Amicus Curiae Brief — Brown v. Pro Football, Inc.

‘OcrToper Term, 1995

ANTONY Brown, ef al.,

oe Petitioners,

Pro FooTBALL, INc.,

d/b/a WASHINGTON REDSKINS, et ai.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Cireuit

BRIEF OF AMICI CURIAE OFFICE OF THE

COMMISSIONER OF BASEBALL AND MAJOR LEAGUE

BASEBALL PLAYER RELATIONS COMMITTEE, INC.

IN SUPPORT OF RESPONDENTS

RANDY L. LEVINE

(Counsel of Record)

MAJOR LEAGUE BASEBALL PLAYER

RELATIONS COMMITTES, INC.

850 Park Avenue

New York, New York 10022

(212) 389-7404

THOMAS J. OSTERTAG

General Counsel

OFFICE OF THE COMMISSIONER

OF BASEBALL

350 Park Avenue

New York, New York 10022

(212) 839-7820

Attorneys for Amici Curiae

Office of the Commissioner

of Baseball and Major League

Baseball Player Relations

Committee, Inc.

Winson - Eras Prxtine Co., Inc. - 769-0096 - WASHINGTON, D.C. 20001

BEST AVAILABLE COPY: ®

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TABLE OF CONTENTS

py PB Nig ts hag) - ne ae

INTEREST OF AMICI CURIAB ....00.......00.0...ccecsseeeeeees

i 8 ee ge aS i |, 5 ee

Fs REREREES Sie NA AS ean A ORC SEE OP OT

I. BASEBALL’S ANTITRUST EXEMPTION HAS

II.

Il.

NOT HAMPERED OR DISRUPTED THE

PROCESS OF FREE COLLECTIVE BAR-

GAINING FOSTERED BY THE NATIONAL

LABOR RELATIONS ACT ....22..000.......... jabpianditees

A. The History of Labor Relations in Baseball

Is Similar to That in Other Industries and

Provides No Indication That the Process of

Collective Bargaining Has Been Adversely

Affected by Baseball’s Antitrust Immunity....

B. The Course of Baseball’s Labor Relations Has

Been Dictated by Historical and Economic

Factors Unrelated to Baseball’s Antitrust

| SEER aa ARO AARR a oe ihc Da aera

THE KIND OF UNILATERAL ACTION THAT

PETITIONERS MAINTAIN SHOULD BE

SUBJECT TO ANTITRUST SCRUTINY HAS

NOT PLAYED A SIGNIFICANT ROLE IN

BASEBALL’S COLLECTIVE BARGAINING...

APPLICATION OF THE ANTITRUST LAWS

IN THE MANNER ADVOCATED BY PETI-

TIONERS WOULD DESTROY MULTIEM-

PLOYER BARGAINING IN PROFESSIONAL

SPORTS AND CREATE CHAOS .......0000000........

UT scrilasmscigdpniidlnensnalosaietblaccapetittoninalitnbiiieeniestideiaeti

Page

11

ii

TABLE OF AUTHORITIES

Cases: Page

Charles D. Bonanno Linen Serv. v. NLRB, 454 U.S.

GE CED hintiictchciniccictnsntinteaahchinicindiilat he aii hates 16, 18

Federal Baseball Club v. National League, 259 U.S.

SI EID Givsins se visicesietiirstecnpeciccieanitnenladinnal aintiaianiias cade 2, 4,5

First Nat’l Maintenance Corp. v. NLRB, 452 U.S.

Ga CEP inkcickihiinntanmekitne te eee 7

Flood v. Kuhn, 407 U.S. 258 (1972) -...222......-.-00000- 2, 3, 4,5

H.K. Porter Co. v. NLRB, 397 U.S. 99 (1970) ......... 17

Keogh v. Chicago & Northwestern R. Co., 260 U.S.

BE COED cicasieccnstilinasebctianiecntatnn tial tea ciaha pre entails 5

Lodge 76, Int'l Ass’n of Machinists v. Wisconsin

Employment Relations Comm’n, 427 U.S. 132

CRP OEE <iniicssscininijeiisdianiaiinasichcsshasaiiatanmiaietame ates stir catia 18

Major League Rodeo, Inc., 246 N.L.R.B. 748

b , en a RR ENE Cae TUNG ee ACRES See CAI 15

NLRB v. Brown, 380 U.S. 278 (1965) ...202.20......... 18

NLRB v. Insurance Agents’ Int’l Union, 361 U.S.

gt, PMs cere esi oy Le RNS Ro 3, 7, 8,17

NLRB v. Katz, 369 U.S. 786 (1962) ........................ 16

NLRB v. Truck Drivers Local Union No. 449

(“Buffalo Linen”), 353 U.S. 87 (1957) ................ 14,17

National and American Leagues of Professional

Baseball Clubs v. Major League Baseball Players

Ass’n, 66 Lab. Arb. Reps. (BNA) 101 (1976)

CTROTER, GAMO cick cininescnaritibdimintiopietae ae. 9,11

National Basketball Ass’n v. . Williams, 45 F.3d 684

(2d Cir. 1995), pet. for cert. filed, No. 95-137

(Dali 96, TO vain ode 17

National Football League v. North American Sec

cer League, 459 U.S. 1074 (1982) ..........000000.. 15

North American Soccer League, 236 N.L.R.B. 1317

(1978), later proceeding, 241 N.L.R.B. 1225

(1979), enf’d, 613 F.2d 1879 (5th Cir.), cert. de-

ated, 460 US. GED Ce wceacnisntaisncinicclsincsinns 15

Silverman v. Major League Baseball Player Rela-

tions Comm., Inc., 516 F. Supp. 588 (S.D.N.Y.

