Mr. Griffith practices in the area of business, antitrust and sports law. He was educated at Dartmouth College and the William Mitchell College of Law. He was an Executive Vice-President of the Minnesota Twins and was a member of Major League Baseball's Player Relations Committee. He also served as Chairman of Major League Baseball Properties and on other Major League Committees. He has represented various teams in labor matters and represents the Northern League as well as non-sports clients.
 

The sports industry has been the battle ground for memorable antitrust-labor cases, as owners and players fought protracted conflicts at the collective bargaining table and in antitrust courtrooms. What players were unable to achieve in bargaining they attempted to achieve in courts, as judges struggled to determine the boundaries between antitrust and labor law. These cases have been the focal point of considerable interest due to the high degree of public fascination with the bitterly contested and divisive battles that have been played out by the contestants. The Supreme Court has clarified these issues, and future owner-player disputes should be confined to collective bargaining.

However, when Major League Baseball's collective bargaining agreement expires in 2000 or 2001,⁽¹⁾ there may be an effort to test again the boundaries separating the two bodies of law that control markets.

This article will examine the search for the bright line in the antitrust-labor interface, its current placement and how it will affect future negotiations.

History of the Labor-Antitrust Nexus

It is now apparent that Congress and the Supreme Court desire to separate labor and antitrust issues by maintaining the national labor policy supporting collective bargaining in a delicately balanced environment that mandates a process and not a result. It has not always been this way.

The Sherman Act was passed in 1890. Samuel Gompers, the most prominent labor leader of the day, had expressed great concern to Senator Sherman that the Act could be used against labor. The Senator assured Gompers that no such application was intended or expected. From the beginning, however, Gompers proved correct and courts routinely granted injunctions against unions that "conspired" to strike or boycott employers.⁽²⁾

Congress reacted to this judicial intervention by including sections 6 and 20 in the Clayton Act of 1914, which contained, among other provisions, express language that "the labor of a human being shall not be considered a commodity in interstate commerce." 15 U.S.C. §17. This language has been subject to various interpretations. The prevalent thought, however, has been that Sections 6 and 20 of the Clayton Act created a "statutory exemption" for unions from antitrust.⁽³⁾ It became clear that unions would not be subject to antitrust unless they joined with non-labor groups to restrain trade.⁽⁴⁾

Further efforts to eliminate courts from labor matters can be found in the Norris LaGuardia Act of 1932, 29 U.S.C. §§1101-15, which bars courts from enjoining peaceful labor activities. Section 4 of that Act describes a labor dispute as "any controversy concerning a term or condition of employment regardless of whether or not the disputants stand in the proximate relationship of employer and employee."

In 1935, the passage of the National Labor Relations Act, 29 U.S.C. §§ 151-169, conferred jurisdiction in labor matters to the National Labor Relations Board. The act limited judicial intervention in labor cases. Courts, however, continued to be involved in labor matters, although in a less activist way. Apex Hosiery v. Leader, 310 U.S. 469 (1940) and United States v. Hutcheson, 312 U.S.219 (1941) showed a tendency to expand labor exemptions from antitrust claims. In Apex Hosiery, the court stated that "the labor of a human being was not a commodity ... in commerce, nor shall such [labor] organizations,. . . be held to be illegal combinations. . .under the antitrust laws." Apex Hosiery, 310 U.S. at 502-3. In Hutcheson, union officials were indicted under the Sherman Act for illegal activities. The Court applied the statutory exemption and stated that " so long as the union acts in its own self interest and does not combine with the non-labor groups, the licit and illicit under [Clayton Act] Section 20 are not to be distinguished. Hutcheson, 312 U.S. 231.

It was not until 1965 that the Supreme Court ruled decisively on this issue. In United Mine Workers v. Pennington, 381 U.S. 657 (1965), an antitrust claim that unions conspired with management to put competitors out of business was upheld, and in Amalgamated Meat Cutters v. Jewel Tea Co., 381 U.S. 676 (1965), an antitrust claim was dismissed because the labor union and management reached a decision that affected only the union members and, therefore, was purely labor in its impact. The decisions, however, are very complex. In Pennington, three Justices held that a Sherman Act cause of action had been stated, three Justices concurred in the result, and three dissented from the opinion but concurred in the result. In Jewel Tea, a union was found to be within the labor exemption by three Justices, three Justices concurred in a separate opinion, and three dissented. Justice Goldberg's separate opinion, in which he was joined by Justices Harlan and Stewart, dissented from the opinion in Pennington but concurred with the result, and concurred with the decision in Jewel Tea. He stated that "in order to effectuate Congressional intent, collective bargaining activity concerning mandatory subjects of bargaining under the Labor Act is not subject to the antitrust laws." 381 U.S. at 697. This decision set the stage for three decades of sports disputes determining the limits of the nonstatutory exemption.⁽⁵⁾

