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LEVIN v. NBA

October 10, 1974

Irving H. Levin and Harold A. Lipton, Plaintiffs
v.
National Basketball Association, et al.,Defendants


Owen, D.J.


The opinion of the court was delivered by: OWEN

OWEN, D.J.:

In this antitrust action, defendants move for summary judgment dismissing the complaint and plaintiffs cross-move for partial summary judgment on all issues except damages.

 The plaintiffs, two businessmen, in 1972 had an agreement to buy the Boston Celtics basketball team, one of the 17-member National Basketball Association.

 N.B.A., as its constitution recites, is a joint venture "organized to operate a league consisting of professional basketball teams each of which shall be operated by a member of the Association." It has been in existence since 1946. Each of its joint venturers holds a franchise to operate a team. While the teams compete vigorously on the basketball court, the joint venturers are dependent upon one another as partners in the league format to make it possible. N.B.A. operates through its Board of Governors which consists of one governor designated by each member. Action by the Board on a transfer of membership requires the affirmative vote of three-quarters of the members of the Board.

 When plaintiffs applied to the N.B.A. for the transfer of the membership of the Celtics to a partnership which the plaintiffs proposed to form, that motion failed to carry at the meeting of the Board of Governors on June 15, 1972, there being two votes in favor, thirteen votes opposed and one not present.

 Plaintiffs immediately demanded and were granted a personal hearing before the Board. Following the presentation of their case a second vote was taken. It was, however, to identical effect.

 There is a sharp dispute on the reason for the rejection. Plaintiffs contend that they were rejected because of their friendship and business associations with one Sam Schulman, owner of the Seattle SuperSonics, who was an anathema to the other members of the league. Plaintiff Levin testified in a deposition that he was told the "real" reason by Basketball Commissioner Kennedy and Richard Bloch, President of the Phoenix Suns and Chairman of the N.B.A. Finance Committee. According to Levin, Kennedy said:

 
"I don't have to draw you a picture. You guys are friendly with Sam Schulman. He is a pain in the neck to the league, and they are obviously worried that if you fellows are also owners, that you will side with Sam Schulman in all matters in the future and cause the league more troubles than they now have with Sam as it is."

 and according to Levin, Bloch said:

 
"You are with Sam Schulman. He has been a craw in the throat of these owners. He's a renegade and a rebel, a troublemaker, and he just doesn't play their game, and they are obviously worried that you fellows, being close to Sam, are going to be siding with him on any matters that come up before the NBA."

 On the other hand, the reason given by the N.B.A. for the rejection was that the business association between the plaintiffs and Schulman violated the "conflict of interest" provision of the N.B.A. constitution. That provision reads: A member shall not exercise control, directly or indirectly, over any other member of the Association. *fn1" This provision is necessary, N.B.A. claims, in order that the league may enjoy public support because there is in fact, and the public believes there is, intense competition in the league framework between the teams operated by the N.B.A. members.

 In any event plaintiffs, rejected, sold their rights in the Celtics elsewhere and commenced this action.

 In order to survive defendants' motion for summary judgment, plaintiffs must demonstrate that the conduct complained of is a violation of the antitrust laws. While it is true that the antitrust laws apply to a professional athletic league, *fn2" and that joint action by members of a league can have antitrust implications *fn3" this is not such a case. Here the plaintiffs wanted to join with those unwilling to accept them, not to compete with them, but to be partners in the operation of a sports league for plaintiffs' profit. Further, no matter which reason one credits for the rejection, it was not an anti-competitive reason. Finally, regardless of the financial impact of this rejection upon the plaintiffs, if any, *fn4" the exclusion of the plaintiffs from membership in the league did not have an anti-competitive effect nor an effect upon the public interest. *fn5" The Celtics continue as an operating club, and indeed are this year's champion.

 The law is well established that it is competition, and not individual competitors, that is protected by the antitrust laws. Checker Motors Corp. v. Chrysler Corp., 283 F. Supp. 876 (S.D.N.Y. 1968) aff'd, 405 F.2d 319 (2d Cir.), cert. ...


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