Supreme Court seems disinclined to give NFL antitrust exemption
Thursday, January 14, 2010
Supreme Court justices Wednesday showed little support for exempting the National Football League from federal antitrust laws, a longtime goal of the league and other sports organizations.
The court considered a lawsuit challenging the NFL's decision to give a sole contract to Reebok to manufacture hats, T-shirts and other apparel bearing the logos of the league's teams. But the bigger question was whether the NFL should be considered a "single entity" -- rather than a collection of 32 independently owned teams -- and thus shielded from the Sherman Antitrust Act. A single company cannot be guilty of conspiring with itself to harm consumers.
Justice Sonia Sotomayor told the NFL's attorney, Gregg Levy: "You are seeking through this ruling what you haven't gotten from Congress: an absolute bar to an antitrust claim." Among sports leagues, only Major League Baseball has an antitrust exemption.
A broad ruling for the NFL could shield the league from all sorts of challenges beyond T-shirt sales, such as television rights or the location of its teams, and give it greater leeway over the salaries paid to coaches and players. Other sports leagues are supporting the NFL, while players' associations are opposing.
Levy denied that the league was seeking protection as broad as Sotomayor suggested but said that decisions by the NFL relating to football and its promotion should not be subject to antitrust lawsuits. NFL teams compete on the field, he said, but must form a single, cooperative unit in order to produce a football league.
"They are not independent sources of economic power, because none of them can produce the product of the venture on their own," Levy said. "No NFL club can produce a single unit of production, a single game."
Football may be America's favorite sport, but there was little of it in more than an hour of sometimes dense arguments that delved deeply into antitrust law. Sotomayor confessed to not being terribly familiar with the NFL -- she's a baseball fan who's thrown out the first pitch at a New York Yankees game -- and her seatmate, Justice Stephen G. Breyer, also resorted to baseball when wondering about the competitive market the NFL's challenger was referring to.
"I don't know a Red Sox fan who would take a Yankees sweatshirt if you gave it away," he said.
The lawsuit was filed by American Needle Inc., which until 2000 had a contract to sell team caps. The NFL decided to award all of its apparel franchises to Reebok, and American Needle sued. Lower courts agreed with the NFL that it was a single entity, and they threw out the suit without conducting the fact-specific test called for in antitrust legislation to determine how a decision affects competition.
American Needle attorney Glen D. Nager said the courts were wrong. "These teams are separately owned," Nager told the Supreme Court. "They are separate decision-makers joining together, and they are making a decision about how they are going to jointly produce something or not produce something."
The justices questioned Nager about whether any of the league's decisions were protected. Justice Anthony M. Kennedy brought up whether new rules protecting quarterbacks could be seen as favoring one team over another and thus be challenged. Justice Samuel A. Alito Jr. wondered about scheduling decisions.
Justice Ruth Bader Ginsburg seemed sympathetic to the argument that even frivolous lawsuits can cost the NFL millions of dollars in court costs and legal fees.