Antitrust History of Sports Leagues Not Covered By The Baseball Exemption

The unique needs of sports leagues and associations create an environment from which antitrust actions arise with regularity. First, there is the question of whether members of a league are competitors or joint venturers. The teams, while competitors on the field, court or rink, are in fact part of a single whole, the league,⁽⁶⁾ which produces a single product, a season of games culminating in a championship. Leagues also are required to collaborate on uniform rules relating to the games produced. The leagues' organizational rules are often restraints which control player movement from team to team and, for hockey and baseball, between a major league team and minor league affiliates. The league's rules regulate the number of players employable, salaries to some extent, and the ability of teams to acquire players from other teams. Leagues also attempt to allocate territories among their members.

Thus, a sports league is not a group of competitors in the normal sense. Each team is dependent on the others. The Yankees, Knicks, and Rangers depend on the Twins, Clippers, and Senators for their very existence, for without them they cannot produce a product. The product must be produced according to rules that are necessary to provide a marketable product, which is a game. The value of any particular game is based upon the playing skill of the players, their nearly equal distribution among the teams, and the essential fact that the outcome of each game is in doubt. The aim of the managers of the game is to create and maintain "competitive balance." Successful baseball seasons are measured by the ratio of victories between the competing teams, with the best teams winning slightly less than 60 per cent and the worst teams winning something more than 40 per cent Thus, the determination of champions is based on success or failure in every fifth game, the best and worst both having won two of the preceding four.⁽⁷⁾ This competitive balance is the sine qua non of a league's continued existence. As such, it is the leagues' central concern, and it is mainly dependent upon the imposition of restraints on the labor market. These restraints relate to the distribution of skilled players throughout the league and is seen in waiver rules, player drafts, trading restrictions and reserve systems. Restraints on this market in other sports have been met mainly by antitrust claims, while baseball has tested the appropriateness of these restraints in arbitration and collective bargaining. Antitrust's role in determining the legality of such restraints has been very important, although courts have gradually recognized the fact that labor matters are best left to labor professionals and that antitrust has no role in the determination of labor matters. The process by which this conclusion has been reached has been tumultuous. The first case to test the application of the nonstatutory exemption to sports cases, Mackey v. NFL, 543 F.2d 606 (8th. Cir. 1976), dealt with the NFL's application of the Rozelle Rule, which imposed a system of compensation on any team that signed a free agent player. This system operated as a very significant restraint on player movement. The court, ruling that the Rozelle Rule was not exempt from antitrust scrutiny, sets forth the "Mackey rule" for analysis of future claims. This rule exempts agreements in which "the restraint on trade affects only the parties to the collective bargaining agreement, concerns a mandatory subject of bargaining, and is the product of bona fide arm's-length bargaining." Id. at 614.

In Wood v. NBA, 602 F. Supp. 525 (S.D. N.Y.1984), aff'd, 809 F.2d. 954 ( 2nd. Cir. 1987), O. Leon Wood, a college player drafted by an NBA team, challenged the college player draft and salary cap as restraints on the labor market and, as such, a violation of Section 1 of the Sherman Act. Wood claimed that he was not part of the bargaining, could not be bound by it, and that Mackey should not apply. The Second Circuit ruled that the draft and salary cap were a part of a collective bargaining process and rejected Wood's claim by stating that it "subverted the national labor policy." Wood, 809 F.2d. at 959. That policy is, of course, to maintain the delicate balance between negotiators in labor disputes to protect the process, not to guarantee the result.

In Wood, the restraints, immunized by the collective bargaining process, were binding on current and potential members of the bargaining group because they were agreed to during valid, bona fide arm's length negotiations of a labor contract. The restraint lay purely on the labor market and, as such, was exempted from antitrust.

The players again challenged NFL free agency restrictions in Powell v. NFL, 678 F. Supp.777 (D. Minn. 1988), although the restrictions had been part of a bargaining process, affected only the parties to the agreement, concerned a mandatory subject of bargaining, and were the product of bona fide arm's length negotiations. The players argued that the exemption did not survive the expiration of the agreement.

