NOTES - Stetson University · a previous year, attended an NFL training camp, but played in less...

* B.S., Accounting, Arizona State University, magna cum laude, 1992; J.D., Stet-son University College of Law, expected May 1998.

This Note is dedicated to the two women who have contributed more to my lifethan I can ever thank them for. First, to my wife Becky, whose love and encouragementsustain me in all that I do. And, in loving memory of my mother, Linda Sue Jensen,whose courage and determination taught me that anything is truly possible. I would liketo thank Professor Darryl C. Wilson and Jolee Land for their invaluable guidance andassistance with this Note. I would like to thank the editors of the Stetson Law Reviewfor all of their efforts on my behalf. Additionally, I extend a special thanks to CurtMurtha for his assistance with this Note.

1. See Ethan Lock, The Scope of the Labor Exemption in Professional Sports, 1989DUKE L.J. 339, 339 (citing 1982 Collective-bargaining Agreement Between the NationalFootball League Management Council and the National Football League Players Associa-tion art. XXXVIII (Dec. 11, 1982) [“1982 Collective-bargaining Agreement”]).

2. See Lock, supra note 1, at 339.

NOTES

BROWN v. PRO FOOTBALL, INC.: AT THEINTERSECTION OF ANTITRUST AND LABORLAW, SUPREME COURT'S DECISION GIVESMANAGEMENT THE GREEN LIGHT

Joseph Covelli*

INTRODUCTION

In August 1987, one of the most significant events in profes-sional sports occurred: the 1982 collective-bargaining agreementbetween the National Football League (NFL) and the NFL PlayersAssociation (NFLPA or Players Association) expired.1 Both the NFLand NFLPA anticipated extended negotiations over a new agree-ment.2 What ensued was five years of strained relations and a hostof litigation brought by the players against the NFL and its member

258 Stetson Law Review [Vol. XXVII

3. See, e.g., Powell v. National Football League, 930 F.2d 1293 (8th Cir. 1989);White v. National Football League, 822 F. Supp. 1389 (D. Minn. 1993); Jackson v. Na-tional Football League, 802 F. Supp. 226 (D. Minn. 1992).

4. See, e.g., Powell, 930 F.2d at 1293; White, 822 F. Supp. at 1389; Jackson, 802F. Supp. at 226.

5. See, e.g., Powell, 930 F.2d at 1293; White, 822 F. Supp. at 1389; Jackson, 802F. Supp. at 226.

6. See, e.g., Brown v. Pro Football, Inc., 116 S. Ct. 2116, 2119 (1996); Powell, 930F.2d at 1298–99.

7. See Powell, 930 F.2d at 1293, 1304 (holding that exemption from the antitrustlaws exist in a collective-bargaining relationship beyond impasse); cf. Mackey v. NationalFootball League, 543 F.2d 606, 615–16 (8th Cir. 1976) (holding that the nonstatutorylabor exemption did not protect mandatory terms of employment imposed by manage-ment during the collective-bargaining process); Bridgeman v. National Basketball Ass'n,675 F. Supp. 960, 964 & n.4 (D.N.J. 1987).

8. See Bridgeman, 675 F. Supp. at 967. In addition to the expiration of the Na-tional Football League Collective-bargaining Agreement, the National BasketballAssociation's 1983 Collective-bargaining Agreement expired in 1987. See id. at 963; Lock,supra note 1, at 339. The decision in Bridgeman led the way to a consideration ofwhether to extend or terminate the nonstatutory labor exemption at several points dur-ing the collective-bargaining process. See, e.g., Brown v. Pro Football, Inc., 116 S. Ct.2116, 2119 (1996); Powell v. National Football League, 930 F.2d 1293, 1299 (8th Cir.1989).

clubs.3 The majority of the litigation concerned antitrust suits cen-tered on player restraints contained in the expired collective-bar-gaining agreement.4 In each antitrust suit, the Players Associationclaimed that the continuance of the player restraints contained inthe expired collective-bargaining agreement violated section 1 of theSherman Act.5

In most cases, the courts found that the judicially created non-statutory labor exemption from the antitrust laws shielded the own-ers from antitrust suits against the challenged player restraints.6

However, the courts struggled with determining when thenonstatutory labor exemption ceased to protect the challenged play-er restraint contained in the collective-bargaining agreement afterthe collective-bargaining agreement expired.7 The courts developedseveral deadlines at which point the nonstatutory labor exemptionwas deemed to expire. In one of the first cases addressing this issue,the court considered expiration of the nonstatutory labor exemptionat the point of impasse. However, the ultimate holding extended thenonstatutory labor exemption to the point when the employer ceasesto reasonably believe that the player restraint, or a close variant ofthe restraint, would be incorporated in the next collective-bargain-ing agreement.8 Finding this logic unpersuasive, later decisions

1997] Brown v. Pro Football, Inc. 259

9. See Powell, 930 F.2d at 1304.10. 116 S. Ct. 2116 (1996).11. See id. at 2127.

found that the nonstatutory labor exemption continued indefinitelybeyond impasse.9 Finally, in 1996, the Supreme Court addressed theissue in Brown v. Pro Football, Inc.,10 finding that the nonstatutorylabor exemption continued beyond impasse. Accordingly, it held thatthe exemption applied to terms that were not previously includedbut that were mandatory subjects of the collective-bargaining pro-cess.11

The ultimate effect of the Supreme Court decision in Brownstrengthens the position of employers involved in the collective-bar-gaining process with unions. Furthermore, the decision may havedrastic effects on unions' ability to represent employees by requiringdecertification of the union to bring antitrust suits against employ-ers for terms imposed, but not consented to, by the employees. ThisNote will address these issues, and then suggest an approach betteraimed at aiding the process of collective-bargaining and harmoniz-ing the intersection of antitrust law and labor law than was theCourt's decision in Brown.

The facts of Brown present an interesting backdrop for the dis-cussion of the appropriate application of the nonstatutory labor ex-emption to professional sports and will be discussed in Part I of thisNote. The history of antitrust law and the labor exemption in thecontext of professional sports is extensive and is discussed in Part IIof this Note. Part III continues the discussion of the history of thelabor exemption and antitrust laws by exploring the courts' applica-tion of the nonstatutory labor exemption to the antitrust laws in thecontext of expired collective-bargaining agreements. Part IV dis-cusses the Brown Court's analysis. Part V criticizes the Brown deci-sion, not only because it may require union decertification, but alsobecause of its effect on the wages of all union employees. Finally,Part VI of this Note recommends the adoption of a rule limiting theextension of the labor exemption in professional sports to the termsof employment contained in the collective-bargaining agreement.


12. At the time of the lawsuit, the National Football League was comprised of 28football clubs, including the Atlanta Falcons, Buffalo Bills, Chicago Bears, CincinnatiBengals, Cleveland Browns, Dallas Cowboys, Denver Broncos, Detroit Lions, Green BayPackers, Houston Oilers, Indianapolis Colts, Kansas City Chiefs, Los Angeles Raiders,Los Angeles Rams, Miami Dolphins, Minnesota Vikings, New England Patriots, New Or-leans Saints, New York Giants, New York Jets, Philadelphia Eagles, Phoenix Cardinals,Pittsburgh Steelers, San Diego Chargers, San Francisco Forty-Niners, Seattle Seahawks,Tampa Bay Buccaneers, and Washington Redskins. See Brown v. Pro Football, Inc., 50F.3d 1041, 1041 (D.C. Cir. 1995), aff'd, 116 S. Ct. 2116 (1996). During 1994, the NFLexpanded, creating teams in Jacksonville, Florida (the Jacksonville Jaguars) and Char-lotte, North Carolina (the Carolina Panthers). See Jarrett Bell, Jacksonville JaguarsMake Jump to NFL, USA TODAY, Dec. 1, 1993, at 1A, available in LEXIS, News Library,papers file. Neither team was named in the action. In addition, since the original filingof the action, the Los Angeles Rams football operations have relocated to St. Louis,Missouri, and the Los Angeles Raiders' football operations have returned to Oakland,California. See NFL Owners Approve Raiders Move, WORLD NEWS DIG., Aug. 3, 1995, atB1, available in LEXIS, News Library, papers file.

13. The NFLPA is a labor union and the players' collective-bargaining represen-tative. See Brown v. Pro Football, Inc., 782 F. Supp. 125, 129 (D.D.C. 1991), rev'd, 50F.3d 1041 (D.C. Cir. 1995), aff'd, 116 S. Ct. 2116 (1996).

14. See Brown, 116 S. Ct. at 2119. The previous collective-bargaining agreementbetween the NFL and the NFLPA covering all aspects of professional football player em-ployment started in 1982 and expired in August 1987. See Brown, 782 F. Supp. at 129.

15. See Brown, 50 F.3d at 1046.16. See Brown, 116 S. Ct. at 2119.17. See Brown, 50 F.3d at 1046.18. See id. First-year free agents were defined by the NFL as those players who, in

a previous year, attended an NFL training camp, but played in less than three regular-season NFL contests. See id. at n.1.

PART I: FACTS OF BROWN v. PRO FOOTBALL, INC.

In 1987, the NFL12 and the NFLPA13 began negotiating a newcollective-bargaining agreement.14 During negotiations, the NFLconsidered changing the existing system governing players on theNFL clubs' injured-reserve lists.15 The NFL adopted a proposedamendment to the NFL Constitution, known as Resolution G-2, atits annual meeting in March 1989.16 This resolution altered theinjured-reserve rules by creating a developmental squad for eachclub.17

Under Resolution G-2, the developmental squad plan, each NFLteam was permitted to sign up to six rookie or first-year players toservice contracts for the 1989 season.18 Under the terms of theplayer contracts, developmental squad players were permitted topractice with regular NFL players and replace regular players whobecame injured, but otherwise, squad players did not play in


19. See Brown, 116 S. Ct. at 2119.20. See Brown, 50 F.3d at 1046. Despite calling for a fixed salary for developmental

squad players, Resolution G-2 was silent about the amount of the fixed salary. See id.21. See id.22. See id. Following the NFL's adoption of Resolution G-2, a series of futile

communications and events transpired between representatives of the NFL ManagementCouncil (NFLMC) and the NFLPA over the terms and conditions of the developmentalsquad plan as follows: On April 7, 1989, following adoption by the NFL of Resolution G-2, Jack M. Donlan, Executive Director of the NFL Management Council, sent a letter toEugene Upshaw, President of the NFLPA, suggesting an April meeting to negotiate thecontract terms relevant to developmental squad players. See Brown, 782 F. Supp. at 127.On April 29, 1989, James A. Conway, Assistant Executive Director and General Counselof the NFLMC, wrote a letter to Richard E. Berthelson of the NFLPA, similarly request-ing a meeting to discuss conditions applicable to developmental squad players. See id.On May 17, 1989, the Executive Committee of the NFLMC set developmental squadplayers' salaries at $1000 per week. See id.

On May 18, 1989, Donlan again wrote to Upshaw requesting a meeting to dis-cuss the contract terms relevant to the developmental squad players and proposing tomodify the expired 1982 Collective-Bargaining Agreement to allow for a fixed salary of$1000 per week for developmental squad players. See id. at 128. On May 30, 1989,Upshaw responded to Donlan demanding the right for the developmental squad playersto negotiate their own salaries. See id. On June 16, 1989, Donlan informed an NFLcommittee that the NFLPA would not agree to the developmental squad plan and thatnegotiations over the developmental squad plan were at an impasse. See id.

