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Thursday, November 17, 2011
Coming Soon: NBA Forum Wars (and Why Choice of Venue will Matter)
By now, most readers are aware of three antitrust lawsuits that seek to address whether the NBA's league-wide lockout represents an illegal group boycott under Section 1 of the Sherman Act:
- Butler v. National Basketball Association (filed by NBA players against the league on Nov. 15, 2011 in the U.S. District Court for the District of Minnesota, which is part of the 8th Circuit).Soon, a battle will likely emerge between the parties about which forum should hear this dispute. In a nutshell, here are two reasons why the ultimate forum might affect the case's result.
(1) Differences in Interpreting Antitrust Law's Non-Statutory Labor Exemption Make the 8th and 9th Circuits More Favorable to the Players than the 2d. Cir.
One of the key defenses in any labor-side antitrust challenge is the non-statutory labor exemption: a defense arguing that a particular claim is preempted from antitrust scrutiny by labor law. However, not all circuits apply the non-statutory labor exemption in the same manner.
In both the 8th and 9th Circuits, courts have repeatedly held that the non-statutory labor exemption shields from antitrust scrutiny only activities that (1) involve mandatory subjects of bargaining, (2) primarily affect the parties involved, and (3) are reached through bona fide arms' length bargaining. Based on this standard, the U.S. District Court for the District of Minnesota concluded in McNeil v. Nat'l Football League, 790 F. Supp. 871 (D. Minn. 1991) that the non-statutory labor exemption cannot apply after a union disclaims interest: presumably because after a disclaimer the second and third prongs of the non-statutory labor exemption cannot be met.
By contrast, the U.S. Court of Appeals for the Second Circuit in Clarett v. Nat'l Football League rejected the 8th & 9th Circuit definition of the non-statutory labor exemption in favor of a far broader non-statutory labor exemption. Thus, in the Second Circuit, the mere act of disclaiming union interest might not impose immediate liability on a sports league for maintaining terms originally implemented before such a disclaimer.
For more on the differences in interpreting the non-statutory labor exemption in the 2d. Cir. from the 8th/9th Cir., see my law review articles addressing the circuit split in the context of age requirements here and here, and Professor McCann's articles discussing this split in the context of age requirements here and here.
(2) Differences in Interpreting "Market Power" in a Labor-Side Antitrust Case
In addition, the NBA teams may seek to defend their league-wide lockout under antitrust law by arguing that the relevant market for professional basketball labor is worldwide and that within a worldwide market the NBA teams lack the requisite "market power" to illegally restrain trade under the Rule of Reason. In determining whether the relevant geographic market for men's basketball labor is limited to the United States or extends to the entire world, a court would likely consider within what range the movement of workers is "practicable."
While many NBA players' lack of interest in playing overseas may seem to indicate that doing so is not practicable and thus to relevant market should be confined to the U.S. the U.S. Court of Appeals for the Ninth Circuit case Tanaka v. University of Southern California, 252 F.3d 1059 (9th Cir. 2001) seems to go against that point. There, the court disregarded a female collegiate soccer player's preference to only accept employment near her family's home in Los Angeles in favor of the view that the market for her services extended to a greater geographic region.
While the court's holding in Tanaka does not directly bar the Ninth Circuit from finding a market for men's basketball labor that is limited to the U.S., it seems to introduce one more bar for the players' lawyers to overcome.
For more on the NBA's potential "lack of market power" defense, see my recent Rutgers Law Journal article Does the NBA Still Have 'Market Power?' Exploring the Antitrust Implications of an Increasingly Global Market for Men's Basketball Player Labor.