The key issue in Powell was whether or not the exemption extended past the termination of the contract and, if it did, whether it expired when impasse was reached during negotiations or when the union was decertified. Judge Doty's decision analyzed the positions of the parties and rejected both arguments, ruling that "the labor exemption related to a mandatory bargaining subject survived expiration of the collective bargaining agreement until the parties reach impasse as to that issue." Id. at 788. Judge Doty indicated an unwillingness to apply the nonstatutory exemption fully "because the issue had not been ruled upon by a majority of the Supreme Court and that absent such specific directive, . . . [he] will not extend ...blanket protection to union-employer agreements merely because the challenged activity arises within the context of mandatory collective bargaining." Id. at 783. The Eighth Circuit Court of Appeals overturned his view and found the restraints in Powell "were exempted from antitrust scrutiny as the exemption survived impasse." Powell v. NFL, 888 F.2d 559 (8th. Cir.1989)

In the aftermath of the Powell case, the NFLPA decertified by asking for and receiving authority from its members to revoke its or anyone else's authority to engage in collective bargaining for them. The NFLPA filed notice of its terminated status with the Department of Labor and the stage was set for further litigation. After a series of cases,⁽⁸⁾ which were paid for by the purportedly defunct NFLPA, the parties attempted to enter into an agreement. However, under the labor laws, the decertified NFLPA was unable to represent the players unless they were re-certified. If that occurred, the nonstatutory exemption would have been activated. The agreement, reached with the properly re-certified union, recognized the existence of the nonstatutory exemption for the term of the agreement, but states that no antitrust claim can be filed after expiration until the parties reach impasse or six months has passed, whichever is later. The league has agreed not to assert any antitrust exemption defense based on any claim that the decertification is a sham.⁽⁹⁾

In 1994, in NBA v. Williams, 857 F. Supp. 1069 (S.D. N.Y. 1994), the NBA sought declaratory judgment that the college draft, right of first refusal, and salary cap did not violate the antitrust laws. Judge Duffy examined the facts and applicable case law and granted the NBA's motion. Indicating some impatience with the players, Judge Duffy stated that "they may not avail themselves [of] the benefits of the federal antitrust and labor laws at the same time." Id. at 1078. He characterized the main issue

"as a case where neither party cares about this litigation or the result thereof. Both are simply using the court as a bargaining chip in the collective bargaining process. . . . A recitation of the history of these lawsuits demonstrates this and puts this litigation in its proper context, i.e., a labor dispute that does not belong in litigation."

NBA v. Williams, 857 F. Supp. at 1071.

The decisions in Powell and Williams set the stage for the definitive antitrust-labor case of the last forty years, the Supreme Court's 8-1 decision in Brown v. Pro Football, 518 U.S. 213 (1996) (Stevens, J., dissenting). During the collective bargaining following the expiration of the agreement in 1987, a side issue developed that provided the factual underpinning for the case. In early 1989, the National Football League developed a plan that would allow each team to employ up to six players, who were placed on a non-active roster. These players would be able to practice with the team but not appear on active rosters for games unless promoted to the active list. The compensation to be paid these players was an issue in collective bargaining, with management offering $1,000 per week and the union insisting on the player's right to negotiate the terms of the individual contracts. Negotiations continued until the Fall, with no change in either position. The parties were clearly at impasse and the NFL implemented its compensation plan. The NFL Player's Association issued notice that the compensation plan was illegal and filed suit on May 9, 1990. Brown v. Pro Football, 782 F. Supp. 125 (D. D. C. 1991).

The jury awarded the players a trebled verdict of $30,349,642. The real battle had been fought and lost by the owners when Judge Royce Lamberth granted partial summary judgment denying them the right to assert the nonstatutory labor exemption as a defense. The owners, after acting appropriately under the under the labor law, found themselves subject to a huge antitrust penalty. Where later courts would first shatter then bury this notion, Lamberth's reasoning is important because it indicates the full range of problems that arise when labor cases hit the antitrust courtroom.

In the Brown summary judgment hearing, the Judge recognized "the obligation of management to maintain mandatory subjects of bargaining after expiration of a collective bargaining agreement and that this policy is based on a desire to promote industrial peace." Brown,782 F. Supp. at 131 (quoting Laborers Health & Welfare Trust Fund v. Advanced Lightweight Concrete Co. 484 U.S. 539, 544 n.5 (1988)), however, he also found "the nonstatutory labor exemption, and, necessarily, the terms of the collective bargaining agreement, should end at expiration of the agreement." Brown, 782 F. Supp. at 131.