RITE) scccestisninsiinessiscdcnsociuabaibanpaaeeniiia emai: aeebriiecs 12

iii

TABLE OF AUTHORITIES—Continued

Page

Silverman v. Major League Baseball Player Rela-

tions Comm., Inc., 880 F. Supp. 246 (S.D.N.Y.),

aff'd, 67 F.3d 1054 (2d Cir. 1995) -.............. 8, 10, 14, 15

Square D Co. v. Niagara Frontier Tariff Burzau,

ee RR i eee 5

Toolson v. New York Yankees, 346 U.S. 356

ar tae acsinisihiademiaidignsciahiniibinennemmntinnrintninaves 2,4, 5

Wood v. National Basketball Ass’n, 809 F.2d 954

I ds camavcnlamisinnehneiniianekananil 8,9, 10

Statutes:

29 U.S.C. §§ 101 et seq. ........... IEE SERN t DP 18

I I i CN i iiecscesaser ver sinntwndcavininrennsiniel 6, passim

Other Authorities:

James B. Dworkin, Owners Versus Players: Base-

ball and Collective Bargaining (1981) ................ 10, 11

John P. Hoerr, And the Wolf Finally Came: The

Decline of the American Steel Industry (1988) .... 6

Marvin Miller, A Whole Different Ball Game

Loe cal psinhetinesenearnivetinaen 10

Charles R. Perry, Collective Bargaining and the

Decline of the United Mine Workers (1984) ....... 6

Paul D. Staudohar, The Sports Industry and Col-

lective Bargaining (2d ed. 1989) -......................... 9,12

New Leadership Elected At AFL-CIO, End Of

Major Labor Disputes Lead 1995 Events, Daily

Lab. Rep. (BNA) No. 7, at C-1 (Jan. 11, 1996)... 7

IN THE

Supreme Cowt of the United States

OCTOBER TERM, 1995

No. 95-388

ANTONY BROWN, et al.,

. Petitioners,

PRO FOOTBALL, INC.,

d/b/a WASHINGTON REDSKINS, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

BRIEF OF AMICI CURIAE OFFICE OF THE

COMMISSIONER OF BASEBALL AND MAJOR LEAGUE

BASEBALL PLAYER RELATIONS COMMITTEE, INC.

IN SUPPORT OF RESPONDENTS

Pursuant to Rule 37 of the Rules of this Court, the

Office of the Commissioner of Baseball and the Major

League Baseball Player Relations Committee, Inc. submit

this brief as amici curiae in support of respondents. Re-

spondents and petitioners have both consented to the filing

of this brief, and the letters of consent have been lodged

with this Court.

2

INTEREST OF AMICI CURIAE

The players in the four major professional sports in the

United States, baseball, basketball, football and hockey,

are unionized, and the members of each league have a long

history of engaging in multiemployer collective bargaining.

In professional baseball (“Baseball”), the history extends

over 30 years. The Major League Baseball Player Rela-

tions Committee, Inc. (“PRC”) is the collective bargain-

ing representative of the 28 Major League clubs

(“clubs”). The Office of the Commissioner of Baseball

(“Commissioner’s Office”) is responsible for the central-

ized administration of the game and oversees the activities

of the PRC.

If petitioners succeed in their effort to overturn the

decision of the court of appeals, labor relations in Base-

ball are likely to be adversely affected. The fact that

Baseball’s status under the antitrust laws is different from

that of the other major professional sports, see Flood v.

Kuhn, 407 U.S. 258 (1972); Toolson v. New York

Yankees, 346 U.S. 356 (1953); Federal Baseball Club

v. National League, 259 U.S. 200 (1922), will not elimi-

nate this impact.

Collective bargaining in professional sports, as in many

other industries, is strongly influenced by pattern bargain-

ing. The results of collective bargaining in the National

Football League (“NFL”), the National Basketball As-

sociation (“NBA”) and the National Hockey League

(“NHL”) have a serious impact on the course of nego-

tiations in Baseball. As the court of appeals recog-

nized, the legal standard advocated by the petitioners

would give “unions a powerful new weapon.” Appendix

to petition for certiorari (“Pet. App.”) at 20a. This, in

turn, undoubtedly would alter the content of the agree-

ments negotiated not only by the NFL but also by the

NBA and the NHL. Thus, although this Court’s decisions

piace Baseball in a different legal posture, the Court’s

resolution of the important issues presented by this case can

3

alter the course of future labor relations in all professional

sports, including Baseball, by changing the patterns estab-

lished in collective bargaining. For this reason, the Com-

missioner’s Office and the PRC have a strong interest in

the Court’s consideration of the issues raised in this case.

