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CLARETT v. NATIONAL FOOTBALL LEAGUE

February 5, 2004.

MAURICE CLARETT, Plaintiff, -against- NATIONAL FOOTBALL LEAGUE, Defendant


The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge

OPINION AND ORDER

I. INTRODUCTION

  Maurice Clarett's goal is to play in the National Football League next year. The only thing preventing him from achieving that goal is the League's rule limiting eligibility to players three seasons removed from their high school graduation. The question before the Court is whether this Rule violates the antitrust laws.

  Clarett, a star freshman football player attending The Ohio State University, now in his sophomore year, challenges the Rule, claiming that he is ready, willing and able to play in the NFL and that his exclusion violates the antitrust laws. Clarett's challenge to the Rule raises serious questions arising at the intersection of labor law and antitrust law, not to mention the intersection of Page 2 college football and professional football. Should Clarett's right to compete for a job in the NFL — the only serious pro football game in town — trump the NFL's right to categorically exclude a class of players that the League has decided is not yet ready to play?

  The answer requires the Court to tackle a number of technical legal issues. The NFL defends itself by asserting three arguments: (1) the Rule is the result of a collective bargaining agreement between the NFL and the players union and is therefore immune from antitrust scrutiny; (2) Clarett has no standing under the antitrust laws to bring this suit; and (3) the Rule is reasonable.

  While, ordinarily, the best offense is a good defense, none of these defenses hold the line. Because the Rule does not concern a mandatory subject of collective bargaining (wages, hours and conditions of employment), governs only non-employees, and did not clearly result from arm's length negotiations, it is not immune from antitrust scrutiny. Clarett has standing to sue because his injury flows from a policy that excludes all players in his position from selling their services to the only viable buyer — the NFL. Finally, the NFL has not justified Clarett's exclusion by demonstrating that the Rule enhances competition. Indeed, Clarett has alleged the very type of injury — a complete bar to entry into the market for his services — that the antitrust laws are designed to prevent. It is Page 3 axiomatic, in the words of Learned Hand, that the antitrust laws will not tolerate a contract "which unreasonably forbids any one to practice his calling."*fn1

  Because the NFL cannot prevail on any of these defenses, the Rule must be sacked.

 II. UNDISPUTED FACTS AND PROCEDURAL POSTURE

  The facts of this dispute are easily recounted and essentially undisputed, unless otherwise noted. Clarett, a college football player, is suing the NFL under the Sherman Antitrust Act,*fn2 asserting that the League's Rule limiting eligibility for the draft to players three seasons removed from their high school graduation constitutes an unreasonable restraint of trade.

  A. The NFL and the Collective Bargaining Agreement

  The NFL began operating in 1920 as the American Professional Football Association, comprised of twenty-three member clubs.*fn3 The current NFL is an unincorporated association of thirty-two member clubs.*fn4 Although there are Page 4 other professional football leagues in North America — including the Arena Football League, the Arena Football League 2, the National Indoor Football League, and the Canadian Football League*fn5 — the NFL dominates. It consistently outperforms all other professional sports leagues, not to mention the other professional football leagues, in both revenues and television ratings.*fn6 The Super Bowl — the League's championship game — is routinely the top-rated television program of the year,*fn7 and indeed, four of the top ten highest-rated programs in Page 5 television history are NFL football games.*fn8

  Not surprisingly, the League's fiscal success also inures to the benefit of its players. The average NFL player earned $1,258,800 in 2003;*fn9 the average starting NFL running back (which Clarett aspires to be) earned $1,578,275;*fn10 the average first-round draft choice (which Clarett also aspires to be) earned $1,367,120;*fn11 the minimum salary that a rookie may be paid is $225,000.*fn12 In contrast, the 2000 salary cap in the Canadian Football League — the total amount of money that a team was permitted to pay to all 50-odd of its players combined — Page 6 was approximately $1,700,000.*fn13 Similarly, the 2003 team salary cap in the Arena Football League was $1,643,000.*fn14 In other words, the average starting running back in the NFL makes only slightly less than the average teams do in the CFL and AFL. In short, the NFL represents an unparalleled opportunity for an aspiring football player in terms of salary, publicity, endorsement opportunities, and level of competition.