Judge Lamberth reasoned that "the exemption is based on the player's consent to the restraint, and that the consent ends, as does the exemption, at expiration." Id. at 131. Furthermore, "the continuation of mandatory subjects and the imposition of the nonstatutory exemption hinders ... the execution of a new collective bargaining agreement."Id.

According to Judge Lamberth "ending the nonstatutory exemption at expiration honors the overall policy goal of the labor laws which is to foster negotiated agreements between labor and employees." Id. at 132. In addition to being wrong in its description of the national labor policy, which promotes a procedure and not a result, it is directly counter to the Eighth Circuit's decision in Powell. Judge Lamberth adds that the "threat of treble damages under the antitrust laws is one of the union's economic weapons in its collective bargaining arsenal. Exempting employers . . . deprives the union of a statutorily created bargaining chip in the negotiating process."⁽¹⁰⁾ Id. at 133.

The Court of Appeals for the DC Circuit spent little time analyzing the trial judge's decision, holding that "the district court erred in rejecting the appellant's claim that the nonstatutory labor exemption shields them from liability in this case." Brown v. Pro Football, 50 F.3d 1041 at 1045 (D.C. Cir. 1995). The circuit court opinion referred to the thirty-year history of the exemption and goes on to recite that

"there is one principle that seems clear; restraints on competition lawfully imposed through the collective bargaining process are exempted from antitrust liability so long as such restraints primarily affect only the labor market organized around the collective bargaining relationship. Thus, employees confronted with actions imposed lawfully through the collective bargaining process must respond not with a lawsuit brought under the Sherman Act, but rather with the weapons provided by the federal labor laws."

Brown v. Pro Football, 50 F.3d at 1045 (D.C. Cir. 1995)

The players' contention that the exemption applies only where a union has consented to a restraint on competition and that the exemption must be narrowly construed, is swept away by the court's conclusion that the nonstatutory labor exemption shields collective bargaining activity from antitrust challenge, and "because the fixed salary for developmental players is such an action, we hold that the exemption shields the clubs and the NFL from liability in this case." Id. at 1048.

Judge Edwards continued by stating that

"Two. . . principles [ ] guide our application of the nonstatutory labor exemption. First, the exemption must be broad enough in scope to shield the entire collective bargaining process established by federal law. Second, the case for applying the exemption is strongest where a restraint on competition operates primarily in the labor market and has no anticompetitive effect on the product market. We believe these principles find support not only in the Supreme Court's precedents, but also in the policies underlying both the NLRA and the Sherman Act."

Brown v. Pro Football, 50 F.3d 1041 at 1051 (D.C. Cir. 1995)

Judge Wald's dissent takes issue with the majority's drawing such a bright line between labor and antitrust matters. Her analysis deals with the application of antitrust rules to labor matters where there is no union, and even analogizes the NFL to a monopsony situation. She fears that consumers and players will be injured by the imposition of restraints on players. Brown, id. at 1061. While it is true that absent collective bargaining agreements, antitrust applies to unreasonable employer imposed restraints on labor, and the players can have that situation by decertifying the union or can have the rights of labor under the NLRA, but they can not have both.

Brown v. Pro Football, 518 U.S. 231 (1996), provided the Supreme Court with an excellent fact situation for the examination of the labor exemption. It combined an expired contract, post-impasse imposition of terms on employees with little bargaining power, and, most importantly, disagreement as to an important subject of federal law. Prior to Brown, labor matters were exempt if they had their origin or basis in labor matters, affected only the labor market, and were the result of arm's length collective bargaining. In Brown, the affected parties were not parties to the negotiations, and there was no agreement on the restraint. The restraint was imposed at impasse, that ephemeral creation of the labor laws that eludes most negotiators and defies description.⁽¹¹⁾

The Brown Court concluded that the labor exemption's scope extended beyond impasse. In reaching this decision, the Brown Court indicated a belief that it has been Congress's intent since 1914 to achieve such an exemption, and that the dissenting opinion of Justice Brandeis, joined by Justices Holmes and Clarke, in the case of Duplex Printing Press Co. v. Deering, 254 U.S. 443 (1921), that "urged the Court to interpret broadly a different explicit "statutory" labor exemption that Congress earlier (1914) had written directly into the antitrust laws" was correct. Brown at 236. The Court goes on to say that in passing the Wagner Act in 1935, "Congress, as in 1914, hoped to prevent judicial use of antitrust laws to resolve labor disputes, a kind of dispute normally inappropriate for antitrust law resolution" Id.

