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SILVERMAN EX REL. NLRB v. MAJOR LEAGUE BASEBALL PL

June 10, 1981

Daniel SILVERMAN, Regional Director of the Second Region of the National Labor Relations Board, for and on Behalf of the NATIONAL LABOR RELATIONS BOARD, Petitioner,
v.
MAJOR LEAGUE BASEBALL PLAYER RELATIONS COMMITTEE, INC., et al., Respondents



The opinion of the court was delivered by: WERKER

This is an action brought by petitioner, the Regional Director of the Second Region of the National Labor Relations Board for and on behalf of the National Labor Relations Board (the "Board") seeking temporary injunctive relief pursuant to Section 10(j) of the National Labor Relations Act, as amended (the "Act"), 29 U.S.C. ยง 160(j), pending the final disposition of matters presently before the Board. Respondents in this action are the Major League Baseball Player Relations Committee, Inc., ("PRC") and twenty-four of its constituent member clubs. A hearing on petitioner's application was held on June 3 and 4, 1981. The Major League Baseball Players Association (the "Players Association") was granted leave to participate at the hearing in support of petitioner. All parties were afforded full opportunity to be heard, to present evidence bearing on the issues and to argue on the evidence and the law. After duly considering all the evidence and arguments presented, the petition for injunctive relief is denied.

FACTS

Since 1966 the Major League baseball players have been represented by the Players Association. During this time the respondent PRC has been the exclusive collective bargaining agent of twenty-six Major League clubs. *fn1" The Board of Directors of the PRC is empowered to formulate labor relations policy for the clubs and direct all negotiations with the Players Association. *fn2" C. Raymond Grebey, Director of Player Relations of PRC, has been designated by the PRC Board as the official spokesman for the PRC in all collective bargaining matters. To assist the PRC Board of Directors in dealing with the Players Association, the Board has designated a bargaining team, which includes Mr. Grebey, to conduct all negotiations. *fn3"

 The Players Association and the PRC bargain to establish an agreement on pensions, allowances and a variety of rules governing players' employment. Except as to a base salary, under the various agreements negotiated by the parties, the Players Association has waived its right to bargain with the PRC about individual player salaries. Thus, above a minimum salary, the subject has been left to each individual player to negotiate with his club.

 Prior to 1975, when a Major League baseball player's employment contract expired, he was precluded from negotiating for employment with any other team except his own. In December 1975, as the result of grievances filed by the Players Association on behalf of John Messersmith and David McNally, an arbitrator found that Major League clubs could not reserve a player for more than one year ("option year") past the expiration of his contract. A player who completes the option year without signing a renewal contract with his team becomes a "free agent" who is able to negotiate with other clubs. *fn4"

 In 1976 the Players Association and the PRC entered into a collective bargaining agreement, effective January 1, 1976 through December 31, 1979, which provided, inter alia, for "free agency" as established by the Messersmith-McNally decision. Pursuant to this agreement, however, a player was required to serve six years in the Major Leagues before becoming a "free agent." The agreement also provided for "compensation" *fn5" in the form of an amateur player draft choice to each club which lost a "free agent" player selected by more than two clubs for negotiation rights. After four years of experimenting with this new system, the Players Association and the PRC commenced negotiations for a new collective bargaining agreement on November 11, 1979.

 On January 16, 1980, the PRC presented a proposal which recognized the difference in quality, as measured by skill and ability, among the various players choosing to become "free agents." Under this proposal, as finally offered on May 12, 1980, a team losing a "free agent" selected by less than four clubs will not be afforded replacement player "compensation." If a player is selected for negotiation rights by four to seven clubs, the club signing a contract with the player must compensate the player's former club with an amateur draft choice, as before. *fn6" However, if a player is selected by eight or more clubs, and meets certain minimum performance standards, *fn7" the signing club must compensate the former club with not only an amateur draft choice, but also a professional player of the former club's choice from a list of unprotected players under contract with the signing club. In this third category, the player is referred to as a "ranking free agent" or "premium" player. Each club may retain 40 players under the contract. Depending upon the performance level of the "free agent" signed, the signing team may protect from 15 to 18 of its 40 players. *fn8"

 The Players Association adamantly opposed this proposal as having a negative impact on player salaries. Since the proposal requires a club signing a "ranking free agent" to give up a professional player as well as an amateur draft choice, the Association predicts that the number of clubs willing to bid for a "premium" player and the salaries they would offer would be limited by the knowledge that they would be required to forfeit a player of perhaps comparable quality. Correspondingly, the player's present club could then offer him less to insure his remaining with the team.

