Commentary

The Supremes question NFL case

Best guess is that the Supreme Court isn't looking kindly on the NFL's antitrust suit

Updated: January 13, 2010, 5:38 PM ET
By Lester Munson | ESPN.com

WASHINGTON -- Lawyers, judges and law professors can and will argue about anything. But they agree on one thing: It is impossible to predict a decision of the U.S. Supreme Court by analyzing the questions and the answers in the arguments the lawyers make to its nine justices.

In the arguments Wednesday, for example, in the case of American Needle Inc. v. NFL, the colloquy between the justices and the attorneys included Justice Stephen Breyer joking about his beloved Patriots and Red Sox, and Justice John Paul Stevens letting a packed courtroom know that he thought players' salaries were "too high."

Justice Clarence Thomas, who wrote a landmark opinion in a recent antitrust case that is at the heart of the issues in the current case, said absolutely nothing during the 70 minutes of argument, a practice he has followed since he joined the high court, even though his recent decision was discussed by all three arguing lawyers and several justices.

But in a case in which the NFL is seeking a ruling that would revolutionize the sports industry by establishing for the NFL and other leagues total immunity from antitrust claims, there were important indications that the NFL might not succeed.

[+] EnlargeSupreme Court justices
Mark Wilson/Getty ImagesThe Supreme Court justices asked hard questions of the NFL's attorney Wednesday.

Comments and questions from an unlikely combination of three justices -- Antonin Scalia, Breyer and Sonia Sotomayor -- seemed to lay the foundation for the court to make a relatively limited ruling, a narrow decision that would avoid the radical changes that would have hurt players, coaches, fans and sports-gear manufacturers.

Sotomayor, the court's rookie, was the first of the justices to question American Needle attorney Glen Nager as he led off the arguments, and she was the only justice even to mention the total immunity the NFL seeks. Instead of focusing on the broad immunity question initiated by the NFL, the Scalia-Breyer-Sotomayor line of questioning pushed NFL attorney Gregg Levy into a corner he wanted to avoid.

Levy and the NFL won everything they wanted in the case in two lower court rulings, the first from a federal district judge in Chicago and the second in a unanimous opinion from three judges of the U.S. Court of Appeals for the 7th Circuit (Chicago).

American Needle argued that it had been significantly damaged when the NFL granted an exclusive monopoly on logo apparel to Reebok, and it demanded an injunction and treble damages. The lower courts threw out ANI's claim at the earliest opportunity. They were nice wins for Levy and the NFL, allowing the league to avoid the enormous discovery process that is part of every antitrust case -- expert witnesses, exchanges of thousands of documents and endless depositions.

The NFL avoided a trial under an antitrust doctrine known as the "rule of reason." A rule of reason trial would determine whether the NFL's grant of a monopoly to Reebok was a reasonable restriction of the market for hats and caps or was a conspiracy to raise prices that injured consumers across the country.

It was in rule of reason trials in Minneapolis in the early 1990s that Gene Upshaw and the NFL Players Association achieved free agency and established escalating salaries, huge bonuses, and significantly improved health and disability benefits.

The NFL's dream has been to eliminate rule of reason trials that allow jurors to decide whether the league's actions are the decisions of a cartel with total control of the market for pro football.

But in the exchanges between the lawyers and the justices Wednesday, "rule of reason" was the legal phrase most often mentioned. Scalia, Breyer and Sotomayor all indicated their interest in a factual determination of whether the Reebok monopoly on apparel was reasonable.

The only way to make the factual determination that these justices want is through extensive pretrial investigation (known as "discovery") and a trial. This is exactly what the NFL and Levy avoided in the two lower court rulings.

The word the NFL really didn't want to hear -- "remand" -- was mentioned eight times in the exchanges. A remand would be a decision by the high court to send the American Needle lawsuit back to Chicago for a trial.

[+] EnlargeCowboys merchandise
AP Photo/Tony GutierrezThe justices seemed to doubt that the NFL sells gear purely for promotional purposes.

A trial in Chicago is the last thing the NFL wants. But a remand and a trial are risks it took when, instead of enjoying its early victories in the case, the NFL, in a stunning decision, asked the Supreme Court to review a case the league had already won.

Responding to the threats of a remand and a rule of reason trial, Levy asserted that NFL team paraphernalia is designed for "promotion and not for the production of football." If the sale of paraphernalia is promotional, Levy said, then it cannot be viewed as an exercise of economic power and cannot be a violation of antitrust law.

NFL hats and apparel are the same as the "gimme" hats that John Deere gave away decades ago to promote its tractors, according to Levy. Although John Deere made no profit on the hats themselves, they benefited the John Deere bottom line when the farmer in the "gimme" hat thought of a Deere first when he was ready to buy.

The justices didn't seem to be buying Levy's claim that NFL paraphernalia is solely for promotion.

"We ought to go and take a look at whether it's merely promotion," Breyer told him. "We should go back and look at the economic facts with witnesses and so forth."

Sotomayor joined Breyer, asking rhetorically, "Shouldn't the rule of reason control? We don't need to go to the single entity [total immunity] issue. We need to know whether the concerted activity on [hats and caps] is reasonable."

Scalia joined the move toward a rule of reason trial when he confronted Levy, demanding to know whether an NFL team was "worthless by itself" and "had value only in the joint venture of the NFL." The implication was that for Levy's argument to work, an individual team such as the Cowboys or the Giants must have no value by itself. Only in joint actions, according to the NFL's briefs, can the league produce profits and value.

ANI insists that each team is an independent source of economic power and that the teams compete with one another for players, coaches and income. Therefore, in that argument, the teams are subject to antitrust liabilities and treble damages when they join together to sell hats and caps, for example.

Responding to the question from Scalia, the leader of the court's conservative bloc, Levy asserted that teams had individual values of their own.

"Wow," replied Scalia, clearly incredulous at Levy's assertion and apparently moving toward a remand and a rule of reason trial.

Knowing that lawyers, judges and law professors agree that it's impossible to predict anything based on colloquy between the justices of the high court and the lawyers, it nonetheless appears that "rule of reason" and "remand" will be the key words in a Supreme Court opinion that, after Wednesday, appears likely to send ANI and the NFL back to Chicago for a trial.

Lester Munson, a Chicago lawyer and journalist who reports on investigative and legal issues in the sports industry, is a senior writer for ESPN.com.

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