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Wednesday, November 16, 2011
Questioning the NBA Players' Litigation Strategy

NBA players filed two different antitrust lawsuits against the NBA owners on Tuesday, one in the U.S. District Court for the Northern District of California, and one in the District for Minnesota. Although I haven't yet been able to track down a copy of either complaint online, the players' attorney David Boies has stated that he doesn't intend to pursue a preliminary injunction lifting the NBA's lockout in either case. Boies, of course, previously represented the NFL owners in the Brady v. NFL litigation this past spring, where he successfully persuaded a majority of the Eighth Circuit panel that a preliminary injunction blocking a lockout is improper under the Norris-LaGuardia Act.

Despite the Eighth Circuit's decision in Brady, I can't help but think that the NBA players are making a mistake by not seeking a preliminary injunction to lift the lockout. Although the NFL players ultimately lost on the injunction issue at the Eighth Circuit, they were nevertheless able to convince the district court judge, as well as one of the three appellate judges, that a preliminary injunction lifting a lockout could issue under the Norris-LaGuardia Act. And even the majority of the Eighth Circuit panel believed that injunctive relief might be appropriate to temporarily lift the lockout for at least a segment of the players (i.e., those not currently under contract with an NFL team). Therefore, there is a legitimate chance that a different judge (and perhaps a panel of the Ninth Circuit) would be willing to grant the NBA players preliminary injunctive relief preventing the NBA owners from continuing their lockout.

Given this possibility, I don't see why the NBA players wouldn't at least seek a preliminary injunction. A court order lifting the lockout would give the players perhaps the greatest bargaining leverage they could hope to achieve from a lawsuit against the owners. In turn, an injunction would provide players with the best chance of reaching a favorable resolution of the dispute in time to save at least part of the season. Meanwhile, the potential downside of seeking a preliminary injunction is minimal, since a refusal by the court would merely maintain the status quo.

Consequently, I don't understand the logic behind not seeking a preliminary injunction. What am I missing here?


My hypothesis: Boies thinks that the best way to get leverage in time to save the season is summary judgment. And a fight over a preliminary injunction would push the timetable for resolving the motion for summary judgment past the last date for saving the season.

Anonymous A.S. -- 11/16/2011 1:34 PM  

Thanks A.S., that's an interesting thought. Personally, I'd worry that an expedited summary judgment decision is unlikely, given the typical briefing schedule and possibility of relevant factual disputes between the parties, but that may be what Boies and Co. are thinking.

Blogger Nathaniel Grow -- 11/16/2011 2:08 PM  

Its unlikely that summary judgement would provide immediate leverage to save the 2012 season. Summary judgment involves both discovery and rulings regarding venue, considering that the NBA has filed suit in the SDNY and the players recently filed suit in the N.D. Cal and D. Minn. Also, its unlikely that a massive antitrust suit such as this one would resolve itself on summary judgement rather than going to trial on the merits or settling before. Either way, the injunction argument for the NBA players looks worst than the NFL players. Unlike the NFL players, there is a vast and lucrative foreign market for NBA players. In addition, the NBA is claiming real operating loses and structural harm. Further, the merits of the NBA players antitrust is murky at best. Sigh, I suppose my point here is that the NBA players should have decertified or disclaimed far before this point or pressed for ruling from the NLRB to gain immediate leverage.

Blogger E.P. -- 11/16/2011 4:03 PM  

Nathaniel, what are your thoughts on the jurisdictional battle that will ensue? How probable is it that the case will remain in California (or Minnesota), and not New York?

Blogger RJ -- 11/16/2011 5:03 PM  

D. Minn. complaint is available on PACER at 11-cv-3352. ND Cal at 11-cv-5525. I have both if you want them.

There is zero chance that either court does anything to impact this season. Goodness, the CMC in the Melo case was set for February. And summary judgment? First, they will have to brief motions to dismiss.


First, calling the foreign market "vast and lucrative" is quite a stretch. Only 15 players in Europe make more than $2mil per year, and there are only 5 teams paying that money. When you also consider that most leagues limit the number of US-born players on a given team, it means that there is actually very little money to go around. JR Smith is reportedly making $3mil per in China, so there may be more money to be had there, but fewer teams.

