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SILVERMAN EX REL. NLRB

March 31, 1995

DANIEL SILVERMAN, Regional Director for Region 2 of the National Labor Relations Board, for and on behalf of the NATIONAL LABOR RELATIONS BOARD, Petitioner, against MAJOR LEAGUE BASEBALL PLAYER RELATIONS COMMITTEE, INC. AND THE CONSTITUENT MEMBER CLUBS OF MAJOR LEAGUE BASEBALL, Respondents.

SONIA SOTOMAYOR, U.S.D.J.


The opinion of the court was delivered by: SONIA SOTOMAYOR

SONIA SOTOMAYOR, U.S.D.J.

 This is an action brought by Petitioner, Daniel Silverman, the Regional Director for Region 2 of the National Labor Relations Board (the "Board" or "NLRB"), seeking a preliminary injunction under Section 10(j) of the National Labor Relations Act (the "Act" or "NLRA"), as amended 29 U.S.C. §§ 151-69 (1988), pending the final disposition of charges presently before the Board. Respondents in this action are the Major League Baseball Player Relations Committee, Inc. (the "PRC"), the collective bargaining representative for the twenty-eight (28) Major League Clubs (collectively the "Owners").

 The Major League Baseball Players Association (the "Players") is the collective bargaining unit for the forty-person rosters of each of the Major League Clubs. On March 15, 1995, on the basis of charges filed by the Players, the Board issued a Complaint and Notice of Hearing alleging, inter alia, that the Owners had violated Sections 8(a)(1) and (5) of the Act by unilaterally eliminating, before an impasse had been reached, salary arbitration for certain reserve players, competitive bargaining for certain free agents, and the anti-collusion provision of their collective bargaining agreement, Article XX(F). After the Board concluded that there was reasonable cause to believe that a violation of the Act had occurred and that injunctive relief was just and proper, it filed this Petition on March 27, 1995. The Board, the Owners, and the Players, who were permitted to participate in this action, thereafter filed papers in support of their respective arguments.

 During a telephone conference with me on March 30, 1995, all parties agreed that the only issues before the Court were questions of law and that no witnesses would be necessary at the hearing to be held on March 31, 1995. Having reviewed all of the submissions of the parties and having given them a full opportunity to be heard, I have concluded that the Board has reasonable cause to believe that the Owners have committed an unfair labor practice, and that an injunction is just and proper to avoid irreparable injury and to ensure that the Owners and Players continue bargaining, in good faith, until the resolution of their disputes, or a genuine impasse untainted by the unfair labor practices, or the determination by the NLRB of the charges before it, whichever occurs earliest.

 FACTS

 I recognize that baseball purists will wince at my simplified explanation of the very complex relationship between the Owners and Players which has evolved since 1966 in their collectively bargained Basic Agreements. Similarly, others will be disappointed by my cursory description of the prolonged negotiations between the parties. The purpose of my recitation here, however, is only to highlight the facts giving rise to the central issues before me.

 The most recent Basic Agreement between the parties extended from January 1990 through December 1993. The Agreement covered a multitude of employment terms and conditions. The pertinent provisions of the Agreement to the issues before me involve the Agreement's reserve and free agency systems. Essentially, the free agency system permits players who have completed six major-league playing seasons to set their wages with individual owner clubs. See Basic Agreement, Article XX(B), attached as Ex. D to Pet'r Mem. P. & A. Supp. Pet. Prelim. Inj. The anti-collusion provision of the Basic Agreement, Subsection F of Article XX, provides, in relevant part, that the wage process between the free agent individual player and club owner

 
is an individual matter to be determined solely by each Player and each Club for his or its own benefit. Players shall not act in concert with other Players and the Clubs shall not act in concert with other Clubs.

 With respect to reserve players, i.e., those with less than six years of experience, there is a standard agreement called the Uniform Player's Contract ("UPC") The UPC, which is incorporated into the Basic Agreement, is a boilerplate contract whose execution essentially requires the parties only to fill in the blanks with information such as the player's name, the club's name, and the dollar amount of salary agreed upon. The Basic Agreement sets the minimum salary for a player's first-year contract. At the end of that first year, an owner may tender a player an additional year's contract in an offer under terms whose parameters are dictated by the Basic Agreement. If the player refuses the offer, the owner is entitled to "reserve" the player's services and the player is not permitted to play for other teams. An owner may only reserve a player once under this system.

 All players with more than three but less than six years of play are eligible for salary arbitration. *fn2" If an owner and player cannot agree to a salary figure, either may insist, without the consent of the other, that the figure be set in salary arbitration. Under this process, the owner and the player sign a UPC and each submits a salary figure to an arbitrator. See Basic Agreement, Article VI(F). The arbitrator then picks one of the two submitted figures using evaluation criteria set forth in the Basic Agreement including comparison with figures for performance comparable free agents. The arbitrator has no authority to pick a number that she or he believes is more equitable than the numbers submitted by the parties. Id. Any salary dispute, regardless of the seniority of the player, may also be submitted to arbitration but only if both parties consent. Id. at VI(F)(1).