Further, the petitioners and certain amici have made

assertions concerning the impact that Baseball’s antitrust

exemption has had on the collective bargaining process.

Brief for Petitioners at 44; Brief of the National Hockey

League Players Association, National Foctball League

Players Association, Major League Baseball Players As-

sociation and National Basketball Players Association

(collectively the “Players’ Unions”) as Amici Curiae in

Support of Petitioners (“Players’ Brief”) at 15-18. The

Commissioner’s Office and the PRC are uniquely situated

to respond to these assertions, which they believe to be

demonstrably inaccurate, and to provide a perspective

on this topic that will assist the Court in resolving the

issues presented by this case.

SUMMARY OF ARGUMENT

For more than thirty years, Baseball and its players have

engaged in multiemployer collective bargaining. Baseball

has an industry-specific, antitrust exemption reaffirmed by

this Court in Flood v. Kuhn, 407 U.S. at 282-84. Con-

trary to the assertions of petitioners and the Players’

Unions, there is no evidence that the existence of Base-

ball’s antitrust exemption has had an adverse impact on

the bargaining process in Baseball. Although Baseball

(like many other industries) has had strikes and lockouts,

those disruptions should not be viewed as symptomatic of

a problem in collective bargaining. Rather, the use of

economic weapons is “part and parcel of the system that

the Wagner and Taft-Hartley Acts have recognized.”

NLRB vy. Insurance Agents’ Int'l Union, 361 U.S. 477,

489 (1960).

4

Moreover, a review of the history of collective bargain-

ing in Baseball demonstrates that the clubs have not relied

on Baseball’s antitrust exemption as a justification for en-

gaging in conduct outside the normal collective bargain-

ing process. In fact, the course of Baseball’s collective

bargaining has been dictated by historical and economic

factors, unrelated to the industry-specific exemption.

The interpretation of the nonstatutory labor exemption

advocated by petitioners would disrupt the process of

multiemployer bargaining that all professional sports have

used to order their economic affairs.’ The threat of anti-

trust litigation post-impasse would lead to legal posturing

at the bargaining table that would chill negotiations. More-

over, potential antitrust liability would leave employers

with little choice but to lock out their employees before

undertaking any possible antitrust risk, thus increasing

disruptions in the sports industry.

ARGUMENT

I. BASEBALL’S ANTITRUST EXEMPTION HAS NOT

HAMPERED OR DISRUPTED THE PROCESS OF

FREE COLLECTIVE BARGAINING FOSTERED BY

THE NATIONAL LABOR RELATIONS ACT.

More than 70 years ago, this Court first held that the

business of Baseball is not subject to the antitrust laws.

Federal Baseball Club v. National League, 259 U.S. at

208-09. Since 1922, the Court has twice reconsidered

Baseball’s immunity, and on each occasion it has ad-

hered to its earlier decision. In Toolson v. New York

Yankees, 346 U.S. at 357, the Court stated that “Con-

gress had no intention of including the business of base-

ball within the scope of the federal antitrust laws.” In

Flood v. Kuhn, 407 U.S. at 282-84, the Court reaffirmed

1 Multiemployer bargaining is the only appropriate bargaining

construct for a professional sports league, and it is significant

that all of the Players’ Unions insisted on multiemployer bargain-

ing when organizing the leagues.

5

the apparent “anomaly” of exempting the business of

Baseball from antitrust scrutiny, stating that “[w]e con-

tinue to be loath, 50 years after Federal Baseball and al-

most two decades after Toolson, to overturn those cases

judicially when Congress, by its positive inaction, has

allowed those decisions to stand for so long and, far be-

yond mere inference and implication, has clearly evinced

a desire not to disapprove them legislatively.” ”

The antitrust exemption reaffirmed in Flood v. Kuhn

obviously is not an issue before the Court. However, in

an effort to support their argument that the antitrust

laws should be given unprecedented application during

the collective bargaining process, petitioners assert that

the Flood v. Kuhn exemption has caused instability in

Baseball’s labor relations. Brief for Petitioners at 44.

See also Players’ Brief at 16 (asserting that Baseball’s

antitrust exemption has caused “unstable, disruptive labor

relations”). This assertion is not correct.

A. The History of Labor Relations in Baseball Is

Similar to That in Other Industries and Provides

No Indication That the Process of Collective Bar-

gaining Has Been Adversely Affected by Baseball’s

Antitrust Immunity.

Petitioners attempt to create the impression that labor

relations in Baseball have been uniquely problematic.

The fact of the matter is that, during a 30-year bargain-

ing relationship, Baseball has had two significant strikes,

one in 1981 and another in 1994. There were also

shorter disruptions in 1972, 1976 and 1985. These

shorter disruptions, however, did not prevent the season

from being played in its entirety.

* Baseball! is not the only industry in which the Court has re-

affirmed an antitrust exemption because of Congress’ failure to

eliminate the exemption. See, e.g., Square D Co. v. Niagara Fron-

tier Tariff Bureau, Inc., 476 U.S. 409, 423-24 (1986) (exemption

for rate-making by motor freight carriers), reaff’g Keogh v.

