel for the Players stated that the “underlying offense” is that “horizontal competitors for labor have entered into what is essentially a price-fixing agreement.” Although the Players concede that employers may act jointly with regard to terms of employment where a particular union agrees to those terms, see Wood v. National Basketball Ass’n, 809 F.2d 954 (2d Cir.1987), they dispute the legality of any joint conduct going beyond proposals to that union. Logically, the Players’ position is that multiemployer groups should be barred from insisting upon, or using economic force to obtain, the desired terms of employment. Therefore, by acting collectively to impose terms of employment after expiration of the CBA, the NBA Teams are, in the Players’ view, acting as a cartel and committing a per se violation of the Sherman Act. See Appellants’ Brief at 39 (characterizing the disputed provisions as “naked agreements among competitors designed ... to fix ... labor costs”). They might add, moreover, that the cartel’s decision is enforced by a joint boycott — that is, a failure by a Team to abide by the cartel’s rules would result in sanctions imposed by the NBA, including perhaps expulsion from the league — another per se violation. The claim is fashioned to rely upon classic principles of antitrust law. Absent justification under the Rule of Reason or some defense, employers who compete for labor may not agree among themselves to purchase that labor only on certain specified terms and conditions, see Anderson v. Shipowners’Ass’n, 272 U.S. 359, 47 S.Ct. 125, 71 L.Ed. 298 (1926), and such a cartel may not enforce its will through an agreement to boycott those who do not abide by its rules, see Eastern States Retail Lumber Dealers’ Ass’n v. United States, 234 U.S. 600, 34 S.Ct. 951, 58 L.Ed. 1490 (1914). Such conduct would be per se illegal. The Players’ claim does limit the application of normal antitrust principles in recognition that some accommodation must be made to labor law. For example, if the NBA Teams are a naked price (wage)-fixing cartel as the per se claim asserts, there would be no reason to allow them even to discuss prices (wages). See Arizona v. Maricopa County Medical Soc’y, 457 U.S. 332, 362, 102 S.Ct. 2466, 2482, 73 L.Ed.2d 48 (1982) (“a per se price-fixing agreement meriting condemnation ... is a naked restraint of trade with no purpose except stifling of competition”). At oral argument, appellants took the position that the NBA Teams may consult over and “suggest,” but not “impose,” terms and conditions of employment pending a new CBA. In their view, consultation and proposal are protected by the so-called nonstatutory antitrust exemption, whereas the imposition of terms, or, logically, insistence upon them, is subject to antitrust sanctions. However, because the NBA Teams are simply maintaining the status quo under the expired 1988 CBA, the question arises as to what terms and conditions of employment should govern the parties’ relationship until a. new CBA is reached if maintenance of the status quo is an antitrust violation. For lack of any discernible alternative, we conclude that the Players’ answer must be that the Players’ Association will impose those terms and conditions. The NBA’s defense is a two-fold, alternative response: (i) the Players’ antitrust claim is entirely trumped by the legislative scheme governing labor relations and collective bargaining, see Powell v. National Football League, 930 F.2d 1293 (8th Cir.1989), cert. denied, 498 U.S. 1040, 111 S.Ct. 711, 112 L.Ed.2d 700 (1991), in particular by the protection afforded multiemployer bargaining by that scheme, see NLRB v. Truck Drivers Local Union No. 449 (“Buffalo Linen”), 353 U.S. 87, 77 S.Ct. 643, 1 L.Ed.2d 676 (1957); and (ii) even if the antitrust laws do apply, the College Draft, Right of First Refusal, and Revenue Sharing/Salary Cap provisions survive scrutiny under the Rule of Reason because the efficiencies these provisions afford in the way of competitive athletic balance among NBA teams outweigh their effect on competition for the services of the Players, see NCAA v. Board of Regents, 468 U.S. 85, 117, 119-20, 104 S.Ct. 2948, 2968, 2969-70, 82 L.Ed.2d 70 (1984). We conclude as follows. Relevant legal authority, including importantly the lack thereof, strongly suggests that the antitrust laws do not prohibit employers from acting jointly in bargaining with a common union. Multiemployer bargaining was commonplace and essentially unchallenged — despite the existence of the antitrust laws — long before the passage of the federal labor laws. The labor laws, moreover, embody a conscious congressional decision to permit multiemployer organizations to bargain hard and use economic force to resolve disputes with unions over terms and conditions of employment. Because the Players’ position appears to be inconsistent with the approach taken under the antitrust laws regardless of labor law and, in any event, collides head-on with the labor laws’ endorsement of multiemployer collective bargaining, we conclude that the Players’ claim must fail. We need not, therefore, address the various arguments pro and con regarding the Rule of Reason.