 As negotiations progressed, various matters were being resolved, but it became apparent that the issue of additional replacement player "compensation" was a significant impediment to settlement. Unable to reach agreement on the PRC's proposal, a strike deadline was established for May 23, 1980. On the eve of that deadline the PRC and the Players Association entered into a collective bargaining agreement ("basic agreement"), effective January 1, 1980 through December 31, 1983, establishing the terms and conditions of employment of Major League baseball players. As part of that agreement, a joint study committee was appointed to consider the unresolved matter of replacement player "compensation" for a club which loses a "free agent." The committee was to report to the PRC and the Players Association no later than January 1, 1981.

 On December 8, 1980, Bowie Kuhn, Commissioner of Baseball, delivered a speech at the Annual Convention of Professional Baseball. Commenting on the financial difficulties facing the industry, Commissioner Kuhn expressed concern about escalating player salaries brought about by "free agency." He cited the companion problem of "compensation" as a threat to competitive balance in baseball and thus expressed a concern about adequate replacement talent for the loss of a "free agent." Sounding a clarion call to owners and players alike to recognize the need to correct the system of "free agency" which has given rise to these problems, he predicted further financial loss without cooperation between the two groups.

 Meanwhile, the joint study committee met on several occasions between August 7, 1980 and January 22, 1981. At one of the meetings, Marvin Miller, the Executive Director of the Players Association, referring to the press reports of Commissioner Kuhn's statements at the Annual Baseball Convention on December 8, 1980, asserted that the clubs' "compensation" proposal was motivated by financial concerns and by a desire to reduce player salaries. Mr. Grebey rebutted these statements and clearly stated that reduction of player salaries was not a goal of the clubs' proposal and that no question of the clubs' ability to pay was relevant or was being raised on behalf of the clubs.

 Failing to agree on a joint report, separate reports were issued by the PRC on February 17, 1981 and by the Players Association on February 19, 1981. The players' position, as reflected in its report, is that the additional compensation for a "ranking free agent" diminishes that "free agent's" bargaining position with the new team by the value of the player that the signing club expects to lose. The clubs repeated their position in the report submitted by its members, stating that its current approach is not designed to attack the subject of player salaries.

 This impasse ended round one of negotiations over the PRC's proposal and set the stage for round two as provided for in Article XVIII, Section D(2) of the basic agreement:

 
Negotiations. Subsequent to receiving the report of the study committee, the parties shall promptly meet to commence negotiations on the subject of the study. If the parties are unable to reach agreement on the matter of player selection rights as compensation to a Club which loses a free agent player after receiving the report of the study committee and by February 15, 1981, the Clubs may thereafter but before February 20, 1981 unilaterally adopt and put into effect as part of the Basic Agreement the proposal on this matter ... (see attachment 9) or a variation not less favorable to the Players Association. In the event the Clubs put such proposal into effect unilaterally, the Players Association may reopen the Basic Agreement with respect to the player selection rights provision put into effect by the Clubs and strike with respect thereto. The Player Association may reopen the Basic Agreement with respect to the player selection rights provision put into effect by the Clubs and strike with respect thereto. The Player Association shall give the Clubs notice of such reopening by March 1, 1981 and in such notice shall indicate the date on which it will strike, which date shall not be later than June 1, 1981. In the event the Players Association does not so strike, there shall be no further strike on this subject during the term of the Basic Agreement; provided, however, that the Players Association may, prior to March 1, 1981, offer to waive the right to strike described above and may request the Clubs to agree to a substitute right to strike in 1982 on a date not later than June 1, with no obligation on the part of the Clubs to accept such request.

 On February 19, 1981, the parties having failed to reach an agreement on the "compensation" issue, the clubs invoked their option under the basic agreement and unilaterally adopted as part of that agreement their last proposal on the issue. On February 26, 1981, the Players Association likewise exercised one of its options under the agreement, reopening the basic agreement on the unresolved issue and setting a strike deadline of May 29, 1981. *fn9" As a result of this reopener, the second round of negotiations began.

 By letter of February 27, 1981, the Players Association requested the PRC to provide certain financial information for all member clubs. The Players Association premised the appropriateness of its request on Commissioner Kuhn's December 1980 speech which the Association interpreted as an affirmation of its belief that the "compensation" proposal was motivated by financial concerns.

 Mr. Miller explained that the requested financial data was "necessary for the Players Association to properly discharge its duties and responsibilities ... as the exclusive collective bargaining representative of all major league players, for purposes of preparation for and conduct of the ongoing negotiations."

 On March 13, 1981, the PRC, through Mr. Grebey, refused to comply with the Association's request, repeating the PRC's position that its bargaining stance regarding "compensation" was not based on "economic incapacity or inability." By letters of April 7 and 20, 1981, the Players Association sought reconsideration of the PRC's decision not to comply with its request. Specifically, the Association focused on the sharp increase in player salaries since the 1976 agreement. *fn10" Noting a causal relationship between the "free agency" provisions of that agreement and the escalation of player salaries, ...


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