Chicago & Northwestern R. Co., 260 U.S. 156 (1922).

6

As a matter of perspective, it is important to evaluate

Baseball's labor relations experience in comparison to the

experience in other industries. In recent memory, the

NFL, the NBA and the NHL have all had labor disrup-

tions with players or referees. Moreover, industries out-

side of sports, such as coal and steel to name just two,

have had extended periods of poor labor relations marked

by strikes that were more frequent, more bitter and more

violent than anything that has ever occurred in Baseball.

See Charles R. Perry, Collective Bargaining and the De-

cline of the United Mine Workers 197-233 (1984) (de-

scribing labor relations in the coal industry); John P.

Hoerr, And the Wolf Finally Came: The Decline of the

American Steel Industry 101-105 (1988) (describing

labor relations in the steel industry). Because Baseball

is the national pastime, its labor problems draw a dis-

proportionate amount of attention. This attention, how-

ever, should not disguise the fact that Baseball’s collective

bargaining has been no worse than that in many other

industries.

More important, the argument that Baseball’s antitrust

immunity has “caused” the work stoppages in Baseball

during the last 30 years starts from the false premise that

a work stoppage represents a failure in the collective bar-

gaining process that must have been “caused” by some

outside force (i.e., the clubs’ antitrust immunity in this

case). As described in detail below, see infra pp. 8-10,

this view has no support in the actual facts of Baseball’s

labor disputes. It is also contrary to the underlying

rationale of the federal labor laws.

Congress did not view strikes and lockouts as collective

bargaining “failures.” Rather, this Court has said that

the premise underlying the National Labor Relations Act

(“NLRA”), 29 U.S.C. §§ 151 et seg. (1994), is that

union and management “proceed from contrary and to

an extent antagonistic viewpoints and concepts of self-

interest. . . . The presence of economic weapons in re-

serve, and their actual exercise on occasion by the parties,

7

is part and parcel of the system that the Wagner and

Taft-Hartley Acts have recognized.” I/nsurance Agents,

361 U.S. at 488-89. Under such a regime, “the use of

economic pressure by the parties to a labor dispute is not

a grudging exception to some policy of .. . the Act; it is

part and parcel of the process of collective bargaining.”

Id. at 495. Indeed, the NLRA collective bargaining

structure “is premised on the belief that collective dis-

cussion backed by the parties’ economic weapons will

result in decisions that are better for both management

and labor and for society as a whole.” First Nat'l Main-

tenance Corp. v. NLRB, 452 U.S. 666, 678 (1981)

(emphasis added ).

Given the NLRA’s theory of free collective bargaining,

it is not surprising that Baseball and the other profes-

sional sports are not the only employers in this country

to experience work stoppages. A review of the Players’

Brief would suggest that only professional sports leagues

—or only industries that utilize multiemployer bargaining

—have had labor disputes. To the contrary, industries

in which collective bargaining takes place on an individ-

ual employer basis have also had tumultuous labor strife

over time and in recent years. The United Auto Work-

ers and Caterpillar, the United Paperworkers and A.E.

Staley, and the United Rubber Workers and Bridgestone ’

Firestone (to name just a few) have been locked in par-

ticularly lengthy and contentious work stoppages over

the last year or more. See generally New Leadership

Elected At AFL-CIO, End Of Major Labor Disputes

Lead 1995 Events, Daily Lab. Rep. (BNA) No. 7, at

C-1 (Jan. 11, 1996) (summarizing conclusions to 30-

month lockout at A.E. Staley, 17-month strike at Cater-

pillar and 10-month strike at Bridgestone /Firestone ).

The fact that Caterpillar, A.E. Staley, and Bridgestone

Firestone (as single employers) do not have to fear a

treble-damage antitrust lawsuit by the unions represent-

ing their employees if they continue terms of an expired

agreement or unilateraily impose new terms after a lawful

8

impasse in bargaining no more “caused” these labor dis-

putes than Baseball’s antitrust immunity “caused” the work

stoppages that Baseball has experienced. Rather, the “ex-

ercise [of economic weapons] . . . by the parties . . . is

part and parcel of the system that the Wagner and Taft-

Hartley Acts have recognized”—not evidence of some in-

appropriate outside force or a “breakdown” of the collec-

tive bargaining process. Insurance Agents, 361 US. at

489.

B. The Course of Baseball’s Labor Relations Has Been

Dictated by Historical and Economic Factors Un-

related to Basebail’s Antitrust Exemption.

Contrary to the assertions of petitioners and the Play-

ers’ Unions, there is no reason to believe that the strikes

and lockouts that have occurred in Baseball were related

to Baseball’s status under the antitrust laws. In fact,

Baseball’s history of labor relations is better explained by

a confluence of special historical and economic factors.

