that the nonstatutory labor exemption applies, and therefore, any antitrust claim the Players may seek must fail.
The parties do not dispute that prior to the formal expiration of the Collective Bargaining Agreement on June 23, 1994, the NBA as well as the Players were immune from antitrust claims. Wood v. National Basketball Ass'n, 809 F.2d 954, 963 (2d Cir. 1987). In Wood, the Second Circuit specifically held that an antitrust challenge to the NBA's salary cap and college draft, inter alia, failed because antitrust laws may not "be used to subvert fundamental principles of our federal labor policy . . . ." Id. at 959. Thus, the law in this Circuit appears to be where a collective bargaining relationship exists, federal labor law applies to the disputes that arise between the bargaining parties. Id.
In a 1976 case involving player restraints in the National Football League (the "NFL"), the Court of Appeals for the Eighth Circuit analyzed the nonstatutory exemption as it applies to the market for player services and established a three pronged test for application of the exemption. Mackey v. National Football League, 543 F.2d 606, 615 (8th Cir. 1976), cert. dismissed, 434 U.S. 801 (1977). First, the restraint on trade must primarily affect only the parties to the collective bargaining relationship. Second, the agreement must concern mandatory subjects of collective bargaining. Finally, the agreement sought to be exempted is the product of bona fide arms-length bargaining. Id. Mackey reasoned that these tests are necessary to ensure that the exemption is applied only when it is clear that federal labor policies trump antitrust concerns. Id. Thus, Mackey also depends on a resolution of the conflicting labor and antitrust policy concerns.
The dispute here arises because the 1988 Collective Bargaining Agreement has formally expired. The issue is whether antitrust immunity that existed while the Collective Bargaining Agreement was in effect continues after its formal expiration, and if so, for what length of time. I can find only four non-binding decisions addressing this precise issue. Unfortunately, each decision fashioned a different standard to apply.
The first case to address this issue was Bridgeman v. National Basketball Ass'n, 675 F. Supp. 960 (D.N.J. 1987). As noted in the factual summary supra, in Bridgeman, the Players alleged that the continued effect of the college draft, the right of first refusal and the salary cap after the formal expiration of the 1983 Collective Bargaining Agreement violated federal antitrust laws. Id. at 961. The NBA moved for summary judgment contending that the nonstatutory exemption immunized them from suit even though the 1983 Collective Bargaining Agreement had formally expired. Thus, the issue before the Bridgeman court was identical to the issue here.
The court refused to accept the Players' contention that antitrust immunity ends at the moment the collective bargaining agreement formally expires. Id. at 965. The court noted that such a result would not be consistent with the National Labor Relations Act, 29 U.S.C. § 151 et seq. (the "NLRA"). Id. Under the NLRA, the owners have an obligation, even after the collective bargaining agreement expires, to bargain fully and in good faith before altering a term or condition of employment that is a mandatory subject of collective bargaining. One can easily imagine the howls to be heard from the Players if the Teams unilaterally terminated medical coverage for them and their families at the formal expiration of the Collective Bargaining Agreement. It is for the good of our entire society that such is not the law. See 29 U.S.C. § 158(a)(5). The Bridgeman court determined that the practical effect of this duty on employers is that the "terms and conditions of employment that are the subject of mandatory bargaining survive expiration of collective bargaining agreement." Bridgeman, 675 F. Supp. at 965.
The Bridgeman court also found the NBA's contention that antitrust immunity lasts indefinitely equally unavailing. Id. at 966. In particular, the court reasoned that such a rule would discourage unions from entering into agreements, for fear of forever binding themselves with restraints that they could not subsequently attack in the courtroom. Id. After considering the elements of the Mackey test, the issue turned on whether the disputed terms will likely become part of a subsequent collective bargaining agreement. Thus, the test that Bridgeman established was that antitrust immunity survives only as long as the employer continues to impose the restrictions unchanged, and reasonably believes that the challenged practice or a close variant of it will be incorporated in the next collective bargaining agreement. Id. at 967.