The Brown Court relied on Jewel Tea, Pennington, and later, Connell Construction Co. v. Plumbers Local 100, 421 U.S. 616 (1975), for authority for its decision holding that "the nonstatutory exemption limits an antitrust court's authority to determine, in the area of industrial conflict, what is or is not a reasonable practice." Brown, 518 U.S. at 238. According to the Court, "the goals of federal labor law could never be achieved if the anticompetitive effects of collective bargaining were held to violate the antitrust laws." Id. at 237 (quoting Jewel Tea, 381 U.S. at 722). Thus, the nonstatutory exemption recognizes that "to give effect to federal labor laws and policies, and to allow meaningful collective bargaining to take place, some restraints on competition imposed throughout the bargaining process must be shielded from antitrust sanctions." Brown, 518 U.S. at 236, (quoting Connell, 421 U.S. at 622). The nonstatutory and statutory exemptions' place is assured because the "national labor law scheme would be virtually destroyed by the routine imposition of antitrust penalties upon parties engaged in collective bargaining." Brown, 518 U.S. at 237, (quoting Pennington 381 U.S. at 665).

The intent of the ruling is clear. There are, however, restrictions that must be adhered to. First, the bargaining must be "good faith" bargaining, free of unfair labor practices. It is suggested, however, that unfair labor practices and the absence of good faith bargaining or any other labor issues should be resolved by the legislatively created agency, and, second, that antitrust courts are not the proper venues for complaints relating to these matters.

The exemption covers, in short, all lawful labor activities, and declares that the National Labor Relations Board is to determine labor matters under its legislatively created mandate. In reaching this decision, the courts have declared that multi-employer bargaining and impasse are labor matters and not an antitrust window of opportunity for plaintiffs. Furthermore, the Brown Court refused to apply the law differently for professional sports players, as it found that they have bargaining power that is superior to that of the ordinary worker. The Court said "we cannot find a satisfactory basis for distinguishing football players from other organized workers. We, therefore, conclude that all must abide by the same legal rules." Id. at 249-50.

Baseball and Antitrust

Baseball's antitrust history has been very different from that of the other sports. Major League Baseball,⁽¹²⁾ the oldest of the sports leagues, began with the formation of the National League in 1876. The American League was formed in 1901 and had teams in many National League cities. The competition between the National and American League lead to a deal in 1903, which created the Major Leagues with shared interests and common labor policies, including the reserve system, which is described below. The two leagues thrived for ten years before the prosperity brought about by cooperation, control of player contracts, and the enormous popularity of the game spawned competition. From 1922 until 1999, it had a general exemption from antitrust based upon the Supreme Court's decision in Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs, 259 U.S. 200 (1922). The exemption was recently modified to allow baseball players the same rights enjoyed by athletes in other sports, thus setting the stage for the coming labor negotiation.

Baseball's antitrust exemption comes from a case that involved the fledgling Federal League, formed in 1913. The Federal League placed teams in Chicago, St. Louis, Kansas City, Buffalo, Brooklyn, Baltimore and Newark, which moved to Indianapolis for the 1915 season. Where the earlier emergence of the American League had led to the formation of an oligopoly, the Federal League was met with barriers to entry. During the labor wars of the first half century of its existence, baseball had adopted a reserve system that prohibited a player from moving from one team to another. By enforcing the reserve system, Major League Baseball was able to inhibit the Federal League's access to skilled players. The Federal League filed suit under the Sherman Act declaring that the reserve system was an illegal restraint on the labor market and as such violated the Sherman Act. The case was filed in the U.S. District Court in Chicago, where it was assigned to Judge Kenesaw Mountain Landis.⁽¹³⁾

The case never went to trial, as Landis brought about a settlement by negotiating the acquisition by the Chicago Federals of the National League Cubs and the acquisition by the St. Louis Federals of the American League Browns. The settlement also included the payment of $600,000 to the remaining Federal League teams which, except for the Baltimore team, ceased operations. The owners of the Baltimore team saw this particular business practice as a violation of the Sherman Act, and filed a claim in the District of Columbia where a verdict for the plaintiff, trebled to $240,000, was entered in 1920. The district court was reversed in the court of appeals, National League of Professional Baseball Clubs v. Federal Baseball Club of Baltimore, Inc., 269 F. 681 (1920), where the essence of the exemption was described in Judge Smythe's eloquent decision, which was affirmed by a unanimous Supreme Court in 1922. Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs, 259 U.S. 200 (1922).