Second, having other options is by no means dispositive in an antitrust suit. For example, all but two of the automakers can't collude because you still have other options. It will also depend on how the court defines the relevant market. I think the players will have solid arguments against the lockout, i.e., group boycott, but I haven't studied it. There are also their breach of contract claims. I understand the NBA's argument that all contracts are now void, but the high level description didn't strike me as particularly persuasive.

Third, and just as a point of clarification, the NBA always refers to its net income losses, not its operating losses. That's not to say some teams aren't also operating at a loss, or that the difference will matter, but I'm betting that more than half the losses are interest payments.

Anonymous Anonymous -- 11/16/2011 6:06 PM  

E.P., I agree that the availability of potential employment overseas for basketball players distinguishes the NBA players' case from that of the NFL. However, given the relatively few jobs available overseas, as well as the fact that they would require players to move to a new continent, I'm not sure that that factor alone would be enough to defeat a motion for preliminary injunction. Even if it were, though, I still don't see why you wouldn't at least ask for the injunction. Again, the worst case scenario is that the court simply denies the motion, in which case the status quo is maintained and the lockout continues.

RJ, I haven't studied the jurisdictional issues in some time, but my general recollection is that courts will usually defer to the first filed forum, unless that site would be highly inconvenient for the parties, or perhaps if it is clearly motivated by forum shopping. Given that both the NBA and former NBPA are headquartered in New York City, I'd think that the odds favor the S.D.N.Y. being the ultimate forum for the case. As I noted, however, this is far from a fully informed prediction.

Blogger Nathaniel Grow -- 11/17/2011 8:47 AM  

My guess is that Boies was concerned about losing the prelim. injunction motion, thereby quickly ending this tactic (filing the antitrust suits). He said in the press that filing the motion would "take a long time" (which I frankly didn't understand) and that winning the motion would be "difficult" (which I think signalled his action). Everyone knows this will never get to trial--it may be over if the SDNY holds onto the proceeding. While I understand why the players followed the Kessler playbook, I don't think it will result in much movement by the owners, though it may ultimately kill the season.

Blogger JTC -- 11/17/2011 9:37 AM  

I think you're underestimating the availability of overseas positions. 70 or so players have already left, gaining generous contacts. And those were arguably B or C list players. With labor discussions breaking down, the flood gates are going to open. In addition, you only have to look to the 2011 NBA draft to see the vibrancy of overseas play and the practicality of jumping on a plane and making a buck. But, I think this bleeds into another big question, which is defining the relevant market. Ironically, the combined efforts of the NBA push and the players, through corporate marketing, to make basketball an international commodity harms the players' argument. We're dealing with a much more geographically diverse labor force and relevant market then in the 80s, 90s, or even early 2000s.

Overall, I agree with you in seeking the injunction. To end this sooner rather than later, the parties need some sort of determination on the merits much like in the NFL case. It just seems impractical to wait around and wangle over the pleadings and pre-trial motions while games are lost, at least to me as a disappointed fan. I don't see the NBA running to negotiate if this is per-the-course litigation. Sad.

Blogger E.P. -- 11/17/2011 11:18 AM  

To the anonymous poster who spoke about the net income/operating income losses: you are dead on right. Around half of the owners' losses derived from interest payments.

My question to you is, how does that affect your opinion on this lockout and the players'/owners' positions in the negotiations.

Blogger RJ -- 11/17/2011 6:11 PM  

How can you seek an injunction on lockout/strike that is permissible under labor law?

Anonymous Anonymous -- 11/19/2011 1:08 AM  


While a strike or lockout is permitted under labor law, it is unsettled whether the lockout is still permissible under antitrust law once the players' union has dissolved. In other words, once the collective bargaining relationship has ended (as is arguably the case now in the NBA labor dispute), then labor law generally no longer applies. The issue in Brady was whether the mere disclaimer of interest alone by the union was sufficient to permit a court to enjoin the lockout under the Norris-LaGuardia Act.

Blogger Nathaniel Grow -- 11/20/2011 10:09 AM  

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