IN THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
NATIONAL BASKETBALL ASSOCIATION, ET AL.,
CHARLES L. WILLIAMS, ET AL.,
ON APPEAL FROM AN ORDER OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
BRIEF FOR THE UNITED STATES AS AMICUS CURIAE
TABLE OF CONTENTS
STATEMENT OF ISSUE PRESENTED
STATEMENT OF THE CASE
TABLE OF AUTHORITIES
Anderson v. Shipowners Ass'n, 272 U.S. 359 (l926)
Connell Construction Co. v. Plumbers & Steamfitters
Local Union No. 100, 42l U.S. 6l6, 62l-622 (l975
Gardella v. Chandler, l72 F.2d 402 (2d Cir. l949
Laborers Health and Welfare Trust Fund for
Northern California v. Advanced Lightweight
Concrete Co., 484 U.S 539 (1988)
Powell v. National Football League,
930 F.2d l293 (8th Cir. l989), cert. denied,
498 U.S. l040 (l99l)
Radovich v. NFL, 352 U.S. 445 (l957)
Statutes and Rules:
Fed. R. Civ. P. 65(a)(2)
Brief for the United States as Amicus Curiae,
Powell v. National Football League,
S. Ct. No. 89-l42l (l990)
STATEMENT OF ISSUE PRESENTED
Whether, after a collective bargaining agreement expires, management may
claim the non-statutory labor exemption from the antitrust laws for a
labor market restraint for as long as the collective bargaining
STATEMENT OF THE CASE
1. The National Basketball Association and its member teams ("NBA") on
June l7, l994, sued several of their players and their union ("Players")
seeking a declaratory judgment that various of their practices do not
violate the federal antitrust laws. The defendants counterclaimed
alleging that the practices do violate the antitrust laws and sought
preliminary injunctive relief. The district court (Hon. Kevin Duffy)
consolidated the matters for trial pursuant to Rule 65(a)(2), Fed. R.
Civ. P., and on July l8, l994, it entered judgment for the NBA. The
Players immedately appealed and on July l9, l994 filed a motion to
expedite the appeal. The Court on July 2l, l994 granted that motion.
2. In l988 the NBA and the players signed a collective bargaining
agreement to last until the conclusion of the l993- l994 season. It
provided for a draft of eligible college players, the right of first
refusal for existing teams when its restricted free agent players sought
to sign with another team, and a cap on overall player salaries.
Earlier this year the parties started bargaining toward a new agreement,
but when the existing agreement expired on June 23, l994, they had not
been able to agree on these issues. The players claimed that if
management continued the practices it would violate the antitrust laws.
Further efforts to negotiate, according to the district court, were
unsuccessful. Both parties turned to the court for relief.
The district court after a consolidated preliminary injunction
hearing/merits trial ruled for the NBA. Following the Eighth Circuit's
decision in Powell v. National Football League, 930 F.2d l293 (8th Cir.
l989), cert. denied, 498 U.S. l040 (l99l), it held that the NBA's
nonstatutory labor exemption continues "as long as a collective
bargaining relationship exists." Slip op. at 24. Alternatively, the
court held on the antitrust merits that the challenged agreements do not
violate the antitrust laws. Id. at 25-28.
1. The United States believes that the Powell standard adopted by the
district court substantially overstates the scope of the nonstatutory
labor exemption from the federal antitrust laws. The reasons for our
position are expressed at length in a brief we filed in the Supreme
Court in support of the petitioners in that case. Brief for the United
States as Amicus Curiae, Powell v. National Football League, S. Ct. No.
89-l42l (l990). Since that brief is before the Court, we will summarize
Employer-imposed restraints affecting only labor markets are not beyond
the scope of the antitrust laws. Gardella v. Chandler, l72 F.2d 402,
408 (2d Cir. l949)(L. Hand, J.); id. at 4l3 (Frank, J.); Radovich v.
NFL, 352 U.S. 445 (l957); Anderson v. Shipowners Ass'n, 272 U.S. 359
(l926). Rather, such immunity as these restraints enjoy is inferred due
to the need to reconcile the antitrust laws with the important
congressional policy favoring collecting bargaining expressed in the
National Labor Relations Act. Connell Construction Co. v. Plumbers &
Steamfitters Local Union No. 100, 42l U.S. 6l6, 62l-622 (l975). The
broad thrust of that Act, however, is to expand the protection afforded
employees. And nothing in the NLRA shows any congressional intent
broadly to deprive unionized workers of the antitrust laws' protection
from employer-imposed restraints on competition in the labor market.