  Day-to-day operation of the League is handled by an appointed Commissioner, currently Paul Tagliabue.*fn15 Representatives of each of the thirty-two teams, however, comprise the National Football League Management Council ("NFLMC"), the exclusive collective bargaining representative of the League.*fn16 The 1,400-odd NFL players are exclusively represented by the National Football Page 7 League Players Association ("NFLPA"),*fn17 which was created in 1956.*fn18 In 1968, the NFLPA and the NFLMC entered into the League's first Collective Bargaining Agreement ("CBA").*fn19

  The current CBA took effect on May 6, 1993, and expires in 2007.*fn20 The CBA, along with the League's Constitution and Bylaws, comprehensively outlines the relationship between the players and the League, covering the operation of the League, player salary and the player draft, including detailed rules by which the teams select new players. Two provisions of the CBA are at issue here. Article III, section 1, provides:

  This Agreement represents the complete understanding of the parties on all subjects covered herein, and there will be no change in the terms and conditions of this Agreement without mutual consent. . . . [T]he NFLPA and the Management Council waive all rights to bargain with one another concerning any subject Page 8 covered or not covered in this Agreement for the duration of this Agreement, including the provisions of the NFL Constitution and Bylaws. . ..*fn21

 Article IV, section 2, entitled "No Suit," provides:
[N]either the NFLPA nor any of its members, agents acting on its behalf, nor any members of its bargaining unit will sue, or support financially or administratively any suit against, the NFL or any Club relating to the presently existing provisions of the Constitution and Bylaws of the NFL as they are currently operative and administered. . . .*fn22
Clarett and the NFL disagree on whether these two provisions establish that the NFL and the players union actually bargained over the terms of the Constitution and Bylaws (which contained the eligibility Rule at issue), or merely bargained away the NFLPA's ability to bargain over or challenge the Bylaws' provisions.*fn23

  B. The Rule

  The NFL's eligibility Rule precluding college underclassmen from participating in the draft has been in force — in one form or another — for Page 9 decades.*fn24 "It was adopted after Illinois's star running back, Harold `Red' Grange, stunned the sports world by leaving school at the end of the 1925 college season and joining the Chicago Bears of the five-year-old NFL for a reported $50,000."*fn25 The original Rule precluded a player from joining the NFL unless four seasons had elapsed since his high school graduation; in 1990, the requirement was changed to three seasons.*fn26

  Notwithstanding the fact that the Rule predates the CBA, the NFL Page 10 maintains that "[d]uring the course of collective bargaining that led to the 1993 CBA, the eligibility rule itself was the subject of collective bargaining."*fn27 On May 6, 1993 — the same day that the current CBA became effective — the NFLPA and the NFLMC also executed a side letter acknowledging that the Constitution and Bylaws attached to the letter were referenced in the CBA.*fn28 Among the various provisions of the 1993 Bylaws are comprehensive rules describing who is eligible to play in the NFL. The Bylaws provided that a player became eligible if he exhausted his eligibility to play college football or graduated from college.*fn29 A player was also eligible if he was five years removed from his first enrollment in college (or four years removed, if he never played college football), regardless of whether he had any remaining college eligibility.*fn30 Finally, a player not otherwise eligible could be granted "Special Eligibility."*fn31

  Such a player has been granted eligibility through special permission of the Commissioner. In order to receive consideration for the League's principal college draft in any year, Page 11 any application for special eligibility must be in the Commissioner's office no later than January 6 of that year. For college football players seeking special eligibility, at least three NFL seasons must have elapsed since the player was graduated from high school.*fn32

 Although by its plain language the Rule requires the "special permission" of the Commissioner, that permission appears to be routinely granted where a player falls within the ambit of the Rule (i.e., is clearly three years removed from his high school graduation).*fn33

  In 2003, the form of the Rule changed yet again when the NFLMC promulgated revised Bylaws.*fn34 The record is unclear as to whether these new Bylaws were the subject of collective bargaining, although Article III, section 1 of Page 12 the CBA requires the NFLMC and NFLPA to negotiate in good faith any changes that "could significantly affect the terms and conditions of employment of NFL players."*fn35

  Under the 2003 version of the Bylaws, the Rule is omitted altogether. In its place is a reference to a separate memorandum promulgated by the Commissioner under section 8.5 of the Bylaws.*fn36 Section 8.5, in turn, provides that "[t]he Commissioner shall interpret and from time to time establish policy and procedure in respect to the provisions of the Constitution and Bylaws and any enforcement thereof"*fn37 Thus, under the 2003 Bylaws, the Rule now exists only as "policy and procedure" established by the Commissioner and cited in the Bylaws. With respect to the 2004 draft, the Commissioner has issued a release that includes the following iteration of the Rule:

  SPECIAL ELIGIBILITY. Such player has been granted eligibility through special permission of the Commissioner. Any applications for special eligibility must be in the Commissioner's Page 13 office no later than Thursday, January 15, 2004, if the player is to be considered for inclusion in the League's principal draft scheduled for April 24-25, 2004. Applications will be accepted only for college players for whom at least three full college seasons have elapsed since their high school graduation. Players will not be permitted to elect to bypass the January 15 deadline in order to seek eligibility for a later supplemental draft, and no supplemental draft will be held to accommodate such an election.*fn38

 It is this version of the Rule that Clarett challenges.

