Sports Law
Fall 2015 – Pr. Synder
Fall 2015
POWER OF THE COMMISSIONER
Why Have a Commissioner?
Pros
Public Face of the League
Integrity of the Game
Legal Deference
Scapegoat
Cons
Works for Owners
Not Disinterested, because he works for
owners.
Autocratic
Perhaps incompetent in the eyes of the
public.
Efficiency
*Sports eventually evolved to entrust a commissioner who protects the integrity of the game.
**They are responsible for making business decisions and decisions that impact the fan
experience.
Pete Rose v. Giamatti (1989 – S.D. Ohio)
Facts: Pete Rose was accused of betting on baseball while managing the Cincinnati Reds. Was
banned from baseball for life under the integrity of the game provision in Rose’s K.
Takeaway: Stands for the proposition that a member of MLB submits themselves to the powers
of the Commissioner. Commissioner has to give due process though.
 Rose agreed to withdraw suit without admitting/denying whether he bet on baseball.
Yankees v. Johnson – Starting point, player suspended by the league. Yankees fight for an
injunction against the suspension and win. At the time: vested property rights of the individual
club-owners … powers not given to the Commissioner.
Milwaukee v Landis (1931 – N.D. of Illinois)
Facts: Team wanted to move the player back and forth with its minor league teams, without
giving other clubs the chance to take player from them. Commissioner blocked such actions.
Takeaway: Court sides with D, he was acting within his authority as Commissioner.
Commissioner has broad, almost discretionary, authority to decide what are in the best
interests of the game.
 There is a grey area, Commissioner gets to make decisions within this area.
 Source of authority is the Major League Agreement, decide what is in the best interest
of baseball.
1
Finley v Kuhn (1978 – 7th Cir. Appeals)
Facts: Oakland A’s owner built team through draft, wanted to sell players and invest in future
assets for farm system. Finley signed them to extensions, then trade them. Kuhn blocked it.
Takeaway: Commissioner is entitled to considerable legal deference in exercising best interests
in the game powers except when in violation of law or bylaws or no basic due process (not
here, Commissioner wins).
 Commissioner has authority to block the sale of players.
Tom Brady (Present – 2nd Cir. Appeals/Judge Berman)
Facts: Tom Brady, the Golden Boy, was accused of deflating footballs during the AFC
Championship Game. Goodell suspended him for 4 games. Brady challenged.
Takeaway: Tom Brady won his appeal because Goodell violated Tom’s due process. No notice
for four game suspension, only fines, for ball deflation. Comparing to PEDs is inaccurate.
 BUT, the player’s granted Goodell the powers to act as the arbitrator under Article 46 of
the CBA AND it is very hard, infrequent to overturn an arbitrator’s decision.
Atlanta NL Bball Club v. Kuhn (1977 – N.D. Ga.)
 Commissioner Kuhn gave warning not to tamper with players eligible for free agency.
 Braves’ owner violated this direction by talking with Gary Matthews on two occasions.
 Judge recognized the broad commissioner’s powers, but listed off the punishments
available under Art. II § 3: removal of draft picks was not one of them.
Chicago NL Bball Club v. Vincent (1992 – N.D. Ill.)
 Commissioner invoked “best interest” powers by switching the Cubs from the Eastern
Division to Western Division.
 Cubs didn’t like this (don’t want late night TV games).
 Team stayed in East, didn’t give consent to switch divisions.
What Makes the NFL Different?
1. Has the same language as other leagues in Article 46: protect the integrity of the game.
2. BUT, in the NFL they are also the arbitrator, most leagues have an independent one that
can be fired by either side.
3. This leads to more contentious litigation as people are trying to reign in the power
Goodell has on paper.
2
POWER OF THE COMMISSIONER REVIEW
Where does
Power Come From
 The power
comes from the
CBA, or Major
League
Agreement.