On June 30, 1989, Donlan sent a draft of the proposed contract for the develop-mental squad players to Upshaw and suggested a meeting in July. See Brown, 782 F.Supp. at 128. On July 6, 1989, Upshaw responded, unequivocally stating the NFLPA'sposition that “all players, including developmental, should have the right to negotiatesalary terms, and that no fixed wage for any group of players is acceptable to theNFLPA.” Id. On September 5, 1989, NFL Commissioner Pete Rozelle sent a memoran-dum to all NFL teams reminding them that compensation for developmental squad play-ers was fixed at $1000 and that individually negotiated contracts above or below $1000were not permitted. See id.

23. See Brown, 116 S. Ct. at 2119; see also supra note 22.

regular-season NFL football games.19 Furthermore, the resolutioncalled for developmental squad players to be paid a fixed salaryinstead of being permitted to negotiate their own salaries.20 Thisportion of the amendment to the NFL Constitution departed fromthe customary NFL practice of allowing NFL players to individuallynegotiate their salaries.21

The adoption of Resolution G-2 prompted a series of ineffectivenegotiations between the NFL and NFLPA over the terms of thedevelopmental squad plan.22 The NFL proposed a fixed salary of$1000 per week for developmental squad players; however, theNFLPA insisted that individual players be allowed to negotiate theirown salaries.23 Ultimately, the NFLPA rejected the developmental


24. See Brown, 116 S. Ct. at 2119.25. See id.26. See Brown, 50 F.3d at 1047. In addition to Antony Brown, the plaintiff class

was represented by James Bishop, John Buddenberg, Gary Couch, Craig Davis, RickyAndrews, Thom Kaumeyer, Wesley Pritchett, and John Simpson. See id. at n.2.

27. See Brown, 116 S. Ct. at 2119; see also supra text accompanying note 12.28. 15 U.S.C. § 1 (1994). Section 1 of the Sherman Act provides that:Every contract, combination in the form of trust or otherwise, or conspiracy, inrestraint of trade or commerce among the several States, or with foreign na-tions, is declared to be illegal. Every person who shall make any contract orengage in any combination or conspiracy hereby declared to be illegal shall bedeemed guilty of a felony, and, on conviction thereof, shall be punished by finenot exceeding $10,000,000 if a corporation, or, if any other person, $350,000, orby imprisonment not exceeding three years, or by both said punishments, inthe discretion of the court.

Id.29. See Brown, 116 S. Ct. at 2119.30. See id. The Federal District Court for the District of Columbia criticized the

application of the nonstatutory labor exemption beyond the expiration of a collective-bar-gaining agreement, see Brown, 782 F. Supp. at 131–32, noting that such an extension“hinders rather than facilitates the execution of new collective-bargaining agreements,”id. at 131. By extending the exemption beyond expiration of the collective-bargainingprocess, the district court noted the NFL had an incentive not to enter into a newcollective-bargaining agreement because, so long as the NFL maintained the status quounder the old agreement, its actions would be shielded from antitrust attack. See id.Instead, the district court stated that the most appropriate point at which to end thenonstatutory labor exemption is at the expiration of the collective-bargaining agreement.See id. at 131–32. When a collective-bargaining agreement expires, the court noted thatthe reason for the nonstatutory labor exemption no longer exists because the union nolonger consents to the restraints contained in the expired agreement. See id. at 132.Furthermore, extending the exemption would create uncertainty in which no new agree-ment could be achieved. See id.

squad plan and negotiations over the plan reached an impasse.24

The NFL then unilaterally implemented the developmental squadplan and advised club owners that paying salaries above or below$1000 would result in disciplinary action against the clubs.25

Antony Brown and eight other developmental squad players26

(the Players), filed suit on behalf of 235 NFL developmental squadplayers against the NFL and its member clubs.27 The players allegedthat the NFL and its member clubs violated the Sherman Act28 byimplementing a uniform salary for developmental squad playersafter reaching an impasse in collective-bargaining negotiations.29

The Federal District Court for the District of Columbia denied theNFL's exemption claim from the antitrust laws and, after a trial todetermine damages, entered judgment against the clubs for anamount exceeding $30 million.30


31. See Brown, 116 S. Ct. at 2119.32. Brown, 50 F.3d at 1056. In its opinion, the court of appeals noted that termi-

nating the nonstatutory labor exemption at the expiration of the collective-bargainingagreement would shift the balance of power, which is characteristic of the collective-bar-gaining process, in favor of the union. See id. at 1052. Such a shift, the court noted,would result in a threat of antitrust attack by the unions to gain an advantage in thecollective-bargaining process and would not properly accommodate the federal labor pol-icy. See id.

33. See Brown, 116 S. Ct. at 2118, 2119.34. See id. at 2127.35. See id.36. See id.37. See id.38. See id.

On appeal, in a two-to-one decision, the United States Court ofAppeals for the District of Columbia Circuit reversed.31 The court ofappeals held that the labor exemption shielded the NFL ownersfrom antitrust liability, interpreting the labor laws as “waiv[ing]antitrust liability for restraints on competition imposed through thecollective bargaining process, so long as such restraints operateprimarily in a labor market characterized by collective bargaining.”32

Although the Supreme Court declined to extend the laborexemption's scope to the same extent as did the court of appeals, theCourt nevertheless affirmed in an eight-to-one decision.33 The Courtnoted that Brown contained three elements that are essential inextending the labor exemption to the conduct of the NFL clubs.34

First, the implementation of the developmental squad plan occurredduring and immediately after a collective-bargaining negotiation.35

Second, the implementation was directly related to mandatory top-ics of the collective-bargaining process.36 Finally, the matter con-cerned only the NFL and the NFLPA, the parties to the collective-bargaining relationship.37 Thus, the Court held that the nonstatuto-ry labor exemption extends to multi-employer bargaining unitswhen, after reaching a negotiating impasse, they implement theirlast, best good-faith offer.38

The Brown decision, like many cases before it, brings labor lawand antitrust law into direct conflict. The decision extends the laborexemption from the antitrust laws to include post-impasse imple-mentation of labor terms not previously contained in a collective-bargaining agreement. The decision shields management not onlyfrom antitrust suits involving wages, but antitrust suits involvingall labor-management relations covered by the collective-bargaining


39. See 15 U.S.C. §§ 1–17 (1994). Section 1 of the Sherman Act provides that“[e]very contract, combination in the form of trust or otherwise, or conspiracy, in re-straint of trade or commerce among the several States, or with foreign nations, is de-clared to be illegal.” 15 U.S.C. § 1; see, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 635 (1985) (stating “`[t]he Sherman Act is designed topromote the national interest in a competitive economy'” (quoting American SafetyEquip. Corp. v. J.P. Maguire & Co., 391 F.2d 821, 826 (2d Cir. 1968))).

40. See Brown, 116 S. Ct. at 2122; Connell Constr. Co. v. Plumbers & SteamfittersLocal Union No. 100, 421 U.S. 616, 622 (1975).

41. See Kieran M. Corcoran, Note, When Does the Buzzer Sound?: The NonstatutoryLabor Exemption in Professional Sports, 94 COLUM. L. REV. 1045, 1046 (1994). By theirvery nature, unions are combinations that attempt to restrain competition by limiting anemployer's ability to negotiate with employees. See Lock supra note 1, at 351.

42. See Brown, 50 F.3d at 1048 (citing Connell, 421 U.S. at 622).43. See Corcoran, supra note 41, at 1046.44. See id.; see, e.g., Mitsubishi Motor Corp., 473 U.S. at 635 (stating “`[t]he Sher-

man Act is designed to promote the national interest in a competitive economy'” (quoting

process. The decision in Brown may have drastic effects on unionemployees, as well as threatening the very existence of unionsthemselves.

PART II: THE HISTORY OF ANTITRUST LAW AND THELABOR EXEMPTION IN PROFESSIONAL SPORTS

Inherently, labor law and antitrust law are in conflict. The fed-eral antitrust laws seek to promote free competition by condemningall unreasonable combinations in restraint of trade.39 However, laborlaw welcomes certain restraints by favoring combinations of employ-ees seeking to eliminate competition over working conditions andwages in an effort to achieve industrial harmony.40 Consequently,the labor exemption was developed to protect unions and certain un-ion-employer relationships from the reach of the antitrust laws.41

Through the use of the labor exemption, courts have attempted tobalance the policy favoring free competition in business markets andthe policy favoring labor relations.42 However, the exact scope of thelabor exemption is unclear, and when applied to the world of profes-sional sports, its reach becomes even more uncertain.43

A. Antitrust Background

The federal antitrust laws, created by Congress and embodiedin sections 1 and 2 of the Sherman Act, seek to promote economiccompetition.44 Section 1 of the Sherman Act provides that “[e]very


American Safety Equip. Corp. v. J.P. Maguire & Co., 391 F.2d 821, 826 (2d Cir. 1968))).45. 15 U.S.C. § 1. Section 2 of the Sherman Act prohibits monopolization, combina-

tions, and conspiracies to monopolize interstate trade or commerce. See id. § 2.46. See, e.g., Board of Trade v. United States, 246 U.S. 231, 238–39 (1918) (pro-

moting or destroying competition is the test of whether restraint is illegal); Standard OilCo. v. United States, 221 U.S. 1, 66 (1911) (testing restraints on trade by the rule ofreason is appropriate “in the light of the principles of law and the public policy whichthe act embodies”).

47. See LAWRENCE ANTHONY SULLIVAN, HANDBOOK OF THE LAW OF ANTITRUST 166(1977); see, e.g., United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 223 (1940) (stat-ing that any combination “formed for the purpose and with the effect of raising, depress-ing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign com-merce is illegal per se”); Standard Oil Co., 221 U.S. at 66 (testing restraint on tradeusing the rule of reason).

48. See, e.g., Northern Pac. Ry. v. United States, 356 U.S. 1, 5 (1958) (stating“there are certain agreements or practices which because of their pernicious effect oncompetition and lack of any redeeming virtue are conclusively presumed to be unreason-able and therefore illegal without elaborate inquiry as to the precise harm they havecaused or the business excuse for their use”). Courts typically reserve use of the per serule for those situations in which they have sufficient experience with the challengedpractice to determine if the practice is overtly anti-competitive, such as price fixing andgroup boycotts. See id.; Lock, supra note 1, at 344.

49. See Lock, supra note 1, at 344.50. See, e.g., National Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679, 692

(1978) (evaluating history of restraint and reasoning of restraint to determine effect);Mackey v. National Football League, 543 F.2d 606, 620–21 (1976) (decreasing salarieswould be result of restraint); Board of Trade, 246 U.S. at 238 (determining competitiverestraint by evaluating history of restraint and reasoning of restraint).

51. See, e.g., Board of Trade, 246 U.S. at 238 (stating that the legality of restraintis based on whether it promotes or suppresses competition); Smith v. Pro Football, Inc.,593 F.2d 1173, 1186–87 (D.C. Cir. 1978) (reasoning that competitive balance can be

contract, combination in the form of trust or otherwise, or conspira-cy, in restraint of trade or commerce among the several States, orwith foreign nations, is declared to be illegal.”45 Despite its broadlanguage, the Supreme Court has interpreted section 1 of theSherman Act to reach only unreasonable restraints on trade.46

The Supreme Court has utilized two standards to determine thereasonableness of a restraint on trade: the per se rule and the ruleof reason.47 Under the per se rule, those arrangements that are in-herently adverse to competition, based on the court's experience, areconclusively presumed to be invalid.48 In contrast, under the rule ofreason, a court determines the reasonableness of a challenged re-straint by balancing the restraint's business purposes with its effecton competition.49 Factors that a court considers in determining arestraint's reasonableness are the purpose and effect of the re-straint50 and its pro-competitive and anti-competitive effects.51


accomplished by less restrictive means compared to the anti-competitive impact of theplayer draft).