In Powell v. National Football League, 678 F. Supp. 777 (D.Minn. 1988), Judge Doty of the District Court of Minnesota addressed whether the NFL could continue to restrict player movement after the formal expiration of a collective bargaining agreement. Judge Doty agreed with Bridgeman to the extent that immunity does not cease with the formal expiration of the collective bargaining agreement. Nor does it continue indefinitely. Id. at 786-88. Judge Doty, however, held that the Bridgeman standard did not give proper regard for federal labor policy because it could encourage unions to be uncompromising while bargaining. Id. at 787. Rather, Judge Doty adopted the so-called impasse standard to be the appropriate standard. Id. at 788. Impasse was then defined as the point at which "there appears no realistic possibility that continuing discussions concerning the provision at issue would be fruitful." Powell, 678 F. Supp. at 788. Thus, by "allowing a labor exemption to survive only until impasse, the law will not insulate a practice from antitrust liability, but will only delay enforcement of the substantive law until continued negotiations over the challenged provision become pointless." Id. at 789.
Powell was reversed by the Court of Appeals for the Eighth Circuit in Powell v. National Football League, 930 F.2d 1293, 1304 (8th Cir. 1989), cert. denied, 498 U.S. 1040, 112 L. Ed. 2d 700, 111 S. Ct. 711 (1991) ("Powell II"). Specifically, Powell II held that the nonstatutory labor exemption extends beyond a mere impasse in negotiations and for as long as the labor relationship continues. Id. at 1303-04. The Eight Circuit reasoned that once a collective bargaining relationship is established, federal labor policies become pre-eminent. As such, labor laws provide the opposing parties with sufficient tools to settle a dispute. For instance, employees may strike, employers may lock players out, and both parties may petition the National Labor Relations Board to prohibit unfair labor practices. Therefore, to provide the union with the ability to sue for treble damages under antitrust law "would . . . improperly upset the careful balance established by Congress through the labor law." Id. at 1302.
The essence of Powell II is that once a collective bargaining arrangement is established, and a valid and bona fide collective bargaining agreement is formed, federal labor law and its policies control. In other words, the disputes that arise from collective bargaining arrangements are labor disputes, and Congress has enacted laws that provide various remedies to these disputes. Id. at 1302-03. As the Eighth Circuit stated:
The labor arena is one with well established rules which are intended to foster negotiated settlements rather than intervention by the courts. The League and the Players have accepted this "level playing field" as the basis for their often tempestuous relationship, and we believe that there is substantial justification for requiring the parties to continue to fight on it, so that bargaining and the exertion of economic force may be used to bring about legitimate compromise. Id. at 1303.
In sum, Powell II effectively held that antitrust immunity exists as long as a collective bargaining relationship exists and labor law remedies are available. Id. at 1303-04.
In Brown v. Pro Football, Inc., 782 F. Supp. 125 (D.D.C. 1991), the District Court for the District of Columbia set forth yet another approach to this issue. There, the court held that the continuing implementation of a collective bargaining agreement's salary provisions by the NFL after the agreement had expired was not shielded by the nonstatutory labor exemption. Instead, the exemption ended with expiration of the agreement. Id. at 130. The court reasoned that the purpose of the exemption was to foster a non-coercive environment conducive to the serious negotiation of a new agreement. If an employer was satisfied with the terms of the previous agreement, the extension of the exemption beyond contracted expiration date would discourage serious negotiation on its part. Id. at 131. In addition, the court reasoned that the extension of the exemption would deprive labor of an important bargaining chip -- the threat of treble damages under the antitrust laws. Id. at 133. As such, immunity from antitrust law does not extend past the formal expiration of the collective bargaining agreement. Id. at 131.
This review of the case law establishes that, if nothing else, opinions vary a great deal on this issue. See, e.g., Kieran M. Corcoran, When Does the Buzzer Sound?: The Nonstatutory Labor Exemption in Professional Sports, 94 Colum. L. Rev. 1045, 1071 (1994) (favoring a standard based on union consent); Ethan Lock, The Scope of the Labor Exemption in Professional Sports, 1989 Duke L.J. 339, 400 (favoring ending the exemption at the formal expiration of the collective bargaining agreement). Obviously, this issue stems from the underlying conflict between antitrust and labor law policies. The issue, at its most basic level, is what role, if any, does antitrust policy play when a valid collective bargaining relationship exists. To find an answer to this question, I believe it is necessary to review the origin of the nonstatutory exemption.
The nonstatutory exemption was created by the Supreme Court to reconcile the conflicting policies between antitrust and labor laws.
We have two declared congressional policies which it is our responsibility to try to reconcile. The one seeks to preserve a competitive business economy; the other to preserve the rights of labor to organize to better its conditions through the agency of collective bargaining. We must determine here how far Congress intended activities under one of these policies to neutralize the results envisioned by the other.