To fully appreciate Baseball’s special bargaining history,

one must begin with the proposition that collective bar-

gaining agreements in professional sports represent a

“unique bundle of compromises.” Wood v. National Bas-

ketball Ass'n, 809 F.2d 954, 961 (2d Cir. 1987); Silver-

man v. Major League Baseball Player Relations Comm.,

Inc., 880 F. Supp. 246, 256 (S.D.N.Y.), aff'd, 67 F.3d

1054 (2d Cir. 1995). This point is well illustrated by the

NFL and the NBA. In both of these sports, the collective

bargaining parties have reached the same essential compro-

mise. The players received free agency, which increased

individual bargaining power and player salaries. See

Wood, 809 F.2d at 861. In return, the owners received

an entry-level draft and a salary cap, which served “the

interests of the employers in stabilizing salary costs and

spreading talent among the various teams.” /d.

Unfortunately, Baseball missed the opportunity to reach

the kind of fundamental compromise achieved in the

NBA and the NFL. In 1976, the players in Baseball

9

secured free agency rights through an arbitration. See

National and American Leagues of Professional Baseball

Clubs v. Major League Baseball Players Ass'n, 66 Lab.

Arb. Reps. (BNA) 101 (1976) (Seitz, Arb.).* Since

1976, Baseball, despite its special status under the anti-

trust laws, has had the most open and competitive free

agency system in professional sports. See generally Paul

D. Staudohar, The Sports Industry and Collective Bar-

gaining 38 (2d ed. 1989) (characterizing Baseball’s free

agency system as “wide open”). Beyond the basic reserve

system (which limits the ability of young players to

change teams), Baseball’s collective bargaining agree-

ment, without a salary cap or similar mechanism, con-

tains few, if any, provisions that reflect “the interests

of employers in stabilizing salary costs and spreading

talent among the various teams.” Wood, 809 F.2d at 961.

Moreover, Baseball has certain unique economic char-

acteristics that, when combined with its “wide open”

system of free agency, have placed the smallest-market

clubs in constant peril. Most important, there is great

disparity in the revenues generated by the clubs. Be-

cause Baseball plays far more games than professional

football, basketball or hockey, gate revenue—which is

often closely correlated with local population—is a very

important revenue source. Also because of the number of

games, Baseball sells television rights not only nationally

(like the NFL) but also locally. As one would expect,

local television rights are much more valuable in large

population centers. Due to these and other factors, Base-

ball has clubs that generate local revenues more than three

times those of some of their competitors on the field.

The wide revenue disparity among the clubs causes

difficulties because there is a single market for Baseball

players. In that single market, the clubs with the most

revenue set the price for free agent players. Clubs with

* The right to arbitrate disputes over contract matters, of course,

was a right that the players had won in collective bargaining.

10

less revenue are faced with the difficult choice of paying

the market rate or losing their talent.*

The combination of Baseball’s player compensation sys-

tem and the revenue disparity in the industry has created

serious economic issues in the game. In every round of

negotiations since 1976, the clubs have sought changes

designed to serve their interests in “stabilizing salary costs

and spreading talent among the various teams.” Wood,

809 F.2d at 961. Unfortunately, the players have viewed

these efforts as an attempt to “roll back players’ free

agency rights. Players’ Brief at 16.

It is a fundamental tenet of labor relations that the most

difficult and contentious type of collective bargaining oc-

curs when a union is asked to respond to changed or

difficult economic circumstances in an industry. See James

B. Dworkin, Owners Versus Players: Baseball and Collec-

tive Bargaining 35 (1981) (describing typical union

reaction to effort to reform a collective bargaining agree-

ment). The instability that petitioners perceive in Base-

ball’s labor relations has not been caused by the fact that

the industry is exempt from the antitrust laws but rather

by the fact that, since 1976, the clubs have felt compelled

repeatedly to seek fundamental reforms of Baseball’s col-

lective bargaining agreement in an effort to protect the

weakest members of the industry. Given these factors and

the extraordinary financial stakes involved, it is hardly

surprising that Baseball has had difficult negotiations with

its players’ union, regardless of the industry’s status under

the antitrust laws.

*A similar problem exists with respect to many of the players

who are not eligible for free agency. Under Baseball’s player com-

pensation system, many non-free agents are eligible for the process

of salary arbitration. A principal purpose of the salary arbitration

process is to eliminate club-to-club variations in salary. See Marvin

Miller, A Whole Different Ball Game 109 (1991). In fact, Base-

ball’s salary arbitration system precludes the arbitrator from con-

sidering the financial position of a club in setting a player’s salary.

See Silverman, 67 F.3d at 1057-58.

11

Il. THE KIND OF UNILATERAL ACTION THAT PETI-

TIONERS MAINTAIN SHOULD BE SUBJECT TO

ANTITRUST SCRUTINY HAS NOT PLAYED A SIG-

NIFICANT ROLE IN BASEBALL’S COLLECTIVE

BARGAINING.

A review of the history of collective bargaining in

Baseball demonstrates that the process has worked in the

manner that Congress envisioned when it passed the

NLRA. The clubs and players often have bargained hard.