  The NFL provides a number of justifications for the Rule, arguing that it protects at least four different classes of people. First, the NFL contends that the Rule protects the people it excludes because they "are not sufficiently mature, either physically or psychologically, to endure the rigors of professional Page 14 football."*fn39 Second, the Rule protects member clubs who might suffer financial adversity resulting from younger players' peculiar susceptibility to injury.*fn40 Third, the Rule protects the League and its "entertainment product from the adverse consequences associated with such injuries."*fn41 Fourth, the Rule protects young players who, if they declare but are not drafted, would lose their eligibility to play college football,*fn42 or who might over-train or experiment with performance-enhancing drugs to speed their athletic development.*fn43 Page 15

  C. Maurice Clarett

  Clarett, now twenty years old,*fn44 graduated high school on December 11, 2001,*fn45 His credentials as a football player are impressive. In the 2002-2003 collegiate season, Clarett — the first freshman starter at running back for The Ohio State University ("OSU") since 1943*fn46 — led his team to an undefeated (14-0) season that was capped by a 31-24 double-overtime victory over University of Miami in the Fiesta Bowl, OSU's first national championship in thirty-four years.*fn47 As a result of his freshman year resounding success, Clarett was named the Big Ten Freshman of the Year and voted the best running back in college football by The Sporting News.*fn48 Page 16

  Clarett claims that he wanted to declare for the April 2003 NFL draft after his strong freshman season,*fn49 but offers no explanation as to why he did not challenge the Rule at that time. Clarett's status changed in September 2003, however, when OSU and the NCAA suspended him for the entire 2003-2004 season.*fn50 As a result, he did not play during the just-concluded college football season. Moreover, there appears to be some question as to whether the NCAA will permit him to play in the 2004-2005 season.*fn51 Clarett's decision to seek eligibility for the 2004 draft may have resulted, in part, from this suspension. The NFL may be his only real option for playing football next year.

  Clarett, who is six feet tall and weighs 230 pounds,*fn52 is taller and Page 17 heavier than some of the NFL's all-time greatest running backs, including Walter `Payton (5' 10", 200), Barry Sanders (5'8", 203) and Emmitt Smith (5'9", 207).*fn53 While sportswriters disagree about which team would draft him and in which round, there seems to be little doubt that Clarett is an NFL-caliber player who would be drafted if he were eligible to participate in the process.*fn54 Thus, only the Rule stands between Clarett and the opportunity to play in the NFL next year.*fn55 Page 18

  D. Procedural History

  This case has progressed rapidly, virtually rushing toward the goal line because of the imminence of the 2004 draft. Clarett filed suit on September 23, 2003. At the initial scheduling conference, held one week later, both parties informed the Court that they intended to move for summary judgment. After limited document discovery, the parties' cross-motions for summary judgment were fully submitted on December 11, 2003. In two separate motions, the NFL asks for summary judgment on its defenses that (1) the Rule is protected from antitrust scrutiny by the nonstatutory labor exemption; and (2) Clarett lacks antitrust standing. Clarett, in turn, seeks summary judgment on his single antitrust claim. The NFL opposes Clarett's motion, claiming that if the suit is not dismissed on the grounds set forth in its motions, a trial is needed to determine whether the Rule is a reasonable restraint of trade.

 III. LEGAL STANDARD

  Rule 56 of the Federal Rules of Civil Procedure provides for summary judgment "if the pleadings, depositions, answers to interrogatories, and Page 19 admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."*fn56 "An issue of fact is `genuine' if `the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'"*fn57 A fact is material when it "`might affect the outcome of the suit under the governing law.'"*fn58

  A party seeking summary judgment has the burden of demonstrating that no genuine issue of material fact exists.*fn59 In turn, to defeat a motion for summary judgment, the non-moving party must raise a genuine issue of material fact. To do so, he "must show more than a `metaphysical doubt' as to material facts,"*fn60 and he may not rely on conclusory allegations or unsubstantiated Page 20 speculation.*fn61 Rather, the non-moving party must produce admissible evidence that supports his pleadings.*fn62 In this regard, "[t]he `mere existence of a scintilla of evidence' supporting the non-movant's case is also insufficient to defeat summary judgment."*fn63

  In determining whether a genuine issue of material facts exists, the court must construe the evidence in the light most favorable to the non-moving party and draw all inferences in that party's favor.*fn64 Accordingly, the court's task is not to "weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial."*fn65 Summary judgment is therefore inappropriate "if there is any evidence in the record that could Page 21 reasonably support a jury's verdict for the non-moving party."*fn66 Nonetheless, the Second Circuit has remarked that "[i]n the context ...


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