 In the case of the
NFL, the power
also comes from
common law,
where high
levels of
deference are
granted to
arbitrators
(Goodell,
although this is
under fire).
 Courts generally
do not like
overstepping the
Commissioner’s
boundaries,
would rather
differ to their
judgement.
What is the Power
 The power is to
protect the
integrity of the
game, “best
interests”.
 This is a grey
area, which IMO
means that the
league is differing
to the
Commissioner for
decisions within
this grey area.
 Why? Efficiency
considerations,
also it benefits
the owners
because, well,
they work for the
owners.
 It also could be a
scapegoat play:
let the fans get
mad at the
Commissioner
rather than the
owners
themselves.
Cases
Takeaway
At the time, the power to
discipline players was
vested with the clubs
Yankees v. Johnson (Yankees). Eventually
changed to the
Commissioner through the
League Constitution.
All MLB employees subject
themselves to the powers
Pete Rose v.
of the Commissioner.
Giamatti
Commissioner has the
power to protect the best
interests of the game.
Commissioner has broad,
almost discretionary,
Milwaukee v.
authority to decide what is
Landis
in the best interests of the
game.
Commissioner is entitled to
considerable legal
Finley v. Kuhn
deference in deciding what
is in the best interest of the
game.
Yes, the Commissioner has
broad authority, but they
Tom Brady v.
still have to give the players
Goodell
basic due process before
punishing them under the
“best interests” powers.
Commissioner does not
Atlanta Braves Case have unlimited punishment
mechanisms.
Commissioner needs to
follow CBA, here, needed
Chicago Cubs Case
the Cubs consent to switch
divisions.
3
ADMINISTRATION OF LABOR AGREEMENT/DISCIPLINE CONT.
Overarching Themes/Questions
1. NFL: players gave Goodell the power to act as arbitrator, so we shouldn’t feel bad for
the players when Goodell lays the smack down on them.
2. Other leagues: hire arbitrator to be neutral for them.
Jim “Catfish Hunter” (1974)
Facts: Pitcher signed a two year deal, half paid immediately and half later (tax reasons). Finley
(A’s Owner) discovered that he couldn’t write off the delayed payment, so he stopped paying.
Hunter filed grievance for non-payment.
Takeaway: Arbitrator Seitz sides with Catfish, he is a free agent. The reason is based on the
contract language: “The player may terminate this K…if the Club shall default in the payments
to the Player.” Shows what a player can accomplish.
 Foreshadows Seitz role in the biggest decision in history: whether a player is held in
perpetuity or whether he becomes a free agent after his current team K expires.
o Status quo: perpetual reserve system.
o Players Association: this system was not in the CBA.
 Hunter becomes a free agent on a technicality, because of the language and Finley
stopping his payments to him…first free agent in MLB history.
National & American League Professional Baseball Clubs v MLBPA (Messersmith/McNally)
(1976 – Labor Arbitration Reports)
Facts: The two players played out the remainder of their K, afterwards they both declared
themselves free agents. Owner’s argued that the K language “on the same terms” included
another option clause; and that the claims was outside the arbitrator’s jurisdiction (CBA).
Takeaway: Seitz didn’t really care about the history of the reserve system in the MLB, just went
with K language, which he interpreted to mean that the players were free agents.
 Seitz empowered himself by saying that he is just interpreting the language of the CBA.
Feels it is his job to interpret the CBA.
 Basically feels the language creates a free agency system, if you have a problem with it:
collectively bargain another way.
 “For a period of one year on the same terms” means, to Seitz, that the player plays his
one year, then becomes a free agent. Siding with the players.
 This case created free agency, probably could have gone either way and the Arbitrator
may have overstepped its boundaries by shaking up the MLB business, but it
effectively created free agency.
*It is very hard to overturn arbitration rulings, Federal courts generally do not do it.
**Going forward from previous case, owners/players collectively bargained for a new system.
***NFL Players tried to do what baseball players did, didn’t work, arbitrator wasn’t willing to
shake up the NFL business model in the way that Seitz did.