 Those players with less than six playing seasons and others who have not become free agents remain "reserved" to their individual clubs under the Basic Agreement. Essentially, a reserve player may become a free agent if the club breaches his UPC by, for example, failing to paying him; or if the club does not tender him a contract; or if the club terminates the player for poor performance or failure to remain in good physical condition. See Basic Agreement, Article XX(A)(2). The Basic Agreement sets forth minimum wages and other benefits for the reserved players but permits them and their clubs to mutually agree to compensation above the minimums.

 The most recent Basic Agreement expired on December 31, 1993. The Players and Owners collectively began negotiations for a new agreement in March 1994. The 1994 baseball season commenced in April 1994, under the full terms of the expired Agreement, including the entry by individual clubs into free agent contracts and salary arbitrations for eligible reserve players. Thus, collective bargaining over the future relationship of owners and players continued simultaneously with individual clubs and players engaged in their contractual mechanisms of free agency and salary arbitration to set wages.

 Despite ongoing negotiations over the terms of a new agreement with an exchange of proposals, on August 12, 1994, the Players commenced a strike. Thereafter, the parties, sometimes at their own initiation and other times with the prodding of mediators, continued to discuss proposals for a successor collective bargaining agreement.

 I need not describe the minute details of the various proposals discussed. Sufficient for my purpose here is that the Owners desired a "salary cap" with elimination of the salary arbitration system and a more restricted free agency system. The Players objected to a salary cap but, in order to accommodate the Owners' concern about escalating club payrolls, counterproposed a tax system on high-paying clubs to deter extravagant wage offers. Subsequent proposals between the parties centered on discussions concerning the appropriate tax rates and the payroll thresholds above which clubs would be taxed.

 On December 22, 1994 the Players submitted a new tax proposal. That same day, the Owners announced that the figures set forth in the new tax proposal were unacceptable, and declared an impasse without making a counterproposal as requested by the then mediator. The Owners also announced that they would immediately and unilaterally impose a salary cap and eliminate salary arbitration. The Owners made no mention of ending free agency rights or the anti-collusion provision of the Basic Agreement. At no time prior to the Owners' unilateral changes had the Players declared an impasse.

 Thereafter, cross-charges of unfair labor practices where filed with the Board by the Players and Owners. Even though the Owners had announced the existence of an impasse, negotiations between the parties continued in January 1995. On February 3, 1995, the Owners advised the Board that they had rescinded their previous unilateral changes to the Basic Agreement and that they would continue to negotiate with the Players. Because of the Owners' advice, the Board, also on February 3, stayed its then proceedings.

 On February 6, 1995, however, the Owners, by way of letter, informed the Players that:

 
until such time as the [Owners' and Players' bargaining units] ratify a new collective bargaining agreement or until further notice, individual Major League Clubs shall have no authority to negotiate terms and conditions of employment (or any element thereof) with the [Players' Union] or individual players or certified agents. The [Players' Union] is now on notice that individual Clubs are not authorized to negotiate or execute individual player contracts with bargaining unit players during the pendency of collective bargaining between [the Owners' and Players' bargaining units].

 Affidavit of Charles P. O'Connor, sworn to March 29, 1995 ("O'Connor Aff."), at Ex. 2.

 Also on February 3, an attorney for the owners advised the Owner Clubs that "individual club/player bargaining" and salary arbitration were permissive topics of collective bargaining and that the anti-collusion provision of the Basic Agreement did not impede the Owners' bargaining representatives from negotiating terms for individual free agent contracts or reserve player salaries.

 Discussions between representatives of the Owners and Players continued again despite renewed activity before the Board, its issuance of the Complaint and Notice of Hearing, and the filing of this Petition. In fact this week, the Baseball Commissioner on behalf of the Owners set forth another bargaining proposal. On March 29, 1995, the Players offered to return to work under the full terms of the expired Basic Agreement and have indicated to the Court that they will return to play baseball if an injunction issues restoring the status quo terms of the expired Basic Agreement. Absent an injunction, opening season, with replacement players, was scheduled to start on April 2, 1995.

 DISCUSSION

 Recognizing that the flow of commerce is "substantially burdened" by the "inequality of bargaining power between employees who do not possess full freedom of association or actual liberty of contract, and employers who are organized in the corporate or other forms of ownership association," Congress in 1935 passed the National Labor Relations Act. NLRA § 1, 29 U.S.C. § 151. In the first section of the Act, Congress expressed its hope that commerce would thrive if the right of employees to "organize and bargain collectively" was legally protected, thereby removing sources of "industrial strife and unrest." Id. The National Labor Relations Board, the governmental body that implements the Act, is empowered "to prevent any person from engaging in any unfair labor practice ...." NLRA § 10(a), 29 U.S.C. § 160 (a). Assisted by Regional Offices, the Board investigates charges of unfair labor practices, and upon a finding of a ...


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