Thus, the immunity should last no longer than clearly necessary to the
successful functioning of the statutory labor scheme.
We think that as a matter of logic that point is impasse in the
bargaining, for that is the point at which the labor laws let management
bring to bear important new legal and economic leverage--such as
unilaterally imposing new terms consistent with a good faith pre-impasse
bargaining position. See generally Laborers Health and Welfare Trust
Fund for Northern California v. Advanced Lightweight Concrete Co., 484
U.S 539, 543 n.5 (1988). But, because impasse is not always readily
identifiable, see id. at 552, and because the labor laws counsel caution
in declaring an impasse, we believe that appropriate deference to the
policies of the labor laws would counsel recognizing the immunity for a
reasonable period beyond impasse to allow the employer to ascertain,
upon advice of counsel, that impasse has occurred and to adjust its
business operations so as to avoid antitrust liability.
How long after impasse the nonstatutory labor exemption should last is
not a question susceptible of simple, bright-line treatment in all
cases. A variety of factors might be taken into account in determining
whether employers were reasonably on notice that impasse had occurred
and whether they had had reasonable opportunity to react. In some
circumstances, however, it will be clear that that point has been
reached. For example, if the employer avails himself of rights that
accrue only upon impasse, such as the right unilaterally to impose new
terms of employment, there can be little doubt that he understands that
the negotiations have reached impasse.
Extending the immunity beyond that point to the end of the collective
bargaining relationship, as Powell and the district court opinion do,
forces the union to give up the collective bargaining relationship--
i.e., be decertified as collective bargaining agent--in order to claim
antitrust rights. While this result seemed not to trouble the district
court (Op. at 25), we are convinced that such a rule disserves both
labor and antitrust interests and that Congress in enacting a worker
protection statute never intended it.
2. Because the district court based its holding as to immunity solely
on its conclusion that the nonstatutory labor exemption continues so
long as there is a collective bargaining relationship, that holding
constitutes legal error and the judgment should not be affirmed on that
ground. It is not possible to determine from the district court's
findings whether the NBA's conduct to date is immune under a proper
interpretation of the exemption. The Players take the position that
impasse has been reached, but the NBA disagrees. The district court
made no finding on the point because, under the legal standard it
adopted, impasse has no significance. It also lacked any reason to
consider whether, if impasse has occurred, the NBA has had a reasonable
opportunity to ascertain that fact and to make adjustments.
Moreover, it is not clear whether the district court's order declaring
"continued implementation" of the disputed terms not to violate the
antitrust laws as long as it is implemented as part of a continuing
collective bargaining relationship (Op. 24-25) authorizes unilateral
changes in those terms after impasse. The NBA's complaint appears
broadly to claim the nonstatutory labor exemption for fulfilling
obligations or exercising rights under the federal labor laws, within a
collective bargaining relationship.3 The district court apparently
agreed, emphasizing that labor law governs all disputes arising between
parties in a collective bargaining relationship. See Op. 13, 18, 24,
25. Nothing in the court's opinion suggests that any event short of
decertification of the union would terminate the exemption. Thus, the
district court's decision may immunize conduct that would clearly fall
outside the exemption as we understand it.
Because the district court based its holding as to immunity solely on
its conclusion that the nonstatutory labor exemption continues so long
as there is a collective bargaining relationship, that holding
constitutes legal error and the judgment should not be affirmed on the
ground that the nonstatutory labor exemption immunizes the NBA's conduct
from antitrust scrutiny.
ANNE K. BINGAMAN
Assistant Attorney General
DIANE P. WOOD
Deputy Assistant Attorney General
CATHERINE G. O'SULLIVAN
ROBERT B. NICHOLSON
Department of Justice
Washington, D.C. 20530
1 The United States does not address the district court's alternative
ruling that as a matter of substantive antitrust law the challenged
practices are not unlawful.
2 The Players have submitted copies to the Court, and thus we will not
burden the Court with yet more copies.
3 The NBA's complaint expressly states that it has the "right under the
federal labor laws" not only to continue in effect the terms of the
expired contract but also "to make unilateral changes consistent with
its pre-impasse proposals." Complaint 100. It further alleged that
the risk of antitrust liability was preventing it from "fulfill[ing] its
obligations or exercis[ing] its rights under the labor laws" after
expiration of the contract. Complaint 101. And it asserts its
entitlement to a declaration that it would not violate the antitrust
laws by continuing in effect the disputed provisions past the expiration
of the contract "because such action is governed solely by the labor
laws and is exempt from antitrust liability under the nonstatutory labor
exemption to the antitrust laws." Complaint 105.
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