****Seitz is a badass.
4
Kansas City Royals v MLBPA (1976 – 8th Cir. Appeals)
Facts: Procedurally this is after Arbitrator Seitz decision. Owners are arguing that the reserve
system is not arbitrable. Seitz ruled that the reserve system is subject to arbitration.
Takeaway: Award has to be sustained, so long as it is related to the CBA. Court believes, as the
arbitrator did, that the 1973 does not embody an understanding by the parties that the reserve
system enables a club to perpetually control a player.
 Courts generally differ to the arbitrator’s decision. A high bar to overcome.
 Award must be sustained so long as it draws its essence from the CBA.
o Nothing in the CBA about perpetually owning a player.
*The CBA is a K between the owners and players. Generally, the arbitrator interprets it and
makes a ruling which stands in a federal court…but what if the commissioner is also the
arbitrator? It would seem that courts aren’t as likely to defer to the “arbitrator” in these
situations.
Quotes
1. Kansas City Royals: An Arbitration decision must be sustained so long as it “draws its
essence from the collective bargaining agreement”.
2. Finley v. Kuhn: Commissioner is entitled to considerable legal deference in exercising
“best interest” powers except when in violation of laws or bylaws or no basic due
process.
Normal: Commissioner  Independent Arbitrator  Federal Courts uphold the arbitrator.
NFL: Commissioner  Commissioner/Arbitrator  Federal Courts use their own judgment.
NFL CBA Art. 46(1) (a) – Gives Commissioner Goodell power to punish players “for conduct
detrimental to the integrity of, or public confidence in, the game of professional football”.
Subject to due process and capricious standard. Commissioner cannot abuse discretion.
NFLPA and Philadelphia Eagles (Terrell Owens Case) (2005 – Arbitration)
Facts: Eagles suspended Owens for four games, said they would not play him after suspension.
NFLPA files grievance protesting the “Maximum Discipline” provision in the CBA. Also stated
that suspension was arbitrary and excessive.
Takeaway: The best argument is that it exceeded the maximum 4 game suspension in the CBA
for conduct detrimental to the club. Coach has power to hold players out as long as they wish.
 Probably a bad decision. Language is clear (4 games). Arbitrator was probably fed up
with Owens conduct and wanted to side with the player being held out.
Melee at the Palace
1. Arbitrator said he had jurisdiction, “anything that occurs before, during or after a game
within the sign of any spectators.”
2. Afterwards: limited Stern’s powers, players can appeal punishments that are greater
than 12 games or greater than $50K in fines.
a. Tradeoff: lower standards for review: “arbitrary and capricious” not just cause.
5
MLBPA and Office of the Commissioner of Baseball (Alex Rodriguez) (2014 – Arbitration)
Facts: A-Rod was treated as a second offender for the drug program, stemming from the
Biogenesis Clinic/Mitchell Report. Suspended for 211 games, despite no precedent for it.
Takeaway: Arbitrator reduced the suspension to the 2014 season, A-Rod didn’t testify (unique).
A-Rod then challenged in federal courts but dropped it.
 MLB has demonstrated by clear and convincing evidence that A-Rod violated the JDA
and he attempted to obstruct MLB’s investigation.
 Arbitrator reduced the penalty to match prior baseball awards.
Williams v NFL (2009 – 8th Cir. Appeals)
Facts: Players suspended for four games for testing positive for bumetanide, a masking agent
found in StarCaps. NFL had a strict liability regime: responsible for what is in your system.
Players sued saying the NFL drug testing procedures violated MN state law (3 days’ notice). NFL
argues that state law is preempted by the Labor-Management Relations Act.
Takeaway: NFL loses because the MN law is not preempted because it did not require an
interpretation of the CBA. 8th Circuit essentially says that the NFL needs to be in compliance
with the state law.