52. See Allen Bradley Co. v. Local Union No. 3, Int'l Bhd. of Elec. Workers, 325U.S. 797, 803–06 (1945).

53. See Lock, supra note 1, at 351.54. See id.55. See Allen Bradley Co., 325 U.S. at 801–03. The Clayton Act is codified at 15

U.S.C. §§ 12–27, 44; 29 U.S.C. §§ 52–53 (1994) and the Norris-LaGuardia Act is codifiedat 29 U.S.C. §§ 101–115 (1994).

56. See 15 U.S.C. § 17 (1994); see also Allen Bradley Co., 325 U.S. at 804 (statingthat “[s]ection 6 declared that labor was neither a commodity nor an article of com-merce, and that the Sherman Act should not be `construed to forbid the existence andoperation of labor, agricultural, or horticultural organizations, instituted for the purposesof mutual help'” (quoting 15 U.S.C. § 17)).

57. See 29 U.S.C. § 52 (1994); see also Allen Bradley Co., 325 U.S. at 804 (notingthat § 20 of the Clayton Act limits courts' injunctive power in cases involving labor dis-putes over terms and conditions of employment).

58. See, e.g., Duplex Printing Press Co. v. Deering, 254 U.S. 443, 478 (1921). His-torically, Duplex is cited as the seminal case leading to the creation of the nonstatutorylabor exemption. See Brown, 116 S. Ct. at 2120. In Duplex, two unions began a second-ary boycott (a boycott utilizing both peaceful and coercive measures) against DuplexPrinting Press Company in an attempt, ultimately, to secure employment with Duplex.

B. The Statutory Labor Exemption

The federal antitrust law, embodied in the Sherman Act, hasas its primary purpose the regulation of commercial activity.52

Unions, as combinations of individuals who seek to restrain an em-ployer's ability to deal with its employees individually, engage invarious activities that restrain commercial activity, such as groupboycotts and strikes.53 Consequently, the Sherman Act was initiallyan impediment to the development of unions.54 Based on growingunion concerns regarding the application of the Sherman Act in thelabor context, Congress passed two critical pieces of legislation: the1914 Clayton Act and the 1932 Norris-LaGuardia Act.55

The 1914 Clayton Act contained two provisions important to thelabor movement. Section 6 of the Clayton Act states that labor is notan article of commerce and, therefore, labor unions do not representcombinations in restraint of trade.56 Section 20 of the Clayton Actprotected certain labor activities from antitrust attack by limitingthe injunctive power of courts to certain types of union activities.57

However, even after section 6 and section 20 of the Clayton Act wereimplemented, courts were still enforcing injunctive relief againstm a n y u n i o n s o n a n t i t r u s t g r o u n d s . 5 8 C o n s e


See 254 U.S. at 460, 466. The case was heard shortly after Congress enacted the ClaytonAct and the issue addressed by the Court was whether it had the power to grant injunc-tive relief after passage of the Clayton Act. See id. at 464. In holding that the secondaryboycott was not immune from antitrust suit, the Court noted that the Clayton Actsought to protect lawful union activities when a direct relationship between the employerand employee existed. See id. at 468–70. Here, the union members had never been em-ployed by Duplex Printing and the coercive nature of their boycott made the means ofobtaining a compromise unlawful. See id. at 471, 475–77. The dissenting opinion in Du-plex is perhaps more important than the majority holding because it led to the adoptionof the labor statutes from which the nonstatutory labor exemption has been created. SeeBrown, 116 S. Ct. at 2120. In the views of dissenting Justices Brandeis, Holmes, andClarke, § 20 of the Clayton Act extended to persons seeking employment and stated thatwhen the persons imposing the restraints on competition are proceeding by self-interestand seeking employment, they should be immunized from the antitrust laws. See Duplex,254 U.S. at 487–88 (Brandeis, Holmes, and Clarke, JJ., dissenting); see also UnitedStates v. Hutcheson, 312 U.S. 219, 230–36 (1941) (discussing congressional reaction toDuplex and noting that the limits imposed by the Court in Duplex were too restrictive).

59. See 29 U.S.C. §§ 104, 105, 113 (1994).60. See Corcoran, supra note 41, at 1049.61. See Lock, supra note 1, at 351.62. See, e.g., Apex Hosiery Co. v. Leader, 310 U.S. 469, 501–03 (1940) (holding that

a violent strike by the union did not violate the Sherman Act).63. See Bridgeman v. National Basketball Ass'n, 675 F. Supp. 960, 964 (D.N.J.

1987) (stating that “[t]he statutory exemption extends to legitimate labor activities uni-laterally undertaken by a union in furtherance of its own interests. It does not extend toconcerted action or agreements between unions and non-labor groups. This is where thenon-statutory exemption comes into play.” (citing United States v. Hutcheson, 312 U.S.219 (1941))).

64. The National Labor Relations Act of 1947 (NLRA), created a federal policy infavor of collective bargaining. See Corcoran, supra note 41, at 1050 (citing 29 U.S.C.§§ 151–169 (1988)). Similarly, this was the purpose of the Labor Management RelationsAct, also adopted by Congress in 1947. See id. The acts protect an employee's right to

quently, further legislation was necessary.Approved in 1932, the Norris-LaGuardia Act declared a federal

policy in favor of the organization of labor.59 In addition, the Norris-LaGuardia Act provided additional protection for unions by furtherlimiting the federal courts' injunctive powers and by expanding thetypes of protected union activities.60 Together, the Clayton Act andNorris-LaGuardia Act create the statutory labor exemption to anti-trust laws.61

The statutory labor exemption protects unions and various un-ion activities from antitrust attack.62 The statutory labor exemptiondoes not apply to agreements between labor and management.63

However, recognizing that application of antitrust law to labor-man-agement agreements would undermine the pro-collective bargainingpolicies of the National Labor Relations Act (NLRA),64 the courts


organize and to bargain collectively. See id. Through this process, Congress believed thatindustrial strife and unrest would be removed and the free flow commerce would be en-couraged. See id. The NLRA also created the National Labor Relations Board (NLRB),which exists to regulate collective bargaining and guards against unfair labor practices.See id. (citing 29 U.S.C. §§ 153–169 (1988)).

65. See Lock, supra note 1, at 352.66. 381 U.S. 676 (1965); see also United Mine Workers v. Pennington, 381 U.S. 657

(1965) (holding that a wage agreement with a multi-employer bargaining unit did notviolate antitrust laws and that the union could seek the same wages from other employ-ers). The Pennington Court noted the concern for “harmonizing the Sherman Act withthe national policy expressed in the National Labor Relations Act of promoting `thepeaceful settlement of industrial disputes by subjecting labor-management controversiesto the mediatory influence of negotiation.'” Id. at 665 (quoting Fibreboard Paper Prods.Corp. v. NLRB, 379 U.S. 203, 211 (1964)).

67. See Jewel Tea, 381 U.S. at 679.68. See id. at 680.69. See id.70. See id. at 681.71. See id.72. See id. at 689.

have created a nonstatutory labor exemption applicable to labor-management agreements.65

C. The Nonstatutory Labor Exemption

A series of cases has often been cited as creating the non-statu-tory labor exemption. One of the first cases to articulate the nonstat-utory labor exemption is Local Union No. 189, Amalgamated MeatCutters v. Jewel Tea Co.66 In this case, a restriction in a collective-bargaining agreement between a group of employers and severalunions provided that the operating hours of a food store meatdepartment would be from 9:00 a.m. to 6:00 p.m., Monday throughSaturday.67 All but two members of the employer group accepted theagreement.68 One member rejecting the agreement was Jewel Tea,who sought an agreement with the union for Friday night opera-tions.69 The union rejected the offer and began a strike against Jeweloperations.70 Under pressure from the strike, Jewel Tea signed theagreement in its original form.71

The Court noted that the labor exemption from the antitrustlaws for certain union-employer agreements represents an accom-modation of the coverage of the antitrust laws to the policy favoringcollective bargaining found in the labor laws.72 The Court also notedthat employers and unions are required to bargain about wages,


73. See Jewel Tea, 381 U.S. at 689.74. See id.75. See id. at 689–90.76. See id. at 689–91.77. See id. at 691.78. See id.79. See Jewel Tea, 381 U.S. at 691.80. See id.81. 421 U.S. 616 (1975).82. See id. at 619–20.83. See id. at 619.84. See id. at 620.

hours, and working conditions.73 However, parties involved in collec-tive-bargaining are not required to bargain about matters unrelatedto these subjects.74 Consequently, the Court favored the antitrustexemption for agreements related to the mandatory subjects of col-lective-bargaining agreements: wages, hours, and working condi-tions.75

The Court held that the agreement with the unions not to sellmeat between 6 p.m. and 9 a.m. was within the labor exemption ofthe Sherman Antitrust Act.76 The Court noted that an agreementlimiting retail marketing hours concerned a mandatory subject ofcollective-bargaining because it affected the particular hours of theday during which the employees would be required to work.77 Con-sequently, the Court concluded that since the restraint involved amatter that was a mandatory subject of bargaining under theNLRA, and was of immediate and direct concern to union employ-ees, it was exempt from the Sherman Act.78 However, the Court'sindication that the application of the exemption would be deter-mined by weighing the respective interests at stake limited thisdecision.79 By its language, the Court indicated that whenemployees' interests were indirectly related to the restraint, thelabor exemption from the antitrust laws would not apply.80

The same approach was used in Connell Construction Co. v.Plumbers & Steamfitters Local Union No. 100.81 In Connell, a laborunion sought to force subcontractors to contract only with parties tothe collective-bargaining agreement.82 The union asked Connell tosign an agreement permitting Connell to subcontract work only tofirms having a current contract with the union.83 After Connell re-jected the agreement, the union picketed one of Connell's majorconstruction sites.84 In invalidating the agreement, the Court stated


85. See id. at 623.86. See id.87. See Connell, 421 U.S. at 625. In Connell, the Court noted that the lessening of

business competition based on concerns of efficiency was not a goal of the federal laborpolicy and, therefore, should not be protected by the antitrust laws. See id.

88. See id. at 622–23.89. See Lock, supra note 1, at 352.90. See Corcoran, supra note 41, at 1053.91. See id.; infra notes 113–17 and accompanying text for a discussion of the un-

equal bargaining positions.

that a restraint on competition will receive protection from the anti-trust laws only when the restraint affects the direct interests of theemployees.85 In Connell, the agreement with Connell indiscrimi-nately excluded subcontractors, who were not parties to the collec-tive-bargaining process, from the business market.86 The Courtfound this agreement subject to antitrust attack because it had thepotential for restraining competition in the business market in waysthat would not follow naturally from elimination of compensationover wages and working conditions.87 Therefore, the agreement wasnot a mandatory subject of the collective-bargaining process and didnot relate to a direct employee interest. This holding also had theeffect of refusing to extend the labor exemption to restraints thatinvolved parties outside of the collective-bargaining relationship.88

The decisions in Jewel Tea and Connell, therefore, indicate thatthe scope of the nonstatutory labor exemption is limited to directemployee interests and parties to the collective-bargaining relation-ship. Despite these basic requirements, there is no general standardfor applying the labor exemption to union-employer agreements.89 Inthe context of professional sports, the labor exemption has a uniqueplace because of the strong arguments in favor of complete re-straints on competition to ensure the continued existence ofleagues.90 Furthermore, in the context of professional sports, typicalrestraints are imposed by the employers rather than by unions, whoattempt to promote the players' interests from an inherently weakbargaining position.91 Consequently, the scope of the nonstatutorylabor exemption becomes more uncertain in the context of profes-sional sports.