At times, economic force has been used. But in the end,

the parties have reached new agreements. There is simply

no evidence that Baseball’s exemption from the antitrust

laws has caused the clubs to have a special proclivity for

unilateral action. In fact, history demonstrates that the

clubs have not relied on Baseball’s antitrust exemption as a

justification for engaging in conduct outside the normal

collective bargaining process:

* In 1972, the players engaged in a brief early-season

strike in an effort to secure additional contributions to

their pension plan. After just 13 days, “[a]s is true in

most effective collective bargaining situations, both sides

had to compromise to reach agreement. . . .” Dworkin,

Owners Versus Players at 33. There was no threat or

talk of unilateral implementation in 1972.

* The 1976 negotiations took place against the back-

drop of the arbitration decision that granted baseball play-

ers free agency after essentially two seasons of service.

See National and American Leagues, 66 Lab. Arb. Reps.

(BNA) 101. The central issue in the negotiations was

the length and contours of the new reserve system. See

Dworkin, Owners Versus Players at 34. The clubs locked

out the players during spring training “in the hopes of

forcing them to reach a quick agreement.” /d. Commis-

sioner Kuhn, however, opened the camps, play com-

menced, and a negotiated agreement was reached in July.

Again, there was no threat of a declaration of impasse or

unilateral implementation.

12

* If the clubs had ever been inclined to act unilaterally,

the 1980-81 negotiations provided a perfect opportunity.

The collective bargaining parties engaged in protracted

negotiations and, by May of 1980, it was clear that the

parties were deadlocked on the single issue of “direct

player compensation.” ° Silverman v. Major League Base-

ball Player Relations Comm., Inc., 516 F. Supp. 588, 591

(S.D.N.Y. 1981). Despite these developments, the clubs

made no effort to act unilaterally. Rather, they reached

an agreement with the Major League Baseball Players

Association (“Players Association”) that allowed the 1980

season to be completed uninterrupted and created a joint

committee to attempt to resolve the direct player compensa-

tion issue. 7d. at 591-92. The agreement also provided

that, if the joint committee failed to resolve the player

compensation issue, a proposal previously made by the

clubs would become effective during the 1981 season

and the Players Association would have the right to re-

open the contract. /d. It was this reopener that led to the

long strike in 1981.

* On August 6, 1985, after protracted negotiations, the

players struck. As one commentator observed, however,

“no one really wanted a strike . .. ,” and a settlement

was reached in just one day. Staudohar, The Sports In-

dustry and Collective Bargaining at 57. There was no

talk of unilateral implementation during the 1985 negotia-

tions.

* In 1990, the clubs again attempted to use the leverage

of a spring training lockout to force a quick agreement.

The strategy was successful in 1990 in the sense that an

agreement was reached without the loss of any regular-

5 Direct player compensation is an aspect of the free agency

system in a number of professional sports. Under a direct player

compensation provision, a team that signs a free agent who

formerly played for another team is required to “compensate” the

player’s former team by providing that team with another player

or, in some cases, a draft choice.

13

season games. Moreover, there was no threat of impasse

or unilateral implementation.

* 1994 was the one round of collective bargaining in

Baseball where impasse and unilateral implementation ar-

guably played a role. While the clubs eventually took

unilateral action, it came only after the Players Associa-

tion had already been out on strike for four months. As

such, it is clear that the unilateral implementation did

not cause the strike. Moreover, the Players Association

used its rights under the NLRA and the NLRB enforce-

ment mechanism to reverse the clubs’ 1994 unilateral

implementation.

As the foregoing amply demonstrates, Baseball’s anti-

trust exemption has had little or no impact upon collective

bargaining. Under the system of industrial relations fos-

tered by the NLRA, the clubs and the players have en-

gaged in collective bargaining and, when necessary, ex-

erted economic leverage in order to reach agreements.

There is no evidence that Baseball’s antitrust exemption

made the clubs more prone than other employers to try

to act unilaterally.° Equally important for present pur-

poses, there is no reason to believe that injecting the

threat of antitrust litigation into the bargaining process

would have made Baseball’s labor situation more “stable.”

6 Certain amici have gone to rather unusual lengths to convince

the Court that there is some relationship between Baseball’s labor

disruptions and its antitrust exemption. One group of amici

actually attached the transcript of a television show where the

President of the NFL, Neil Austrian, made certain comments

about the impact of Baseball’s exemption on the players’ 1994

strike. See Players’ Brief, Appendix at 2a. With all due respect

to Mr. Austrian, he has no particular knowledge of Baseball, the

events surrounding the 1994 strike, or labor relations. The amici’s

reliance on an offhand comment on a television show to support

their argument shows how speculative that argument js.

14

Ill. APPLICATION OF THE ANTITRUST LAWS IN

THE MANNER ADVOCATED BY PETITIONERS

WOULD DESTROY MULTIEMPLOYER BARGAIN-

ING IN PROFESSIONAL SPORTS AND CREATE

CHAOS:

As Congress and this Court have previously recognized,

there is “cogent evidence that in many industries . . .

multi-employer bargaining . . . [is] a vital factor in the

effectuation of the national policy of promoting labor

peace through strengthened collective bargaining.” NLRB

v. Truck Drivers Local Union No. 449 (“Buffalo Linen’’),

353 U.S. 87, 95 (1957) (referring to congressional de-

bates on Taft-Hartley amendments to NLRA). In every

major professional sport, multiemployer collective bargain-

ing agreements establish uniform terms and conditions of

employment such as roster sizes, scheduling rules and

playing rules that are crucial to the competitive character

of the enterprise.