 There appears to be a doormat commerce clause issue, NFL doesn’t raise it.
 Players end up serving 2 game suspensions, and that’s all.
 8th circuit is on dangerous grounds: effecting interstate commerce.
Ray Rice
Facts: Rice says he told Goodell at the meeting that he hit his girlfriend, Goodell says he didn’t
and that she knocked herself down when she fell. League updated its personal conduct policy
after the incident, saying the video justifies an extended suspension. Goodell was a witness, so
he had differ to another arbitrator.
Takeaway: Arbitrator believes Rice over Goodell. Says you cannot retroactively apply
punishment to an incident and since there are no new pieces of evidence, Rice wins and
suspension is vacated.
Adrian Peterson
Facts: Ray Rice is suspended and faces criminal charges for hitting his son with a switch.
Goodell hires a new arbitrator: Arbitrator Henderson to serve on the case.
Takeaway: Judge Doty reverses Henderson because he feels that you cannot retroactively apply
a new personal policy. Cannot apply your ‘own brand of industrial justice’.
Tom Brady Case (Round II)
1. Arbitrator’s source of authority is the CBA (Goodell in this case). Arbitrator upheld the 4
game suspension, despite arguments that Brady did not have proper notice.
2. Judge Berman rules that the NFL did not give Brady proper due process. He did not have
notice that deflating the footballs would result in a four game suspension. Also, Berman
feels as if Goodell had a stacked hand (who he signed on for investigation).
3. Could be overturned in 2nd Circuit; strong counterarguments against Brady’s positions.
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Administration of Labor Agreement Review
Overarching Theme
Arbitrators interpret
CBAs and are given a
wide range of
discretion in their
positions.
In the NFL, Goodell is
not viewed as a
normal arbitrator,
instead he is the guy
who gets paid $44M
by the owners.
Courts are much
more skeptical of his
position as
‘arbitrator’ and more
likely to overrule
him.
MLB players have
the strongest union
in large part because
of some lucky breaks
from Arbitrator Seitz.
His decisions could
have gone either
way, favored the
players.
T.O. seems to have
gotten the raw end
of the deal, but from
a law in action
position, he was a
problematic player.
Most leagues:
independent
arbitrator that is
mutually agreed
upon. Not the NFL.
Thoughts
The Brady Case is the
most recent one. It
represents that a
player needs
adequate notice to
be punished (AP
Case as well). It also
represents that a
player is entitled to a
fair shot at proving
his innocence (due
process).
Messersmith Case is
the next biggest one.
This is the case that
established MLB’s
free agency system.
Could have gone
either way, but Seitz
read the language in
favor of the players.
Arbitrators interpret
CBAs, that is what
they do and the
source of their
authority. It is then
hard to get their
decisions overruled,
Courts don’t’ want to
disrupt the
factfinder.
Brady was probably
wrong, in Pr.
Snyder’s opinion,
and really IMO too.
Cases
Stands For
Arbitrator Seitz rules
that Catfish Hunter
was a free agent
Jim ‘Catfish’ Hunter
based on the language
in the K: payments
stopped.
Seitz interpreted the
language of the K and
ruled that the CBA
Messersmith saying “for a period of
McNally
one year on the same
terms” means you’re
a free agent after one
year.
Challenge to whether
Kansas City Royals v. the Seitz decision was
MLBPA
arbitratable, Court
rules that it is.
Coach can hold out
Owens as long as he
Terrell Owens
wishes, despite the
language of the CBA.
Alex Rodriquez
Williams v. NFL
Ray Rice/Adrian
Peterson
MLB demonstrated by
clear and convincing
evidence that A-Rod
violated the JDA.
NFL has to follow
state laws, according
to this case. MN was
not preempted
because it did not
require an
interpretation of the
CBA.
Ray Rice: Goodell has
to testify, arbitrator
overturns decision.
AP: Goodell
overturned as well.