92. See Lock, supra note 1, at 345; see, e.g., Mackey v. National Football League,543 F.2d 606, 609 (8th Cir. 1976) (challenging the validity of the Rozelle Rule); Robert-son v. National Basketball Ass'n, 389 F. Supp. 867, 872 (S.D.N.Y. 1975) (challenging thebasketball draft, the reserve clause, and the uniform player contract); Kapp v. NationalFootball League, 390 F. Supp. 73, 78 (N.D. Cal. 1974) (challenging the Rozelle Rule andthe tampering rule). For additional discussion of the Rozelle Rule, see infra note 121 andaccompanying text.

93. See, e.g., Mackey, 543 F.2d at 620.94. See id. at 620. Two economists who testified at the trial, stated that eliminat-

ing the Rozelle Rule would result in substantial increases in player salaries. See id.95. See id. at 621.96. See id.97. See id.98. See Corcoran, supra note 41, at 1056; see also infra notes 147–49 and accompa-

nying text.99. See Mackey v. National Football League, 407 F. Supp. 1000, 1007 (D. Minn.

1975) (utilizing the per se rule), aff'd in part and rev'd in part, 543 F.2d 606 (8th Cir.1976) (applying the rule of reason instead); see also Robertson v. National BasketballAss'n, 389 F. Supp. 867, 893 (S.D.N.Y. 1975) (applying the per se rule).

100. See Lock, supra note 1, at 346; see also Smith v. Pro Football, Inc., 420 F.Supp. 738, 744 (D.D.C. 1976) (finding the draft similar to a group boycott), aff'd in partand rev'd in part, 593 F.2d 1173 (D.C. Cir. 1978); Mackey v. National Football League,407 F. Supp. 1000, 1007 (D. Minn. 1975) (deeming the Rozelle Rule a group boycott and

D. Antitrust Law and the Labor Exemption Applied to ProfessionalSports

1. Antitrust Law and Professional Sports

One of the most often litigated situations in professional sportsrelates to restraints on players.92 The most typical restraint on play-ers is the player's ability to move from one team to another.93 Thisrestraint effectively limits an athlete's ability to negotiate a morefavorable salary.94 Management has often argued that allowing freemovement of players would ultimately harm the economic well-beingof sports leagues.95 Freedom of movement leads to domination bylarge, market organizations that can garner the best athletes.96 Thisleads to a competitive imbalance in the league and harms the leagueas a whole.97 In addition to restraints limiting a player's ability tomove among teams, other restraints such as player drafts, salarycaps, reserve clauses, and prohibitions on tampering exist.98

When addressing these employer restraints, courts have usedboth the rule of reason and the per se rule to invalidate restraints.99

During the 1970s, some trial courts applied the per se rule to theseplayer restraints, comparing the restraints to group boycotts, hori-zontal restraints, and price-fixing agreements.100 Still other courts


a concerted refusal to deal), aff'd in part and rev'd in part, 543 F.2d 606 (8th Cir. 1976).101. See Lock, supra note 1, at 346; see also Smith, 420 F. Supp. at 745–46 (noting

that practices would be invalid even under the rule of reason).102. See, e.g., National Collegiate Athletic Ass'n v. Board of Regents, 468 U.S. 85, 86

(1984) (rejecting the per se rule and applying the rule of reason).103. See Lock, supra note 1, at 346.104. See, e.g., Smith, 593 F.2d at 1188–89; Mackey, 543 F.2d at 622; Kapp v. Na-

tional Football League, 390 F. Supp. 73, 82 (N.D. Cal. 1974). However, professional base-ball maintains a unique exemption to the antitrust laws and similar player restraintshave been upheld in professional baseball. See Flood v. Kuhn, 407 U.S. 258 (1972); seealso Toolson v. New York Yankees, Inc., 346 U.S. 356 (1953); Federal Baseball Club v.National League of Prof'l Baseball Clubs, 259 U.S. 200 (1922).

105. See Corcoran, supra note 41, at 1056.106. See id.107. See id.108. See infra notes 145–74 and accompanying text for a discussion of the various

approaches considered by the courts in determining the extent of the exemption.109. See id.110. See id.

applied both the rule of reason and per se rule in their analysis ofvarious arrangements because of their lack of experience with pro-fessional sports restraints.101 However, it now appears that courtshave accepted the rule of reason as the appropriate standard forreviewing player restraints.102 Under the rule of reason, player re-straints have been uniformly103 condemned as anti-competitive.104

2. Nonstatutory Labor Exemption and Professional Sports

Despite the decisions noted above, many player restraints arenot unilaterally imposed by management.105 Rather, the player re-straints are contained in a collective-bargaining agreement betweenmanagement and the players.106 When player restraints are part ofthe collective-bargaining agreement, it is clear that the nonstatutorylabor exemption from the antitrust laws apply.107 However, thescope of the exemption is uncertain.108

Professional sports differ from other collective-bargaining situa-tions in that antitrust suits in other situations are brought by em-ployers against unions that have imposed restraints unfavorable tothe employer.109 Here, the employees seek the protection of thenonstatutory labor exemption.110 In professional sports, however, theemployer most often imposes a restraint through the collective-bar-gaining process often unfavorable to the players, and then seeks theprotection of the nonstatutory labor exemption from the antitrust


111. See Corcoran, supra note 41, at 1056.112. See id.113. See Lock, supra note 1, at 354–59.114. See id. at 354–56. Because of varying degrees in talent among players, union

goals differ among those players considered “superstars” and those considered “marginal”or “average” players. This divergence of interests results in a lack of cohesivenessamongst player unions. See id. at 354.

115. See id. at 354–56.116. See id. For instance, it is estimated that the NFLPA has a yearly turnover rate

of 25%. See id. at 356.117. See id. at 356–59.118. See Corcoran, supra note 41, at 1056–57.119. See, e.g., Mackey v. National Football League, 543 F.2d 606, 615–16 (8th Cir.

1976).120. 543 F.2d 606 (8th Cir. 1976).121. See id. at 609 n.1. The court stated:[t]he Rozelle Rule essentially provides that when a player's contractual obliga-tion to a team expires and he signs with a different club, the signing club mustprovide compensation to the player's former team. If the two clubs are unableto conclude mutually satisfactory arrangements, the Commissioner may award

laws.111 Since the nonstatutory labor exemption was intended toprotect employees, courts must determine if the owners can use theexemption to shield restraints that conflict with the players' inter-ests.112

Professional sports are also distinct from other industries due tothe unequal bargaining power of the employers in comparison to theemployees.113 This inequality in bargaining power results from thevarying degree in talent among players, the lack of job securityamong players, and the brief careers most players enjoy.114 Thesedifferences result in a less unified union and an influx of new mem-bers who must be educated on the complex union issues.115 Further-more, players are often asked to sacrifice for the benefit of the un-ion, when in the long run, those players will not receive the benefitof the fight.116 These factors create a situation in which the employ-ers consistently have an advantage at the bargaining table.117

The uniqueness of professional sports has led to a considerablechallenge for courts attempting to apply the nonstatutory laborexemption.118 During the NFLPA's infancy, courts frequently ruledin favor of the union on antitrust grounds, holding that the laborexemption did not apply because of the relatively weak position ofthe labor union.119 One of the first examples of this type of decisionwas Mackey v. National Football League.120 In Mackey, a player chal-lenged a restraint known as the Rozelle Rule.121 “The ostensible


compensation in the form of one or more players and/or draft choices as hedeems fair and equitable.

Id.122. Id. at 611.123. See id. at 609–11.124. See id. at 609.125. See id.126. See Mackey, 543 F.2d at 609–10.127. See id. at 611. The court noted that:[t]he concept of a labor exemption from the antitrust laws finds its basic sourcein §§ 6 and 20 of the Clayton Act, 15 U.S.C. § 17 and 20 U.S.C. § 52, and theNorris-LaGuardia Act, 20 U.S.C. §§ 104, 105 and 113. Those provisions declarethat labor unions are not combinations or conspiracies in restraint of trade, andspecifically exempt certain union activities such as secondary picketing andgroup boycotts from the coverage of antitrust laws.

Id.128. See id. at 611 (citing Apex Hosiery Co. v. Leader, 310 U.S. 469 (1940)).

purposes of the rule [was] to maintain competitive balance amongthe NFL teams and protect the clubs' investment in scouting, select-ing and developing players” by severely limiting a player's ability tosign with another team when his contract expired.122 Under theRozelle Rule, a player's former team was awarded with one or moreplayers from the acquiring team as compensation for signing thatteam's former player.123

The player's original complaint alleged that the club's enforce-ment of the Rozelle Rule constituted an illegal combination andconspiracy in restraint of trade.124 The player argued that the ruledenied professional football players the right to individually contractfor their services, and therefore violated the federal antitrustlaws.125 On appeal, the Eighth Circuit addressed two issues: 1)whether the NFL's enforcement of the Rozelle Rule was protected bythe labor exemption to the antitrust laws; and 2) if not, whether theRozelle Rule violated the antitrust laws.126

Drawing from the Clayton Act and Norris-LaGuardia Act, thecourt noted that unions are specifically exempted from antitrustsuits for certain activities.127 Furthermore, the court stated that thestatutory labor exemption protects those legitimate collective activi-ties undertaken by employees, which are inherently anti-competi-tive, but are favored by federal labor policy.128 From this discussion,the court noted that since the nonstatutory labor exemption appliesto agreements between employers and employees, the benefits of the


129. See id. at 612.130. See text at Part II.C for a discussion of these cases.131. Mackey, 543 F.2d at 613.132. See id. at 614.133. See id.134. See id.135. See id.136. See id.137. See Mackey, 543 F.2d at 615.138. See id.139. See id. at 616.140. See id.141. See id. at 615–16. The relatively weak bargaining position of the players' union

resulted in the union accepting imposition of the Rozelle Rule and operating under thestatus quo in its initial collective-bargaining agreement with the NFL and its member

exemption logically extend to both parties.129

The Mackey court, citing Connell, Jewel Tea, and Pennington,130

noted that the “availability of the nonstatutory exemption for aparticular agreement turns upon whether the relevant federal laborpolicy is deserving of pre-eminence over federal antitrust policy un-der the circumstances of the particular case.”131 The court then setout a three-prong test for determining when this situation is pres-ent.132 First, for the nonstatutory labor exemption to apply, the re-straint on trade must primarily affect only the parties to thecollective-bargaining relationship.133 Second, the agreement soughtto be protected must concern a mandatory subject of collective bar-gaining.134 Finally, the labor exemption will be applied only whenthe agreement is the product of bona fide, arms-length bargaining.135

Applying this test, the court concluded that the Rozelle Rulemet the first prong of the three-part test in that it affected only theparties to the agreement.136 Regarding the second prong, the courtnoted that under the National Labor Relations Act, mandatory sub-jects of bargaining include wages, hours, and other terms and condi-tions of employment.137 The Rozelle Rule affected player movementand salaries, and therefore constituted a mandatory subject of col-lective-bargaining.138 However, the court held that the Rozelle Rulefailed the third prong of the test because there was no bona fide,arms-length bargaining between the union and the NFL clubs.139

The court's decision was due in part to the union's recent formationand inadequate finances.140 These factors, as the court noted, placedthe NFLPA in a relatively weak bargaining position compared to theNFL clubs.141 Based on this analysis, the court held that the


clubs. See id. at 616.142. See Mackey, 543 F.2d at 616. In addition to the relatively weak bargaining

position of the NFLPA, the court noted the following factors as bearing on its decision towithhold the labor exemption: 1) the players wanted the Rozelle Rule modified in the1968 agreement; 2) there was some argument that the union lacked the power to persistthat it be removed during the 1968 negotiations; and 3) during the 1974 negotiations,the players again sought removal of the Rozelle Rule. See id. at 612–13.