The affirmation of Judge Smythe's appellate court decision has been described as "not one of Justice Holmes happiest days." Salerno v. American League of Professional Baseball Clubs , 429 F.2d. 1003 (2d Cir. 1970). However, in the days of a more restrictive view of interstate commerce, Judge Smythe had reasoned very clearly. Baseball creates a product which is incapable of interstate commerce. He stated that "a game of baseball is not susceptible to being transferred. . . . Not until they [the players] come into contact with their opponents on the baseball field and the contest opens does a game come into existence. . . . The exertions of skill and agility . . . may excite pleasurable emotions, just as one might view a beautiful picture...; but the game effects no exchange of things according to the meaning of trade and commerce as defined above." Federal Baseball, 269 F. at 685. The Twins and Braves cannot go on a tour with the sixth game of the 1991 World Series in the way a group of actors can tour with "Hamlet." They can, of course, go to another city and create another game, but that game is similarly unique and incapable of transfer.⁽¹⁴⁾ The ephemeral product thus created, and the business process around it, was not the stuff of antitrust in 1922, and probably should not be in 1999, because of the unique nature of sports leagues.

While other sports have attempted to have Federal Baseball's express exemption from antitrust extended to them, they have failed.⁽¹⁵⁾ Baseball is treated differently because it acquired its exemption at the time of a more restrictive view of antitrust and retained it because a vast professional baseball industry has evolved in reliance upon the exemption's existence.

The baseball exemption has survived repeated assaults over the decades. The most significant cases form the baseball trilogy of Federal Baseball, Toolson v. New York Yankees, Inc., 346 U.S. 356 (1953), and Flood v. Kuhn, 407 U.S. 258 (1972). In the decision in Minnesota Twins Partnership v. State of Minnesota, 592 NW2d. 847 (Minn. 1999), cert. denied 68 USLW 3154, 120 S. Ct.517 (1999), ⁽¹⁶⁾ the Minnesota Supreme Court found the exemption to be intact.

With its antitrust flank covered, Baseball can look forward to labor negotiations with certain optimism. This has not always been the case, however. In its long history, labor conflict has been constant.⁽¹⁷⁾ The baseball players formed a union in 1966 and the other major sports followed soon thereafter.⁽¹⁸⁾ Baseball's labor restraints had been attacked before the union was formed, and the baseball exemption had prevailed.⁽¹⁹⁾ The union attacked in Flood v. Kuhn, 407 U.S. 258 (1972), which was a reserve system case, in which the Court recognized the anomaly of the baseball exemption but specifically declined to overturn it. Justice Marshall's dissent specifically called for remand to determine if the antitrust claim was trumped by the nonstatutory labor exemption.⁽²⁰⁾ Id. at 296.

After a long strike in 1994 and 1995 which caused the cancellation of the 1994 World Series, the Major Leagues face the expiration of the current labor agreement in either December 2000 or 2001. This time it may be different because of the changes that have occurred in sports collective bargaining due to the Brown case. During its last labor negotiation in 1994-1995, Major League Baseball agreed to give up a portion of its overall exemption from antitrust so that its players could enjoy the same rights as players in other sports leagues, although preserving the exemption for business activities such as franchise location.⁽²¹⁾ This agreement was made shortly after the court of appeal's decision in Brown and during the final stages of a lengthy strike. The parties then petitioned Congress to alter the Clayton Act to recognized the change in the baseball exemption. After a very lengthy process, Congress passed the Curt Flood Act of 1999. Clayton Act , 15 U.S.C. §§12, 27 et seq. This act granted major league players the rights of other professional athletes while preserving the exemption for other organized baseball activities.

The baseball players had timed the expiration of the new agreement to come a year or more after the basketball players, it was hoped, would have tested the outer limit of Brown by decertifying after the expiration of their agreement in 2000. The early reopening of the basketball negotiations and the resulting collective bargaining agreement in 1999 left the baseball players without the clear guide to the post-Brown world that they had hoped would be provided for them by an NBA case.

In the post-Brown world, it is clear that management will have, for the first time in modern history, an opportunity to negotiate without the players being able to raise potentially disruptive antitrust issues. In previous negotiations, this has resulted in lengthy Congressional hearings, media antipathy for owners because of a mistaken belief of special privilege, and a general sense that the players were at a disadvantage. In the coming negotiation, the owners need only focus on their negotiating strategy. To make proper use of the Brown decision, of course, it will be necessary to bargain in good faith, although good faith bargaining can be vigorous and rugged, and avoid unfair labor practices. These matters are easily accomplished. What is critical is that the owners avoid the internecine disruptions that have marked prior negotiations and focus on the bargaining table.

