Commentary

Antitrust case reaches Supreme Court

The American Needle case against the NFL reaches the highest court on Wednesday

Originally Published: January 12, 2010
By Lester Munson | ESPN.com

WASHINGTON -- At 10 o'clock on Wednesday morning in a mahogany and marble courtroom a bit larger than an NFL end zone, a lawyer named Glen Nager will address the U.S. Supreme Court in a case that is likely to produce enormous consequences for the sports industry.

Nager, a nationally recognized attorney with the Jones Day law firm who clerked for retired Justice Sandra Day O'Connor, will be the first of three advocates who will address the effort to grant antitrust immunity to the NFL. He will have 30 minutes to persuade the court's nine justices that a ruling in favor of the league will be a disaster for fans, players, coaches and manufacturers.

The case began as a relatively routine antitrust lawsuit in which Nager's client, American Needle Inc. (ANI), a manufacturer of hats and caps, challenged the NFL's grant to Reebok of a monopoly on production of NFL logo apparel, an action that cost ANI millions of dollars in profits. After the NFL won favorable rulings in a trial court and the U.S. Court of Appeals in Chicago, ANI filed a request for review in the nation's highest court.

[+] EnlargeSupreme Court Justices
Mark Wilson/Getty ImagesThe Justices of the U.S. Supreme Court can shape the future of sports in America when they decide the latest antitrust case.

In a stunning and unexpected action, the NFL also asked for consideration in the Supreme Court, which suggests that the league wants a ruling that goes far beyond its victory on the apparel contract and would grant it immunity in all of its "core business functions."

In another surprise, the high court agreed to consider the case and the NFL's revolutionary suggestion of new structures in the sports industry.

The court's action and the NFL's demand for immunity on its "core business functions" alerted players' unions and an NFL coaches' organization to the possibility that their futures are at stake.

Union leaders in all four team sports contend that they need to be able to succeed in antitrust litigation against team owners if they are to protect free agency and other rights they've gained in past litigation and negotiation. And they maintain that antitrust immunity will vastly reduce their bargaining leverage with team owners and will result in attempts to limit free agency, reduce salary caps, install wage scales and -- in strikes and lockouts -- attempts to use replacement players.

They scrambled to put together a response. In an unprecedented action, the players' unions in professional football, baseball, basketball and hockey worked jointly on a brief for the court that describes the dire consequences of antitrust immunity. The NFL Players Association went a step further and is seeking consideration of the issue in the U.S. Congress with a hearing of the House Judiciary Committee scheduled for Jan. 20.

The NFL's bold action and the high court's acceptance of the case for consideration and decision also alerted the NBA, the NHL, MLB and the NCAA to the possibilities of increased powers and profits in their sports, and they, too, have all intervened in the case.

Representatives of all four sports leagues, the NCAA and the players' unions will be in the audience on Wednesday morning as Nager begins his argument.

The second lawyer to address the court on Wednesday will be Deputy U.S. Solicitor General Malcolm L. Stewart, a top lawyer in the Obama administration, which aggressively intervened in the case shortly after the high court agreed to hear the case. Although the administration's position is a series of highly technical suggestions about the earlier decisions in the case, Stewart will support Nager and ANI in their attempt to thwart the NFL's effort to obtain total immunity.

If the court adopts the position of the Obama administration, the decision would be of little lasting effect and return the case to the category of routine sports antitrust litigation.

[+] EnlargeAmerican Needle
AP Photo/Nam Y. HuhAmerican Needle's Dan Parenti, in his office in Buffalo Grove, Ill., has a very vested interest in the outcome.

The last lawyer to address the court will be Gregg Levy, a brilliant litigator from the law firm of Covington & Burling, a Washington powerhouse that has represented the NFL for nearly five decades. Levy was the victorious lawyer in the NFL's successful effort to defeat Maurice Clarett's attack on the rule that requires players to complete three years of college before becoming eligible for the draft. Levy also won the last NFL case decided in the Supreme Court: Brown v. Pro Football Inc., a players' association class action antitrust case in which the union attacked the NFL's setting of a salary scale for taxi squad players.

On Wednesday, Levy will have 30 minutes to explain the NFL's position.

In his earlier court papers, Levy told the court that the NFL is interested in immunity for all "core business functions." In later papers, Levy and the NFL talked only of the "promotion and production" of the NFL, a change of language that appears to be an attempt to minimize the impact of a decision granting the NFL immunity.

The basis for the NFL's argument that it is entitled to immunity from antitrust litigation is its long-held notion that it is a "single entity" and not a group of 32 separate businesses that compete with each other. If the league is a single unit instead of 32 individual teams, any violation of antitrust law would be impossible to establish. Levy and other NFL lawyers have advanced the "single entity" theory for 20 years in battles with the NFL Players Association. It was part of the NFL's response when the NFLPA and Gene Upshaw used antitrust cases in the early '90s to achieve free agency, escalating contracts and major improvements in other benefits.

The theory has occasionally produced a victory for the NFL, but this is the first time the league has argued it at so high a level and with such significant consequences.

For players, coaches and fans, what happens in the courtroom on Wednesday morning is tantamount to a goal-line stand. For the NFL, it might be noteworthy that the majestic courtroom is shaped like an end zone, only bigger.

A decision from the court is expected by the end of June.

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