143. See, e.g., Powell v. National Football League, 930 F.2d 1293, 1297 (8th Cir.1989); Bridgeman v. National Basketball Ass'n, 675 F. Supp. 960, 964 (D.N.J. 1987);Zimmerman v. National Football League, 632 F. Supp. 398, 403–04 (D.D.C. 1986); Woodv. National Basketball Ass'n, 602 F. Supp. 525, 528 (S.D.N.Y. 1984).

144. See Bridgeman, 675 F. Supp. at 965.145. See Bridgeman, 675 F. Supp. at 965; see also Corcoran, supra note 41, at 1060

(citing Daniel C. Nester, Labor Exemption to Antitrust Scrutiny in Professional Sports,15 S. ILL. U. L.J. 123, 135–36 (1990)).

146. 675 F. Supp. 960 (D.N.J. 1987).147. The college draft provides NBA teams the exclusive right to negotiate with and

sign rookie players. See id. at 961.148. The salary cap sets maximum limits on salaries paid to players. See id. at

961–62.

nonstatutory labor exemption did not shield the Rozelle Rule fromantitrust attack.142

The three-prong test set forth in Mackey has been the standardused by courts in other player restraint cases.143 Although Mackey isimportant because it sets out a test to determine when the non-statutory labor exemption applies, the decision did not provide muchguidance beyond its basic three-prong test. Specifically, the Mackeyopinion did not provide a standard for determining how long a termcontained in a collective-bargaining agreement continues to be ex-empt from the antitrust laws after the collective-bargainingagreement expires. The answer to this question involves proceedingone step beyond Mackey.144

PART III: SCOPE OF THE NONSTATUTORY LABOR EXEMP-TION AFTER THE COLLECTIVE-BARGAINING

AGREEMENT EXPIRES

A New Jersey federal district court was the first to addresswhen the nonstatutory labor exemption no longer protects playerrestraints contained in an expired collective-bargaining agree-ment.145 In Bridgeman v. National Basketball Association,146 nineNational Basketball Association (NBA) players sued the NBA, alleg-ing that the college player draft,147 the salary cap,148 and the right of


149. The right of first refusal allows an NBA team to match any offer made byanother team to one of its veteran free agents. See id. at 962.

150. See id. at 961.151. See id. at 964. The court noted that under the Mackey test, the challenged

player restraints at issue were protected from antitrust suits because 1) “they related toa mandatory subject of collective bargaining . . . ;” 2) “they were the product of arm's-length negotiations;” and 3) they affected only the parties to the collective-bargainingagreement. Id. at n.4.

152. See Bridgeman, 675 F. Supp. at 965.153. See id.154. See id.155. See id.156. Id.157. See id.

first refusal149 violated the antitrust laws.150 Although these re-straints were in the collective-bargaining agreement, the playerschallenged them on the ground that the collective-bargaining agree-ment had expired and, therefore, the nonstatutory labor exemptionceased to shield these restraints from antitrust attack.151

The court rejected the players' argument that the antitrust ex-emption to player restraints in a collective-bargaining agreementshould cease at the moment the collective-bargaining agreementexpires.152 The court found that the employers had a duty to bargainfully and in good faith, and that a rule limiting the exemption to thedate the collective-bargaining agreement expired would be unrealis-tic.153 The court noted that, if an employer fails to bargain fully andin good faith and unilaterally alters terms or conditions of the agree-ment before negotiations reach an impasse, the employer has com-mitted an unfair labor practice under the NLRA.154 Consequently,the obligation to bargain fully and in good faith naturally extendsthe terms of the collective-bargaining agreement beyond theagreement's expiration.155

The court went on to note that the history of collective-bargain-ing in the NBA is “punctuated by interim periods between agree-ments during which the league maintained the status quo and con-tinued to negotiate with the players.”156 This history suggested tothe court that the potential existed to form the basis of a new agree-ment based on terms previously contained in the expired collective-bargaining agreement.157 Under this scenario, the court found it“anomalous for such restraints to enjoy antitrust immunity duringthe period of the previous agreement, to lose that immunityautomatically upon expiration of the agreement . . . and then to


158. Bridgeman, 675 F. Supp. at 965.159. See id. at 965–66.160. See id. at 966.161. See id.162. Id. at 967.163. 930 F.2d 1293 (8th Cir. 1989).164. See id. at 1304.165. See id. at 1295.166. See id. at 1296.167. See id. at 1295–96.168. See id. at 1304.

regain immunity upon [the] entry of the new agreement.”158 Such asituation could inhibit the collective-bargaining process because em-ployers might fear agreeing to potentially anti-competitive re-straints, in light of exposure to antitrust suits during the interimperiod between expiration of the collective-bargaining agreementand adoption of a new agreement.159

Likewise, the court rejected the NBA's argument that the ex-emption should continue indefinitely, because this too would fail toencourage collective-bargaining agreements.160 The court noted thatemployees would not likely consent to agreements that could foreverbar them from challenging the restraints contained in those agree-ments.161 Instead, the court decided that the nonstatutory laborexemption for a particular player restraint “survives only as long asthe employer continues to impose that restriction unchanged, andreasonably believes that the practice or a close variant of it will beincorporated in the next collective-bargaining agreement.”162

In Powell v. National Football League,163 the United StatesCourt of Appeals for the Eighth Circuit rejected the impasse stan-dard set forth in Bridgeman.164 In Powell, nine professional footballplayers and the NFLPA sued the NFL, challenging a provision of theplayers' collective-bargaining agreement that established a Right ofFirst Refusal/Compensation System.165 Under the Right of FirstRefusal/Compensation System, a team could retain a veteran freeagent by matching a competing club's offer.166 If the club chose not tomatch the competing team's offer, the club was given additionaldraft choices as compensation.167

In rejecting the standard set forth in Bridgeman, the Powellcourt held that the nonstatutory labor exemption from the antitrustlaws extends beyond impasse.168 The court noted that the federallabor laws provide both economic and legal alternatives for opposing


169. See Powell, 930 F.2d at 1302.170. See id.171. See id. As the court stated:To now allow the Players to pursue an action for treble damages under theSherman Act would, we conclude, improperly upset the careful balance estab-lished by Congress through labor law. . . .

The labor arena is one with well established rules which are intended tofoster negotiated settlements rather than intervention by the courts.

Id. at 1302–03.172. See Corcoran, supra note 41, at 1064.173. See id.174. See, e.g., White v. National Football League, 822 F. Supp. 1389 (D. Minn.

1993); Jackson v. National Football League, 802 F. Supp. 226 (D. Minn. 1992).

parties in a labor dispute to resolve their dispute.169 For instance,the labor laws provide unions with the opportunity to strike, and inturn, employers may choose to lock out their employees.170 The courtstated that to allow the players to pursue an antitrust suit, evenafter impasse is reached, would upset the careful balance ofcollective-bargaining.171

Following the decision in Powell, the NFLPA decertified its un-ion.172 The consequence of Bridgeman and Powell was to encourageplayers to forego the benefits of union representation in order tobring antitrust suits.173 Subsequent antitrust suits brought by play-ers resulted in the courts finding antitrust violations and holding infavor of the players.174

After Mackey, Bridgeman, and Powell, questions still remained.For instance, what happens when a collective-bargaining agreementexpires and employers unilaterally implement a proposal not previ-ously contained in the collective-bargaining agreement? Bridgemanextended the scope of matters previously contained in a collective-bargaining agreement to the point of impasse in negotiations. Powellextended the scope of matters previously contained in a collective-bargaining agreement beyond the point of impasse. However, bothcases dealt with terms already contained in the previous collective-bargaining agreement. Neither addressed the issue of applying thenonstatutory labor exemption to terms unilaterally imposed by em-ployers and not previously contained in an expired collective-bar-gaining agreement. The Supreme Court in Brown addressed thisscenario.

PART IV: THE BROWN COURT'S ANALYSIS


175. See Brown, 116 S. Ct. at 2120.176. See id. Various statutes have been used to imply the nonstatutory labor exemp-

tion. Justice Breyer noted those statutes setting forth a national policy favoring free andprivate collective bargaining. See id. at 2120 (citing 29 U.S.C. § 151 (1994)). For in-stance, the statutes used to imply the nonstatutory labor exemption included those thatrequire good-faith bargaining over wages, hours, and working conditions. See 29 U.S.C.§§ 158(a)(5), 158(d) (1994). In addition, the nonstatutory labor exemption has been im-plied through the use of those statutes that delegate related rulemaking and interpretiveauthority to the NLRB. See 29 U.S.C. § 153 (1994).

177. See Brown, 116 S. Ct. at 2120. Justice Breyer noted that the intent of laborstatutes was to adopt the views of the dissenting justices in Duplex, 254 U.S. at 443. SeeBrown, 116 S. Ct. at 2120. See supra note 58 and accompanying text for discussion ofdissenting opinion in Duplex.

178. See 29 U.S.C. §§ 151, 153, 158(a)(5), 158(d) (1994).179. See Brown, 116 S. Ct. at 2120.180. See id.181. See id.182. See id.

A. The Majority

Writing for the majority, Justice Stephen Breyer relied on his-tory and logic in applying the antitrust exemption to the multi-em-ployer situation at hand.175 First, Justice Breyer discussed the cre-ation and the need for the nonstatutory labor exemption. He notedthat historically, as evidenced by congressional statutes, Congressintended to limit judicial use of antitrust law to resolve labor dis-agreements.176 The Court noted that Congress intended to preventjudicial use of the antitrust laws to resolve labor disputes, becausetypically, the antitrust laws are not appropriate for resolving thesetypes of disputes.177 From the statutes,178 the Court has implied the“nonstatutory” labor exemption.179 Through use of the nonstatutorylabor exemption, the Court noted that congressional intent isachieved.180 Namely, the nonstatutory labor exemption limits courts'use of antitrust laws to determine what is a reasonable practice inindustrial conflicts, and leaves that decision for a legislative and ad-ministrative labor-related determination.181

The Brown Court logically stated that it would be difficult toallow meaningful collective-bargaining to occur if employees and em-ployers were not permitted to make agreements restricting competi-tion during the bargaining process.182 The Court noted that thenonstatutory labor exemption allowed for such conduct by recogniz-ing that, for the collective-bargaining process to work, some re-


183. See id.184. See id. at 2120–21.185. See Brown, 116 S. Ct. at 2121. The Court ultimately concluded that such action

was not objectionable under labor law and policy, and that the nonstatutory laborexemption applied. See id.