Perhaps the most important component of the economic

arrangements reached through collective bargaining in

professional sports is the free agency/reserve system. See

Silverman, 67 F.3d at 1061-62." A free agency/reserve

system is nothing more than a method of regulating the

timing and circumstances under which players (i.e., em-

ployees) can move from one team (i.e., employer) to

another. There are many reasons why such a system is

vital to the stability of ali professional sports: (1) the

free agency’reserve system often determines the share of

revenues going to teams and players; (2) the free agency/

reserve system preserves a degree of roster continuity,

which is important to maintaining fan interest; (3) the

free agency/reserve system helps to ensure high-quality

play by requiring that individuals practice and play with

the same teammates for a certain period of time; and

TAs noted above, supra p. 8, in two major sports—football

and basketball—the free agency/reserve system is accompanied

by a salary cap.

15

(4) the free agency/reserve system allows teams to re-

coup development costs. /d. at 1061.

Because a free agency/reserve system regulates the inter-

change of employees among different employers, it would

be difficult, if not impossible, to establish such a system

in bargaining between groups of players and each single

team.* Conversely, if multiemployer bargaining is dis-

rupted in professional sports, it is difficult to imagine

how the industry will be able to operate and what mecha-

nism will perform the crucial functions now handled by

the free agency/reserve system.

The unprecedented interjection of the antitrust laws

into the collective bargaining process advocated by pe-

titioners would destroy multiemployer bargaining in pro-

fessional sports. Key components of the agreements

commonly reached in the sports industry, including the

free agency/reserve system and the salary cap system,

would provide fertile ground for potential antitrust plain-

tiffs. The potential for antitrust liability would not only

provide “unions with a powerful new weapon,” Pet. App.

at 20a, but it would also inevitably lead both bargaining

parties to alter their conduct at the bargaining table to

8 In fact, there is a line of authority indicating that professional

sports leagues are joint employers, rather than multiemployer-

groups. See Major League Rodeo, Inc., 246 N.L.R.B. 743 n.2 (1979)

(holding that Major League Rodeo and its constituent members

constituted a joint employer bargaining unit); North American

Soccer League, 236 N.L.R.B. 1317, 1819 (1978) (holding that

soccer league and its member clubs were joint employers for

bargaining purposes), later proceeding, 241 N.L.R.B. 1225 (1979),

enf’d, 613 F.2d 1379 (5th Cir.), cert. denied, 449 U.S. 899 (1980).

Consistent with this line of authority, the current Chief Justice

has expressed the view that sports leagues have some of the charac-

teristics of a “single enterprise.” National Football League v.

North American Soccer League, 459 U.S. 1074, 1077 (1982)

(Rehnquist, J., dissenting from denial of certiorari). A finding

that a sports league is a single enterprise would provide an

alternative basis to conclude that the antitrust laws do not apply.

16

prepare for the inevitable onslaught of litigation. This

kind of posturing cannot help but impede productive col-

lective bargaining.

The fact that under the theory advocated by the United

States and the Federal Trade Commission, the antitrust

laws would become applicable only at impasse provides

little solace.’ Brief of the United States and the Federal

Trade Commission as Amici Curiae Supporting Petition-

ers at 9. As the Court has recognized, impasse is a

state of affairs that can be brought about intentionally by

one or both parties. Charles D. Bonanno Linen Serv. v.

NLRB, 454 U.S. 404, 412 (1982). Under the interpre-

tation of the nonstatutory exemption advocated by peti-

tioners, a professional sports union could force the bar-

gaining process to impasse and thereby create an impos-

sible dilemma for the teams. At the point of impasse,

the teams would have to choose between: (1) exposing

themselves to potentially massive antitrust liability by

continuing key collective bargaining provisions such as

the free agency/reserve system; and (2) operating with

no uniform arrangements with respect to the interchange

of players among the various teams.

In fact, if petitioners’ theory were accepted, there

would necessarily be more, not less, “labor strife” or

“chaos” in collective bargaining in professional sports.

Despite the Players’ Unions’ generous advice to the leagues

that “all that [they] need to do is to comply with the

rule of reason and the antitrust laws in implementing

their proposals,” Players’ Brief at 24, no league would

* As an alternative, petitioners contend that the nonstatutory

exemption should end upon expiration of a collective bargaining

agreement. No federal court of appeals has ever accepted this

position. This is hardly surprising given that, until impasse, em-

ployers are required by the labor laws to maintain the status quo

on a!i mandatory topics of bargaining. See NLRB v. Katz, 369 U.S.

736, 742-43 (1962). It is hard to imagine how conduct required

by the federal labor laws would also violate the federal antitrust

laws.