7
LABOR LAW AND COLLECTIVE BARGAINING
*Clayton Act and Norris-LaGuardia Act of 1932 created union rights. Unions can strike and
employers can lock them out.
**Wagner Act of 1935 protected employees more. Goal was to allow private parties to go
through the NLRB and determine if they want to unionize, then CBAs will settle disputes,
reflecting who has leverage, rather than congressional interference.
Sports leagues voluntarily gave in to unions for some level of antitrust immunity: The NLRA was
held constitutionally valid in NLRB v. Jones & Laughlin Steel Corp. Applied to sports: needs to be
interstate commerce to be covered under the NLRA.
American League of Professional Baseball and Association of National Baseball League
Umpires (1969 – NLRB)
Facts: Umpires were attempting to unionize. Issue was whether or not baseball affects
interstate commerce.
Takeaway: This was the first case that held that baseball was interstate commerce and that the
umpires could unionize.
 Board was establishing jurisdiction over the MLB umpires because baseball is in fact
interstate commerce.
 All employees are eligible to participate in the union, despite individual contracts.
Morio v North American Soccer League (1980 – N.Y. South District)
Facts: Players had a ‘union’ but individual players were negotiating their own contracts. League
refused to acknowledge the union. Union filed suit arguing that the league needed to recognize
them as exclusive bargaining authority under the NLRA.
Takeaway: Court sided with union/players by saying that contracts that undercut the union
position are voidable. League needs to recognize the union and collectively bargain with them
instead of individual contracts.
Discussion
1. Union sets the framework and the bare minimum. After that individuals negotiate on
their own terms. This is different than most unions where the union will negotiate
everything.
a. Supreme Court: Unions, by nature, are group endeavors and the group comes first
at the expense of some individuals (OK that some, mostly superstars, are harmed).
Court further says it is OK to have a labor exemption where some things are
exempt from antitrust laws because they were collectively bargained for.
North American Soccer League v NLRB (1980 – 5th Cir. Appeals)
Facts: Soccer league is challenging the NLRB decision.
Takeaway: Court rules that the Board’s decision was not arbitrary or capricious. Teams (except
three from Canada) are appropriate bargaining units.
8
Seattle Seahawaks v. NFLPA & Sam McCullum (1989 – NLRB)
Facts: McCullum was a WR for the Seahawks. He was also the union’s player representative.
He was traded for a WR and then cut. McCullum argues that this transaction occurred because
of his involvement with the union.
Takeaway: After an 11 year process the player won. Player proved that the release was
influenced by his union involvement.
Duty to Bargain in Good Faith
1. Once you have a union in place, you have a duty to bargain in good faith with them.
2. Can’t show up and go through motions, have to make a real effort.
a. Can’t engage in surface bargaining.
3. BUT you don’t have to reach an agreement.
4. Employer has obligation to supply all relevant information to the union.
Mandatory v. Permissive Subjects
1. Mandatory – Terms & conditions of employment. Have to collectively bargain for.
2. Permissive – Management has no duty to negotiate over them, union not allowed to
strike over permissive subjects.
Silverman v. MLB Player Relations Committee (1995 – S.D. N.Y.)
Facts: Baseball was in the middle of a player strike in 1994. Owners wanted a salary cap and
players offered a luxury tax of sorts. Owners broke off negotiations by saying they were
permissive subjects.
Takeaway: Sides with players, the free agency/reserve system is a mandatory subject, not
permissive. Sotomayor says that the owners collectively bargained for this system, so they
have to collectively bargain their way out.
 Free agency and reserve system are a part of the CBA and mandatory subjects.
 Also, sports are unique, specialized industries that have different models than other
industries.
 Side Note: unfair labor practices take a long time. Most labor disputes don’t last long
enough for NLRB to decide and for it to go through appeals.
Owners: Can lockout players once an impasse has been reached.