This focus requires a clear understanding of the long term needs of the industry. The product is jointly created and must be jointly protected. Such protection is the primary job of the Commissioner and Executive Council. Each individual team contributes equivalent values to the creation of the product, however, each team receives disproportionate amounts in return. This disproportionate distribution of jointly created value now determines championships and is the greatest challenge faced by management. To correct this problem, owners must obtain negotiated restraints on labor. The opportunity presented by the coming negotiation demands that owners adopt a singleness of purpose dedicated to creating a Major League of fundamentally equivalent teams. This opportunity exists because of the newly leveled field on which negotiations will take place.⁽²²⁾

The players on the other hand, can be expected to interject antitrust into the negotiation in some form. This effort may be directed at decertification. The players' effort to bypass the exemption by decertifying its union will be an effort to achieve what they could not achieve with bargaining. The players may claim that after thirty-five years of contentious collective bargaining, which has achieved monumental gains for players, the protection and restrictions of the labor act are no longer necessary. They may say that most players are really independent contractors whose best interests are served by ending the collective bargaining relationship and the resulting restraints on players' activities in favor of a free market. The best management argument against the players' assertions would be that decertification is a mere sham to achieve collectively outside the labor laws what was unobtainable at bargaining.⁽²³⁾ The decision to decertify will be the union's, the action will be managed by the union, and subsequent litigation will be managed and paid for by the union and argued by its designees. To maintain competitive balance, the leagues would be required to continue the collective bargaining agreement's restraints on the labor market. The continued restraints, based in collective bargaining, are arguably exempted from antitrust by Brown.⁽²⁴⁾

As the relationship becomes more remote from the bargaining, or the NLRB finds the decertification to be valid, the imposed restraints would be reviewed by antitrust courts. Management would defend its actions by arguing that the restraints were reasonable and ancillary to the need to maintain competitive balance and produce a product. However, the proof here may be complex.

The final argument, and the one that, had it been adopted when written would have put an end to a century of clutter in this area, is that Justices Brandeis and Holmes were right in applying the Clayton Act to the proposition that labor is not a commodity in commerce and that the antitrust laws do not apply. Using that reasoning and the Brown decision, along with the long history of Congressional efforts to separate the two conflicting bodies of law, future courts can apply a simple rule to future complaints. If the matter asserted has an origin in concerted activity and remedies can be found in the NLRA, the matter is labor and should be determined by the NLRB.⁽²⁵⁾ If the NLRA does not offer remedies, or if the NLRB does not assert jurisdiction, the matter can then be considered under other theories, including antitrust.

Nothing is ever completely clear, however, in the labyrinth of sports. There is a concern that the baseball players have little interest in the labor portion of the exemption and that their real target is the product market exemption. They would like to eliminate baseball's ability to restrict franchise movements so that teams could move more easily. To achieve that end and avoid the need to decertify, the players may attempt a novel approach aimed at blurring the distinction between labor and product markets. In a long forgotten National Football League negotiation, the players' rallying cry was "We are the Game." The echoes of that cry are long gone, except for the implication that the labor market in sports is coterminous with the product market, and all restraints on players are restraints on the product market. This approach is not remote as it conforms to the players' view of their own importance and the desire to interject antitrust arguments into future labor negotiations is so strong that it may arise to gain the type of leverage Judge Duffy warned about.

But such an approach deserves to fail. It is the game that is unique. Labor, on the other hand, is labor. Players are hired to perform specific jobs, according to specific rules, using specific equipment. Only time will determine the ultimate outcome of that question. For the meantime, we can rest assured that sports management and unions must confine themselves to bargaining during future negotiations. We will all benefit.

1. The collective bargaining agreement expires in December 2000, but grants the players the right to extend the agreement to 2001.

2. The most noted case was Loewe v. Lawler (a.k.a. Danbury Hatters), 208 U.S. 274 (1908), in which the Supreme Court upheld an injunction against a union's nationwide boycott which attempted to force recognition of the union.

3. There is considerable opinion that Congress intended that the Clayton Act exempt all labor activity from antitrust scrutiny. Judicial interpretations of Clayton, however, have given the impression that what came to be called the "statutory exemption" was limited to unions only. This may be due to the lobbying done by unions urging passage of the Act. The broader interpretation is now seen as correct. See Brown v. Pro Football, Inc. In retrospect, it is clear that the original intent of the drafters of the Sherman Act was the regulation of non-labor matters only.

4. Allen Bradley Company v. Electric Workers (IBEW) Local 3, 325 U.S.797 (1925).

5. The fact that the nonstatutory exemption was not part of a majority opinion was a significant factor in future decisions. Judge Doty in Powell, for example, was especially cautious in extending a rule that lacked such authority.