186. See id.187. Id. (citing NLRB v. Katz, 369 U.S. 736, 745 (1962); Storer Communications

Inc., 294 N.L.R.B. 1056, 1090 (1989); Akron Novelty Mfg. Co., 224 N.L.R.B. 998, 1002(1976); Taft Broad. Co., 163 N.L.R.B. 475, 478 (1967), enf'd, 395 F.2d 622 (D.C. Cir.1968)). The Court noted that if an employer “has not bargained in good faith, it may notimplement a term of employment.” Id. (citing 1 PATRICK HARDIN, THE DEVELOPING LABOR

LAW 697 (3d ed. 1992)).188. See id.189. Id.190. See id. at 2122. Of the benefits provided by the collective-bargaining process,

straints on competition are necessary.183

Having determined that the exemption did exist and was neces-sary to the collective-bargaining process, the Court noted that theexemption applied to both employers and employees.184 Consequent-ly, Justice Breyer noted that the ultimate question was whether theexemption applied to multi-employer groups implementing theterms of their last, best good-faith offer after impasse in the collec-tive-bargaining process.185

The Court noted that labor law directly regulated the issue indispute.186 Specifically, the Court noted that both the NLRB and thecourts have held that labor law permits “employers unilaterally toimplement changes in preexisting conditions, but only insofar as thenew terms meet carefully circumscribed conditions, [which includethe new terms being] `reasonably comprehended' within the em-ployer's preimpasse proposals . . . [and] [t]he collective-bargainingproceeding must be free of any unfair labor practice[s].”187 Further-more, the Court noted that this standard should be applied to themulti-employer situation, and no distinction should be drawn be-tween single-employer and multi-employer bargaining.188 In fact, theCourt noted that a common practice in multi-employer collective-bargaining is the “joint implementation of proposed terms after im-passe.”189

The Court reasoned that because unilateral implementation ofproposed terms in the collective-bargaining process was permissibleunder the labor laws, submitting this act to threat of antitrust suitwould result in many of the benefits of the collective-bargainingprocess being lost.190 In addition, by subjecting the employers' ac


the Court noted that multi-employer collective bargaining arrangements offer advantagesto both labor and management such as encouraging industry-wide employee benefits andinhibiting employer competition. See id. (citing Bonanno Linen Serv., Inc. v. NLRB, 454U.S. 404, 409 n.3 (1982)).

191. See Brown, 116 S. Ct. at 2122.192. See id. at 2122 (citing Paramount Famous Lasky Corp. v. United States, 282

U.S. 30, 51 (1930)).193. See id. at 2123.194. See id.195. See id.196. Id.197. See Brown, 116 S. Ct. at 2124. In an amicus curiae brief, the Solicitor General

argued that impasse should be the point at which the nonstatutory labor exemptionshould cease because at this juncture, “`employers no longer have a duty under the laborlaws to maintain the status quo,' and `are free as a matter of labor law to negotiateindividual arrangements on an interim basis with the union.'” Id. (citing Brief for UnitedStates et al. as Amici Curiae at 17, Brown v. Pro Football, Inc., 116 S. Ct. 2116 (1996)(No. 95-388)).

tion to antitrust suits, courts would face questions regarding wages,hours, and working conditions that are subjects of the collective-bargaining process that these courts have little experience han-dling.191

Furthermore, the Court distinguished between labor law andantitrust law, noting that labor law sometimes permits anti-compet-itive agreements, while antitrust law forbids unreasonable agree-ments in restraint of trade.192 The Court noted that allowing anti-trust laws to apply in the context of collective-bargaining wouldcreate instability and uncertainty for management.193 For instance,if antitrust laws applied and employers imposed terms similar totheir last joint offer, antitrust laws would subject the employers toliability and treble damages for their identical behavior and commonagreement.194 On the other hand, if any of the employers individu-ally imposed different terms from those offered in the employers'last joint offer, they would be subject to an unfair labor practicecharge.195 Instead of applying antitrust laws, the Court found thatthe labor laws gave the NLRB primary responsibility for determin-ing “what is socially or economically desirable collective-bargainingpolicy.”196

The Brown Court rejected an argument that the nonstatutorylabor exemption should terminate at the point of impasse.197 TheCourt noted several factors that led to its conclusion that impassewas an inappropriate juncture at which to suspend the nonstatutorylabor exemption. First, the Court noted that, even after impasse,


198. Brown, 116 S. Ct. at 2124 (citing Bonanno Linen Serv., 454 U.S. at 410–13).199. See id.200. Id. (quoting Bonanno Linen Serv., 454 U.S. at 416).201. See id. For instance, joint lockouts and use of replacement players is allowable

under the labor laws. See id.202. Id.203. See Brown, 116 S. Ct. at 2124.204. See id. at 2124–25.205. See id. at 2125.206. See id.

typically, “[t]he multiemployer bargaining unit ordinarily remainsintact [and] individual employers cannot withdraw” from thegroup.198 Second, employers must be ready to resume the collective-bargaining process because the duty to bargain survives impasse inthe collective-bargaining negotiation process.199 Third, although“individual employers can negotiate individual interim agreementswith the union,” this action is permissible only as long as thoseagreements are consistent with “the duty to abide by the results ofgroup bargaining.”200

Most importantly, the Court noted that accepting impasse asthe terminating point for the nonstatutory labor exemption wouldnot change the fact that the labor laws permit employers to engagein common behavior after impasse.201 The Court noted that, “as ageneral matter, labor law often limits employers to four options atimpasse: (1) maintain the status quo, (2) implement their last offer,(3) lock out their workers, . . . or (4) negotiate separate interimagreements with the union.”202 If the nonstatutory labor exemptionexpired at impasse, and an interim agreement with the union wasnot reached, the use of the remaining three measures would resultin the threat of an antitrust suit and, therefore, the use would beseverely limited.203

Furthermore, in rejecting the impasse rule, the Court noted thatimpasse is often temporary and that it is difficult to determine whenimpasse has occurred.204 Consequently, if the impasse rule wereaccepted, employers who incorrectly determined that impasse hadbeen reached, and therefore suspended negotiations, would be sub-ject to unfair labor charges.205 On the other hand, if the employersincorrectly determined that impasse had not occurred and subse-quently agreed to maintain the status quo, liability for antitrustviolations would result.206 This result forces uncertainty upon theemployers in the collective-bargaining process and hinders its effec-


207. See id. at 2126.208. Id.209. See Brown, 116 S. Ct. at 2126. The Court noted that football players' special-

ized talents and ability to individually negotiate their own contracts often created supe-rior bargaining positions for professional athletes, as opposed to other union workerssuch as transport workers, coal miners, and meat packers. See id. The Court noted thatit was odd to provide football players with the added advantage of suspending thenonstatutory labor exemption when this advantage was not provided to other unionworkers in a less advantageous bargaining position. See id.

210. See id. at 2127 (citing Mackey, 543 F.2d at 614).211. See id.212. See id.213. See id.214. Id.

tiveness.Finally, the Court rejected the players' contention that applying

the nonstatutory labor exemption in professional sports wasunique.207 Despite the fact that “football players often have specialindividual talents, and, unlike many unionized workers, they oftennegotiate their pay individually with their employers,” these factorsmerely determine the relative bargaining strength or weakness ofthe employees.208 However, these factors have no bearing on appli-cation of the nonstatutory labor exemption and indeed, weigh morefavorably in finding that the nonstatutory labor exemption extendsbeyond impasse.209

In concluding that the implicit antitrust exemption applied tothe NFL's conduct, the Court relied on the three prong test set forthin Mackey.210 First, the conduct involved a mandatory subject ofcollective-bargaining.211 Second, it concerned only the parties to thecollective-bargaining relationship.212 Third, the conduct was theresult of a bona fide, arms-length negotiation, in that it was part ofthe lawful operation of the bargaining process.213 Despite this hold-ing, the Court noted that a situation could exist in which the con-duct of the employers was “sufficiently distant in time and in cir-cumstances from the collective-bargaining process that a rule per-mitting antitrust intervention would not significantly interfere withthat process.”214

B. The Dissent


215. See Brown, 116 S. Ct. at 2128 (Stevens, J., dissenting).216. See id.217. See id. (citing National Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679,

695 (1978)).218. See id. at 2128–29.219. See id. at 2128–31.220. Vivien Lou Chen, Antitrust Shield; Impact of Supreme Court's Decision on Col-

lective Bargaining Is in Question., L.A. DAILY J., July 1, 1996, at 5. “Supporting the play-ers in their Supreme Court case were the Screen Actors Guild, Inc., the American Fed-eration of Television and Radio Artists, the Directors Guild of America, and the WritersGuild of America, West Inc.” Id.

221. See Allan H. Weitzman & Kathleen M. McKenna, The Supreme Court Has Heldthat a Multiemployer May Impose Contract Terms Unilaterally After a Bargaining Im-passe, NAT'L L.J., July 29, 1996, at B4. Approximately 40% of all collective bargainingoccurs in the multiemployer context. See Brown, 116 S. Ct. at 2127 (App. to Opinion ofBreyer, J.).

222. See Brown, 116 S. Ct. at 2128 (Stevens, J., dissenting). “In addition, decertifica-tion may leave unions with no legal means for gathering and distributing salary infor-mation to players and to agents, a linchpin of contract negotiations with teams and play-ers.” Mark T. Gould, Brown v. Pro Football, Inc.: To Decertify or Not To Decertify?, ENT.& SPORTS LAW., Summer 1996, at 9.

Justice Stevens was the sole dissenter in Brown.215 Justice Ste-vens presented an argument based on the concept of free competi-tion and the original intent of the antitrust laws.216 He noted thatthe antitrust laws exist to promote free competition, which naturallyleads to the best price and wage levels.217 In addition, the originalintent of the antitrust laws was to shield employees lacking bargain-ing power from overreaching by employers seeking to keep wageslow.218 However, Justice Stevens argued that the majority opinionwould turn management's shield into a sword, immunizing themfrom suit under antitrust laws and enabling them to set wages atlower rates than a free market would generate.219

PART V: CRITICAL ANALYSIS

The Brown decision brings labor law and antitrust law intodirect conflict, and “signifies a major victory for management in theworld of professional sports and entertainment.”220 The decision notonly impacts the NFLPA and its ability to seek redress for antitrustviolations against the NFL, but all other industries who participatein multi-employer collective-bargaining.221 The majority's decisionremoves the forces of free competition from setting the best pricelevels, a basic purpose of the Sherman Act.222 Furthermore, the deci-sion eliminates any potential role that the antitrust laws may play


223. See Kevin Arquit & Richard Wolfram, A Recent Circuit Court Decision MayImpair Labor's Ability to Sue Multiemployer Bargaining Units Pursuant to the ShermanAct, NAT'L L.J., June 5, 1995, at B5.

224. See Arquit & Wolfram, supra note 223, at B5.225. Id. at B8 (footnote omitted).226. See Chen, supra note 220, at 5 (citing Frank Rothman, partner at Skadden,

Arps, Slate, Meager & Flom in Los Angeles who sees “broad ramifications for allworkers” involved in collective-bargaining units). A 1994 estimate shows that 2.3 millionAmerican employees are involved in collective-bargaining groups dealing with multipleemployers. See id.

227. See Brown, 116 S. Ct. at 2126 (stating that extending the nonstatutory laborexemption to professional sports employees would be odd, based on their superior bar-gaining power in relation to that of transport workers, coal miners, and meat packers).

228. See supra note 227 and accompanying text.229. See Harvey Berkman, NFL Keeps Its Immunity on Antitrust, NAT'L L.J., July 1,

1996, at B1 (citing NLRB Chairman William B. Gould IV as stating that “he regrettedthe court's decision to apply its ruling to all multiemployer bargaining units — whichemploy 40 percent of all unionized workers — and not limit it to sports”).

in the collective-bargaining process.223 In addition, the decision en-courages employers not to bargain in good faith since once an im-passe is reached, the employer can implement employment termswithout fear of antitrust liability.224 “[A]lthough [the decision] keepsthe federal courts out of `messy labor-management disputes,' [it]creates a system that will discourage rather than promote collectivebargaining.”225 Despite its attempt to harmonize antitrust law andlabor law, the Brown decision ultimately hinders the very process itsought to promote: collective-bargaining.