17

risk bankrupting its franchises by following such a fool-

hardy course of conduct. If, several years later when

the antitrust action finally went to trial, an antitrust jury

concluded that the implemented collective bargaining pro-

posals were not “reasonable” terms, the treble-damage

award would probably put some teams in the league out

of business.” Nor would a league attempt to operate un-

der the chaos that would exist if there were no uniform

contract negotiating and signing rules or player allocation

system. Therefore, petitioners’ proposed rule of law

would leave sports leagues with one and only one plaus-

ible course of action at the expiration of each collective

bargaining agreement—to lock out the players until a

new labor agreement is reached.

The Players’ Unions acknowledge that, even under

their misguided view of the antitrust laws’ role in the col-

lective bargaining process, a lockout (i.e., a concerted re-

fusal to employ a certain group of workers) by a multi-

employer group would be lawful. Players’ Brief at 24.

As the court below, Pet. App. at 27a-28a, and the Second

Circuit in National Basketball Ass'n v. Williams, 45

F.3d 684, 691-92 (2d Cir. 1995), pet. for cert. filed,

No. 95-137 (July 24, 1995), pointed out, this Court’s

decision in Buffalo Linen, 353 U.S. at 94-96, mandates

The absurdity of petitioners’ view of the role that the anti-

trust laws should play in the collective bargaining process may be

best illustrated by the Players’ Unions’ acknowledgment that anti-

trust courts and juries would be judging the “reasonableness” of

employer collective bargaining proposals if petitioners prevail in

this case. Of course, this Court has held that Congress determined

that the NLRB—the government agency in charge of enforcing

the federal collective bargaining laws—would have no authority

to pass on the reasonableness of a party’s bargaining proposals.

See Insurance Agents, 361 U.S. at 488: H.K. Porter Co. v. NLRB,

397 U.S. 99, 108 (1970). Under petitioners’ theory, as the Players’

Brief freely acknowledges, federal courts and juries that may

have no particular labor relations expertise would be doing precisely

what Congress expressly determined would not be done by any

governmental! body.

18

such a result. See also NLRB v. Brown, 380 U.S. 278,

285 (1965). In fact, the Players’ Unions opine that “a

lockout [is a] particularly powerful weapon[] for em-

ployers in professional team sports.” Players’ Brief at

24 n.10. Regardless of whether the Players’ Unions are

right about the effectiveness of lockouts in this industry

—and there is substantial reason to doubt their assess-

ment—the lockout would certainly become the only ra-

tional employer response to the expiration of a collective

bargaining agreement.

Thus, the “havoc to labor relations in professional team

sports,” Players’ Brief at 6, that petitioners and the Players’

Unions decry and purportedly seek to remedy through

their petition to this Court would, in fact, be the state of

affairs mandated by their proposed interjection of the anti-

trust laws into matters that Congress either regulated

through the federal labor laws or “left for the free play

of contending economic forces.” Lodge 76, Int'l Ass’n of

Machinists v. Wisconsin Employment Relations Comm'n,

427 U.S. 132, 150 (1976) (internal quotation marks

omitted ).

In addition to passing on the reasonableness of collective

bargaining proposals, the federal courts, under the inter-

pretation of the nonstatutory exemption advocated by

petitioners, would also have to make determinations as to

the existence of an impasse. As the Court has recognized,

impasse is a transitory state of affairs. Charles D. Bo-

nanno Linen Serv., 454 U.S. at 412. If petitioners’ theory

were adopted, courts would be forced into the unenviable

position of evaluating when an impasse existed in order

to determine whether a particular antitrust claimant has

a cause of action. This in-depth involvement by the fed-

eral courts in labor disputes would again run contrary

to fundamental policies underlying the NLRA and the

Norris-LaGuardia Act, 29 U.S.C. §§ 101 et seg. (1994).

Finally, the notion that an individual sports franchise

could avoid potential antitrust liability by imposing, at

19

impasse, terms and conditions of employment separate

from the rest of the teams in the league is absurd. The

entire purpose of a free agency/reserve system is to regu-

late the conditions under which individual players may

move from team to team. It would simply be impossible

for each team to impose its own version of a free agency/

reserve system because those versions inevitably would

not be compatible.

In sum, the entire professional sports industry has

ordered its affairs in reliance on the long-standing federal

labor policy that encourages multiemployer collective bar-

gaining. To interject the antitrust laws into multiemployer

bargaining would have severe structural repercussions in

professional sports and other industries in which multi-

employer bargaining has long been the norm. To avoid

this result, the Court should reject petitioners’ effort to

seek a treble-damage antitrust recovery based on conduct

authorized under the labor laws.

20

CONCLUSION

The judgment of the court of appeals should be

affirmed.

Respectfully submitted,

RANDY L. LEVINE

(Counsel of Record)

MAJOR LEAGUE BASEBALL PLAYER

RELATIONS COMMITTEE, INC.

350 Park Avenue

New York, New York 10022

(212) 339-7404

THOMAS J. OSTERTAG

General Counsel

OFFICE OF THE COMMISSIONER

OF BASEBALL

350 Park Avenue

New York, New York 10022

(212) 339-7820

Attorneys for Amici Curiae

Office of the Commissioner

of Baseball and Major League

Baseball Player Relations

February 16, 1996 Committee, Inc.