Players: Can strike once an impasse has been reached. They can also decertify and file suit
under antitrust laws.
Why have a Union?
 Sports are different. People negotiate their own contracts. So why have a union? The
reason in my mind is that it adds value to inherently risk adverse creatures (athletes). It
provides protection for their short lived careers and also has efficiency value.
9
Labor Law and Collective Bargaining Review
Overarching Themes
Unions were created
under a power in
numbers type of
idea. Puts the
interests of the group
ahead of several
individuals who may
be suffer.
Thoughts
The big question put
forth by Pr. Synder
was: why have a
union? As
established above,
you have a union to
grant some sense of
structure and
protection in an
otherwise
unstructured and
risky profession. But
to be clear, you don’t
need a union because
players are already
individuals for the
most part.
Owners initially
Sports are different
showed reluctance to and thus the typical
players unionize, but ‘mandatory subjects’
after several antitrust are going to be
losses they began
different than
promoting unions as working hours,
a way to shield
salaries, etc. One
themselves from
example of this is the
antitrust immunity.
free agency system.
That is a mandatory
subject.
Sports leagues are
As we will discuss
covered under the
later, having antitrust
NLRB because they
immunity granted
are interstate
through the labor
commerce.
exemption is
probably a good
Unions set the
thing out of
framework in sports
leagues, players then efficiency and
freedom of K
negotiate their own
concerns.
contracts.
Cases
Seattle Seahawks v.
McCullum
Silverman v. MLB
Player Relations
Committee
Morio Case
Umpires Case
Stands For
 The NLRB process
takes a long time to
play out.
 The team acted
against the WR due
to his position in
the union. This is an
unfair labor
practice (I think)
and thus the WR
won, eventually.
 The owners argued
that free agency
was a permissive
subject, not
mandatory (could
have argued it was
an impasse
instead).
 Sports are different
and free agency is a
mandatory subject.
 League has to
recognize the union
was exclusive
bargaining unit.
 Case that
establishes that
baseball is
interstate
commerce for
union purposes.
10
ANTITRUST LAW
BASEBALL EXEMPTION
Antitrust Overview
1. Overview v. Management
a. Players can file a grievance under the CBA.
i. OR can file an unfair labor practice with the NLRB.
ii. OR players could collectively decertify union, file antitrust lawsuit.
2. Antitrust Cases in Sports
a. Section 1 – “contract, combination, or conspiracy in restraint of trade that
affects commerce among several states (must be an agreement between two or
more entities).
b. Section 2 – “Monopolize or attempt or conspire to monopolize (one large entity
could corner market through illegal means – price fixing, boycott, etc.).
c. Both cases are entitled to treble damages.
d. Per se violations: price fixing & group boycott (sports are different, despite the
NFL being a monopoly, it still goes to a reasonableness evaluation).
e. Rule of Reason – Is the restraint of trade unreasonable?
What isn’t Covered?
1. Every League:
a. Basic rules (scheduling, length of field).
b. Collectively bargained is not subject to antitrust laws (Brown v. NFL). This is why
leagues want unions.
2. Baseball:
a. Franchise mobility
b. Minor leagues.
Federal Baseball (1922)
Facts: Baltimore team from Federal League, a rival third major league sued after being excluded
from the settlement between other Federal Leagues between other Federal League teams and
MLB. For baseball to be sued under the Sherman Antitrust Act: needs to be 1) interstate 2)
commerce.
Holding: Holmes said baseball is not interstate commerce because, at the time, there was a
very limited scope of interstate commerce (pre-new deal). Holmes did not exempt baseball for
all time. Court also says baseball is NOT commerce, it is a game (at time manufacturing wasn’t
commerce either).
Takeaway: Baseball is not an interstate commerce activity, rather the transportation is a mere
incident, not the essential thing.
Toolson v. New York Yankees (1953)
Facts: Yankees pitcher was stuck in the farm system: argues reserve system against AT laws.