A. The Impact on Non-Sports Industries of Expanding theNonstatutory Labor Exemption

The Brown decision will likely have a drastic effect on employ-ees in such unionized industries as the retail trade, construction,transportation, and real estate.226 These industries do not providethe collective-bargaining strength enjoyed by professional sports' un-ions, and are inherently weak compared to management.227 As theBrown Court noted, professional sports athletes, because of theirindividualized talents, command a much more significant bargain-ing position in the collective-bargaining process than workers in lessspecialized industries.228 However, the Brown Court failed to limitits decision to the professional sports, multi-employer situation athand. Rather, the decision in Brown affects all multi-employer bar-gaining situations.229


230. See Chen, supra note 220, at 5 (citing Gregg Levy, a Washington D.C.-basedattorney, who stated that, for example, “a group of employers in the mining industrycould impose a limit of 10 vacation days a year on workers without being subjected toantitrust suits, though such action arguably restricts competition for new employees”).

231. See id. (citing Frank Rothman, a partner at Skadden, Arps, Slate, Meagher &Flom in Los Angeles).

232. See Brown, 116 S. Ct. at 2128 (Stevens, J., dissenting) (stating that “[t]he basicpremise underlying the Sherman Act is the assumption that free competition amongbusiness entities will produce the best price levels” (citing National Soc'y of Prof'l Eng'rsv. United States, 435 U.S. 679, 695 (1978))).

233. See supra note 32 and accompanying text.234. See Arquit & Wolfram, supra note 223, at B5, B8.235. See Chen, supra note 220, at 5.

Consequently, employees who possess relatively homogenousskills in industries distinct from professional sports have lost theability to bring antitrust suits against employers who unilaterallyimplement terms not previously considered or included in a collec-tive-bargaining agreement. For instance, under Brown, employeeswould be powerless to bring an antitrust suit against a group ofemployers who unilaterally implemented a proposal limiting thenumber of vacation days provided to employees.230 Furthermore, thewage earner in the retail industry currently making ten dollars anhour as a store clerk, has no redress under the antitrust laws tobring suit when a group of employers agrees to limit hourly rates tonine dollars an hour.231 Brown, therefore, clearly offends the funda-mental purpose underlying the Sherman Act, which is to allow freecompetition to set the best price levels.232

By limiting the ability of employees to bring antitrust suitsagainst employers, Brown also shifts the power in the collective-bargaining process decisively in favor of management.233 Withknowledge that Brown has limited an employee's ability to seekredress on antitrust grounds for employer imposed terms, manage-ment involved in collective-bargaining may be encouraged by theBrown decision to negotiate in bad-faith, reach an impasse, and thenimplement the terms of their last best offer.234 Because Brownshields management not only from antitrust suits involving wages,but also from antitrust suits involving all labor-management rela-tions covered by collective-bargaining, employees will be unable toseek redress on antitrust grounds.235

Some proponents argue that Brown will not impact wage earn-ers in these various industries because of the number of other


236. See id.237. See id. (stating that “`[f]or the average employee earning less than $20,000 a

year, I don't think [the high court's ruling] will have much impact at all, and I arguenone at all'” (quoting Victor Van Bourg, an Oakland based attorney)).

238. See supra note 229 and accompanying text.239. Chen, supra note 220, at 5.240. See generally Brief of Amici Curiae in Support of Petitioners at 9–13, Brown v.

Pro Football, Inc., 116 S. Ct. 2116 (1996) (No. 95-338). Although ultimately rejected bythe Supreme Court in Brown, the amicus brief submitted on behalf of the NationalHockey League Players Association, National Football League Players Association, MajorLeague Baseball Players Association, and National Basketball Players Association, pres-ents the most persuasive argument against extending the nonstatutory labor exemptionbeyond the terms contained in the existing collective-bargaining agreement. See id. Thethrust of this argument is again set forth in this Note in the hope that should thecourts face this issue in the future, which they likely will as a result of the decision inBrown, a proper limitation on the scope of the nonstatutory labor exemption will beachieved.

241. See supra note 30 and accompanying text.

workers available to replace them.236 Those adopting this view seeBrown as affecting only those industries where employees possess alarge degree of bargaining power and have union representation.237

This, however, is simply not the case. The Brown Court failed torecognize any distinction between professional sports unions andother industries' unions who possess less bargaining power in com-parison to the even weak bargaining position of professional ath-letes.238 Indeed, it has been stated that “those in pro[fessional]sports and entertainment have the most power to negotiate salariesand conditions of employment, while many at lower echelons of thejob force settle for whatever they can get.”239 As such, the BrownCourt has tipped the collective-bargaining negotiation scales evenfurther in favor of management. The antitrust laws and labor laws,which once sought to promote employee interests, have thus, beenturned on the employees and become a sword for unilateral action byemployers.

B. The Impact on Professional Sports of Expanding theNonstatutory Labor Exemption240

Multi-employer bargaining in professional team sports will beadversely affected as a result of the Brown decision. Brown signifi-cantly hinders the ability of employers and employees in profession-al team sports to achieve new collective-bargaining agreements.241


242. See Brief of Amici Curiae in Support of Petitioners at 1, Brown v. Pro Football,Inc., 116 S. Ct. 2116 (1996) (No. 95-388); see also infra note 243 and accompanying text.

243. Professional baseball, which has enjoyed an exemption from the federal anti-trust laws since the Supreme Court's decision in Federal Baseball Club v. NationalLeague of Professional Baseball Clubs, 259 U.S. 200 (1922), presents the best example ofthe instability that can result from an overbroad application of the nonstatutory laborexemption. Since the Court's ruling in 1922, professional baseball has had player strikesin 1972, 1980, 1981, 1985, and 1994–95. See Winter Meeting Hot for MLB, Low-key forMinor Leagues, AMUSEMENT BUS., Dec. 14, 1992, at 1. Further, the Major League Base-ball owners have locked out the players in 1973, 1976, and 1990. See id. In addition tothe problems encountered by Major League Baseball, following the 1989 Powell decision,the NFLPA decertified its union and various players filed antitrust suits against man-agement. See infra note 248 and accompanying text.

244. See, e.g., Mackey v. National Football League, 543 F.2d 606, 623 (8th Cir.1976); Smith v. Pro Football, Inc., 420 F. Supp. 738, 746 (D.D.C. 1976); Robertson v.National Basketball Ass'n, 389 F. Supp. 867, 893 (S.D.N.Y. 1975).

245. For instance, the National Basketball Association enjoyed 10 consecutive collec-tive-bargaining agreements from 1967 until 1994. See National Basketball Ass'n v. Wil-liams, 45 F.3d 684, 686 (2d Cir. 1995); see also infra note 248 and accompanying text.

246. See, e.g., Kapp v. National Football League, 390 F. Supp. 73, 82 (N.D. Cal.1974); Mackey v. National Football League, 543 F.2d 606, 620–22 (8th Cir. 1976); Smithv. Pro Football Inc., 593 F.2d 1173, 1183–87 (D.D.C. 1978).

The experiences of the National Football League, Major LeagueBaseball, and the National Basketball League, all demonstrate thesevere and adverse consequences that result from an extension ofthe antitrust exemption.242 For instance, when employers in profes-sional team sports have been granted an overbroad immunity fromantitrust attack for their unilateral imposition of labor market re-straints, it has resulted in lockouts, strikes, and union decertifica-tion.243 In contrast, when the nonstatutory labor exemption has beenlimited,244 history shows that collective-bargaining has beenfacilitated, resulting in employee and employer compromise.245

1. Professional Football

The distinction between an appropriate limit on the scope of thenonstatutory labor exemption and an overly broad application of thenonstatutory labor exemption is evident in the chain of professionalfootball cases before and after the decision in Powell. For instance,before the decision in Powell, unreasonable restraints on playerservices were found to violate the rule of reason and, consequently,subjected the NFL clubs to liability under the antitrust laws if theserestraints were imposed without union consent.246 During this pe-riod, successful multi-employer collective-bargaining occurred, and


247. See Brief of Amici Curiae in Support of Petitioners at 2, Brown v. Pro Football,Inc., 116 S. Ct. 2116 (1996) (No. 95-388).

248. See Corcoran, supra note 41, at 1064. Following the decision in Powell, theNFLPA decertified its union. See id. Following decertification, several cases followedattacking various player restraints on antitrust grounds. See, e.g., White v. NationalFootball League, 822 F. Supp. 1389 (D. Minn. 1993); Jackson v. National FootballLeague, 802 F. Supp. 226 (D. Minn. 1992).

249. See Mark Asher, NFLPA Regains Certification as Players Union, WASH. POST,Apr. 2, 1993, at C5. Following the league's recognition of the NFLPA as the exclusiverepresentative of the players, the NFL and the Players Association resumed negotiationsover such issues as free agency, a salary cap, and the college draft. See id.

250. See Brief of Amici Curiae in Support of Petitioners at 5, Brown v. Pro Football,Inc., 116 S. Ct. 2116 (1996) (No. 95-388).

251. See id.252. See id.

resulted in compromise.247 After the decision in Powell, labor rela-tions in professional football deteriorated.

The cases involving professional football player restraints afterthe decision in Powell demonstrate how the extension of the non-statutory labor exemption can inhibit the process of collective-bar-gaining. Following the expansion of the nonstatutory labor exemp-tion in Powell, which allowed the NFL clubs to unilaterally imposeanticompetitive restraints, the NFL players decertified their unionto assert their rights under the antitrust laws.248 Not until 1993,following a host of antitrust suits brought by players against theNFL, was the NFLPA union reconstituted and collective-bargainingresumed.249

The decertification of the NFLPA and the numerous antitrustsuits brought by the players after Powell demonstrates how collec-tive-bargaining is inhibited by an overbroad extension of the non-statutory labor exemption.250 By shielding management from anti-trust attack, unilateral imposition of anti-competitive player re-straints resulted, followed by labor strife and union decertifica-tion.251 Neither result served any national labor policy or promotedcollective-bargaining.252

2. Professional Basketball

The decision in Brown not only affects professional football, butother professional sports as well. For instance, professional basket-ball is another sport in which both antitrust and labor law objectivescan be achieved by limiting the scope of the nonstatutory labor


253. See infra notes 255–61 and accompanying text.254. See infra notes 262–68 and accompanying text.255. See, e.g., Robertson v. National Basketball Ass'n, 389 F. Supp. 867, 884

(S.D.N.Y. 1975) (holding that the nonstatutory labor exemption did not protect restraintson competition for players imposed without union consent and that the labor exemptiondid not prevent a suit by the players on antitrust grounds).

256. See National Basketball Ass'n v. Williams, 45 F.3d 684, 685–86 (2d Cir. 1995)(noting that since 1967, the NBA and the NBA Players Association has entered into tenconsecutive collective-bargaining agreements).

257. See Bridgeman v. National Basketball Ass'n, 675 F. Supp. 960, 962 (D.N.J.1987). The proposed change, creating a salary cap, altered the system of player re-straints created after the decision in Robertson. See id.