6. The leagues are not "single entities" under antitrust law because the individual teams are separately owned. For more on this subject see Copperweld Corp. v. Independence Tube Corp., 467 U.S.752 (1984 ).

7. The winning percentages of recent teams has approached or exceeded these limits and is a source of great concern in the game. In 1999, the Atlanta Braves won .636 and the New York Yankees won .599 of their games while the Minnesota Twins won only .394 and Florida Marlins won only .395 of their games.

8. McNeil v National Football League,1992-2 Trade Cas.(CCH) ¶69,982 (D. Minn. 1992), Jackson v. National Football League, 802 F. Supp. 226 (D. Minn. 1992), White v. National Football League, 822 F. Supp. 1389 (D. Minn. 1993).

9. The parties action also triggered an unfair labor practice charging unlawful bargaining, which was dropped for other reasons.

10. Treble damages are awarded by application of Clayton Act Section 4.

11. Impasse is defined in various ways. Judge Doty, who is a noted labor law authority, described the test as "whether, following intense, good faith negotiations, the parties have exhausted the prospects of concluding an agreement." Powell, 678 F. Supp. at 788. Justice Breyer, in Brown, define it as "a recurring feature in the bargaining process , ... a temporary deadlock or hiatus in negotiations which in almost all cases is eventually broken, through either a change of mind or the application of economic force." Brown, 518 U.S. at 245-6. (quoting W. Simkin & N. Finladis, Mediation and Dynamics of Collective Bargaining, 139-140 (2d. ed. 1986)). See 1. Patrick Hardin, Developing Labor Law 691-99 (3rd ed. 1992) (listing standards for impasse); See also. Taft Broadcasting Co., 163 N.L.R.B.475, 478 (1967), Charles Bonanno Linen Serv. v. NLRB , 454 U.S.404, 413 (1982).

12. Baseball as an institution includes all organized professional leagues. This includes the Major and Minor leagues and all independent professional leagues, as well. For the purpose of our discussion here, the term "Major Leagues" will refer to the American and National Leagues and "baseball" will refer to all organized professional leagues.

13. Landis became the first Commissioner of Baseball following the Black Sox Scandal of 1919. He served until 1944.

14. The transfer of the game via television or video tape is protected by copyright.

15. Radovich v. NFL, 352 U.S. 445 (1957)

16. This case involved the right of the Attorney General to issue Civil Investigative Demands to determine if Major League Baseball violated state or federal antitrust laws in connection with a new stadium debate.

17. The National League was formed in 1876 and the first labor problem arose with the creation of the National Brotherhood of Professional Baseball Players in 1885. The National League owners imposed the reserve system in 1879 and strikes have been endemic since that time. The formation of the Major League Players Association has been followed by disruptions in 1969, 1972, 1975, 1980, 1981, 1985, 1990, and 1994-95. The current agreement expires in 2000, with the players having the right to extend it through 2001.

18. The National Football League Player's Association was certified in 1969, the NBA Players Association in 1964 and the NHL Players Association in 1967.

19. See, Gardella v. Chandler, 172 F.2d. 402 ( 2d Cir.1949) Toolson v. New York Yankees Inc., 346 U.S. 356 (1953).

20. This issue would not be decided until Mackey v. NFL 543 F.2d 606 (8th. Cir. 1976)

21. The purpose of the new law is stated as follows:

It is the purpose of this legislation to state that major league baseball players are covered under the antitrust laws (i.e., that major league baseball players will have the same rights under the antitrust laws as do other professional athletes, e.g., football and basketball players), along with a provision that makes it clear that the passage of this Act does not change the application of the antitrust laws in any other context or with respect to any other person or entity. Clayton Act , 15 U.S.C. §§12, 27 et seq.

22. This formula applies to all sports leagues. In past negotiations, unions have sought to gain leverage by involving antitrust courts. After the protracted proceedings described herein, the future will be focused on bargaining activities. This change will be welcome as all leagues have substantial issues to deal with regarding restraints on labor.

23. "Unobtainable at bargaining" implies unwillingness or inability to exert available economic weapons.

24. Brown gives only general clues as to the end point of the exemption by saying it extends until the "agreement is sufficiently distant is time and in circumstances from the collective bargaining precess that a rule permitting antitrust intervention would not significantly interfere with that process." Brown, 518 U.S. at 250.

25. This test is a slight expansion of the Brown test. Where Brown deals with collective bargaining and its aftermath, the labor exemptions should attach at the time the first concerted activity confers authority on the NLRB.