258. See id.259. See id.260. See Wood v. National Basketball Ass'n, 809 F.2d 954, 957 (2d Cir. 1987).261. See Bridgeman, 675 F. Supp. at 962–63. The NBA and NBPA reached a new

collective-bargaining agreement on April 26, 1988. See Lock, supra note 1, at 341 (citing1988 Collective-bargaining Agreement Between National Basketball Association and Na-tional Basketball Players Association).

exemption. Similar to professional football, labor relations havedeteriorated since the National Basketball Association (NBA) andits member clubs, anticipating protection from the antitrust laws,unilaterally implemented unreasonable player restraints.253 In con-trast, the collective-bargaining process has been promoted when theantitrust laws have been applied to the unreasonable restraints.254

Before 1994, unilateral imposition of anti-competitive restraintsby the NBA were subject to the antitrust laws255 and consequently,the NBA owners were more receptive to collective-bargaining agree-ments with the players.256 For instance, in 1983, the NBA clubsthreatened to unilaterally implement a salary cap system.257 In re-sponse, the players sued under the antitrust laws.258 After a specialmaster decision, holding that the owners could not unilaterally im-pose the salary cap, the NBA clubs instead resumed collective-bar-gaining negotiations.259 The result of the negotiations was an agree-ment in 1983 between the NBA and the Players Association (NBPA)that created a new salary cap and free agent system.260 Similarly, atthe end of the 1986–87 season, when a New Jersey district courtrejected the NBA's imposition of additional player restraints andarguments for expanding the scope of the nonstatutory labor exemp-tion, the owners and players ultimately agreed to a new seven-yearcollective-bargaining agreement.261

In contrast, labor relations deteriorated when a decision by theUnited States Court of Appeals for the Second Circuit in 1995 held


262. See National Basketball Ass'n v. Williams, 45 F.3d 684, 686 (2d Cir. 1995).263. See Scott Howard-Cooper, NBA Makes Its Move to Avert a Stoppage, L.A.

TIMES, Oct. 27, 1994, at C1; see also Jake Curtis, NBA Season in Limbo, S.F. CHRON.,Aug. 29, 1995, at D1.

264. The NBA players scheduled a vote for September 7, 1995 to determine whetherto decertify their union. See Curtis, supra note 263, at D1. The decertification vote re-sulted in more than 61% of the National Basketball League players voting against decer-tification. See John Jackson, NBA Crisis Over, But Players Still Feeling Divided, CHI.SUN-TIMES, Sept. 14, 1995, at 106.

265. See Ira Winderman, NBA's Stern Expects Season to Start on Time, FT. LAUD-ERDALE SUN-SENTINEL, Aug. 17, 1995, at 1C.

266. According to NBA Commissioner David Stern, the result of a vote by the NBAplayers would almost have certainly delayed the start of 1995 NBA season. See Curtis,supra note 263, at D1.

267. See supra note 264 and accompanying text.268. The analysis applied to professional football and basketball can also be applied

to professional hockey, where the antitrust laws have been applied to player restraintsunilaterally imposed by the National Hockey League (NHL) clubs, thereby promptingsuccessful collective bargaining. See Brief of Amici Curiae in Support of Petitioners at 7,Brown v. Pro Football, Inc., 116 S. Ct. 2116 (1996) (No. 95-388) (citing PhiladelphiaWorld Hockey Club, Inc. v. Philadelphia Hockey Club, Inc., 351 F. Supp. 462 (E.D. Pa.1972) and Linseman v. World Hockey Ass'n, 439 F. Supp. 1315 (D. Conn. 1977)). Forinstance, after the last professional hockey collective-bargaining agreement expired inSeptember 1993, the NHL clubs desired to implement a new salary cap, but the Nation-al Hockey League Players Association (NHLPA) opposed the plan. See id. Despite reach-ing an impasse in the negotiations, the NHL clubs did not attempt to impose the salarycap, believing that such action would subject them to the antitrust laws. See id. In fact,Harry Sinden, the President of the Boston Bruins, admitted that he believed that the

that labor restraints imposed by a multi-employer bargaining unitwere exempt from the antitrust laws until the players decertifiedtheir union.262 As a result, the NBA experienced the threat of thefirst lockout in its history,263 as division amongst the NBA playersensued over whether to decertify the player's union to enable indi-vidual players to bring antitrust suits against the league.264 In addi-tion, the clubs threatened to continue their lockout if the playersvoted to decertify the union.265 These events threatened to delay thestart of the NBA season.266

Fortunately, a majority of the NBA players voted not to decerti-fy their union and eventually reached a new collective-bargainingagreement.267 However, these events signify the danger inherent inthe Brown decision, which extends the nonstatutory labor exemp-tion. Similar to the results in professional football, when courts haveexpanded the reach of the nonstatutory labor exemption to profes-sional basketball player restraints, labor strife and the threat ofunion decertification followed.268 Thus, Brown is contrary to the


antitrust laws would apply, stating that “`[a]t the moment we have no plans to imple-ment anything the way the baseball owners did. We don't have the (antitrust) protectionthey do.'” Id. at 7–8 (citing Joe Gordon, NHLPA Eyes Suit; Owners May Hear AntitrustCharge, BOSTON HERALD, Dec. 25, 1994, at B24). Instead, the NHL owners instituted alock-out of the players, which eventually led to a new collective-bargaining agreement.See id. The interaction of the NHL clubs and the NHLPA demonstrate that when theantitrust laws apply, the collective-bargaining process works.

269. See supra note 243 and accompanying text.270. See MATTHEW C. MCKINNON ET AL., SPORTS LAW 3-1 (1996). See id. As stated by

the owners, the reasons for the reserve rule were that:The financial results of the past season prove[d] that salaries must come down.[The owners] believe[d] that players in insisting on exorbitant prices are injur-ing their own interests by forcing out of existence clubs which cannot be runand pay large salaries except at large personal loss. The season financially[was] a little better than 1878; but the expenses of many of the clubs have farexceeded their receipts, attributable wholly to the large salaries. In view ofthese facts, measures [must] be taken by th[e] league to remedy the evil tosome extent in 1880.

Id. (citing House Subcomm. on Study of Monopoly Power, H.R. DOC. NO. 82-2002, at 22).271. See supra note 270 and accompanying text.272. See Flood v. Kuhn, 407 U.S. 258 (1972); Federal Baseball Club v. National

League, 259 U.S. 200 (1922).

history of collective-bargaining in professional sports and hindersthe process of collective-bargaining.

3. Professional Baseball

Perhaps the sport that provides the most persuasive example ofthe need to limit the scope of the nonstatutory labor exemption isprofessional baseball. Throughout the history of professional base-ball, which has enjoyed protection from the antitrust laws, laborrelations have been anything but stable.269 Starting in 1879, MajorLeague Baseball (MLB) operated under a uniform pledge by theteam owners to refrain from competitive bidding for players' ser-vices.270 This pledge, which became known as the “reserve system,”provided that once a player signed a uniform player contract with ateam, he was the property of that team and other clubs would re-frain from attempting to employ him.271 This system was challengedunder the antitrust laws, but the Supreme Court found that base-ball was exempt from the antitrust laws.272

Recognizing that professional baseball enjoys an exemptionfrom the antitrust laws, it is curious to note that during each of thelast eight collective-bargaining negotiations between the clubs and


273. See supra note 243 and accompanying text.274. See id.275. See Brief of Amici Curiae in Support of Petitioners at 8, Brown v. Pro Football,

Inc., 116 S. Ct. 2116 (1996) (No. 95-388).276. See id.277. See id.278. See id. at 8–9.279. See id. at 9.280. Like those instances in professional football, basketball, and hockey, in which

the antitrust laws have been found to apply and the courts have limited the nonstatu-tory labor exemption, if professional baseball clubs were subject to the antitrust laws,their labor relations would stabilize. As Neil Austrian, President of the National FootballLeague noted, baseball's antitrust exemption “really precipitated and prolonged the[1994–1995] strike.” Brief of Amici Curiae in Support of Petitioners at 9, Brown v. ProFootball, Inc., 116 S. Ct. 2116 (1996) (No. 95-388) (citing Moneyline (CNN television

the Players Association, there has been some form of work stoppage.For instance, in 1972, 1980, 1981, 1985, and 1994–1995, the MajorLeague Baseball players went on strike.273 In 1973, 1976, and 1990,the MLB owners locked-out the players.274 The MLB clubs' attemptto impose restraints on players' services has created the majority ofthese conflicts.275 For instance, the player strikes in 1980 and 1981were the result of the MLB owners' attempts to eliminate freeagency through use of a compensation system whereby a club thatsuccessfully obtained another team's free agent player had to com-pensate the player's former team with a player from its roster.276 In1985 and 1990, the clubs proposed to implement a salary cap sys-tem.277 The salary cap system limited the amount that each clubcould provide to players as compensation and resulted in a playerstrike in 1985 and a lockout by the owners in 1990.278 Most recently,the players' strike that resulted in the cancellation of the 1994World Series, was the product of the MLB owners' attempt to onceagain implement a salary cap system, without the consent of theplayers' union.279

The history of labor relations in Major League Baseball demon-strates the danger of providing employers with an exemption fromthe antitrust laws. Throughout the history of professional baseball,the clubs have continuously used their exemption from the antitrustlaws to restrict competition and impose various player restraints.Clearly, the decision by the clubs to implement these terms has beendriven by the belief that they are immune from the antitrust laws.The results have been strikes, lockouts, decreased fan loyalty, andan overall decrease in the effectiveness of the business of baseball.280


broadcast, Dec. 7, 1995, Transcript No. 1565)).281. See Gould, supra note 222, at 9.282. Id.283. See id.284. See id.285. Id.

Brown brings labor relations in other professional sports, suchas football and basketball, closer to the tenuous relationship thathas existed between labor and management in professional baseball.Brown increases instability in labor relations, and in addition to theaffect on individual employees, appears to suggest that unions mustdecertify (forego benefits of representation of members through theunion) before being capable of bringing suit on antitrust grounds.281

This result could affect the advantages of the collective-bargainingprocess that antitrust and labor laws were to achieve.

The decision in Brown “may have a significant impact on pro-fessional sports unions, perhaps affecting their very existence.”282

Decertification has several consequences. For instance, unions willhave greater bargaining power to fight for broad free-agency rules.283

However, a decertified union cannot represent players in grievancesor administer pensions and union benefits.284 “In addition,decertification may leave unions with no legal means for gatheringand distributing salary information to players and to agents, a linch-pin of contract negotiations with teams and players.”285

In addition to its effect on unions, Brown does little to promotethe collective-bargaining process and the objective of labor and anti-trust laws. Rather, as history has shown in the context of profes-sional football and basketball, extending the nonstatutory laborexemption as the Brown Court has, increases the likelihood ofstrained labor relations.

PART VI: RECOMMENDATION

Any proposed standard related to the scope of the nonstatutorylabor exemption requires a balancing of the antitrust laws and laborlaws. Furthermore, the standard must aim to encourage, ratherthan hinder, the collective-bargaining process. Consequently, thisNote proposes limiting the scope of the nonstatutory labor exemp-tion to the terms of employment contained in the collective-bargain-


286. See generally Brief of Amici Curiae in Support of Petitioners at 9–12, Brown v.Pro Football, Inc., 116 S. Ct. 2116 (1996) (No. 95-388).

ing agreement between a union and employer.286 Under this ap-proach, both antitrust and labor law objectives will be served. Em-ployees will no longer be forced by Brown to abandon collective-bar-gaining to assert their antitrust rights. Furthermore, there is noindication that limiting the nonstatutory labor exemption to termscontained in the collective-bargaining agreement will impede collec-tive-bargaining by shifting the bargaining power in favor of employ-ees. First, so long as employers adhere to the rule of reason in imple-menting their proposals, they will be shielded from antitrust attack.Second, employers may still use lockouts and other similar weaponsto achieve collective-bargaining agreements with unions. Further-more, this limitation will ensure that employees do not have todecertify their unions to assert their antitrust rights. As the historyof professional sports has demonstrated, limiting the nonstatutorylabor exemption promotes, rather than hinders, the collective-bar-gaining process.

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