11
Holding: Congress had done nothing for 30 years. Supreme Court says because Congress has
done nothing, Federal Baseball still stands and baseball is exempt from antitrust laws (even
though this isn’t really what Federal Baseball said).
Takeaway: This case created the baseball antitrust exemption, which still stands today.
Congress has not acted since then (Curt Flood Act?) and baseball still enjoys its exemption.
 But they over read Congress’s inaction.
 AND they misapplied Federal Baseball
 AND they counteracted the New Deal’s shift to a more expansive interstate commerce.
Burton’s Dissent in Toolson: Says wait a second, baseball sort of feels like interstate commerce
now. In 1922, Federal Baseball said baseball wasn’t interstate commerce AT THE TIME. This is
the correct reading of Federal Baseball. Encourages congress to investigate MLB.
*Toolson makes clear that baseball is exempt for reserve system ONLY, excludes boxing,
football, other sports.
Flood v. Kuhn (1972 – Supreme Court of the United States)
Facts: Curt Flood was a solid player, challenges the reserve system after being traded from the
Cardinals to the Phillies. Challenges on AT grounds, 13th Amendment grounds & state AT laws.
Holding: Court holds that baseball is a business that does interstate commerce. The reserve
system is an anomaly, Congress has not acted so SC precedent stands: baseball is exempt from
AT immunity.
Takeaway: Curt Flood lost the case, but got the ball rolling on removing the reserve system out
of baseball (Arbitrator Seitz acted in a few years). The SC was scared of both sides: if baseball is
intrastate commerce, Flood’s state AT laws wins. For the MLB, they argued they still had the
labor exemption through the CBA, but this wasn’t collectively bargained for.
 Again, MLB wins on the baseball exemption. Court relies heavily on Congress’ inaction.
 They were also upholding precedent, but it’s unclear if they were upholding Federal
Baseball or Toolson.
 Marshall Dissent: Feels as if there is no reason why baseball should be exempt from AT.
Also, there is still the labor exemption, so MLB may win anyways.
 Douglas Dissent: Regretting joining majority in Toolson, feels as if SC made a mistake
and should fix it.
*Indentured Servant: Flood had a strong argument that if a player is stuck with his team for his
entire career, he is an indentured servant. Reserve system allows players to switch teams, only
if owner consents.
**What is the scope of baseball’s exemption? Reserve system or business of baseball?
Piazza and Tirendi v. Major League Baseball (1993 – E.D. Penn.)
Facts: Case where group was trying to bring the San Francisco Giants to St. Petersburg. P argues
that exemption is for reserve system only, D says it is for the business of baseball.
12
Holding: Court says that under stare decisis, they cannot overturn SC precedent. The
exemption applies to the reserve system, so antitrust exemption does not apply.
Takeaway: Court has a narrow interpretation of the exemption scope, settlement then
reached.
Butterworth v. National League of Professional Baseball Clubs (1994 – Florida)
 Takes approach that Piazza case had.
MLB v. Butterworth (N.D. FL 2001)
 Rejected Pizza, endorse the business of baseball MLB argument. The exception applies
to the business of baseball, not just the reserve system.
Curt Flood Act of 1997
1. MLB and MLBPA agree that AT laws don’t apply to labor matters with MLB players.
Congress enacts statute granting AT immunity to MLB, the same immunity other leagues
enjoy. (Codifying the Labor Exemption).
San Jose v. MLB (Present – SCOTUS Cert Denied)
Facts: A’s are considering relocation to San Jose. Giants object saying they have territorial
rights. San Jose is trying to clear the path for the A’s to come to San Jose.
Holding: DC says franchise relocation falls within the business of baseball, not subject to AT
scrutiny.
Takeaway: The baseball AT exemption continues living on. 9th Circuit says they do not have the
authority to determine whether baseball is exempt from AT laws, this exemption was created
by the SC, not us…the SC then denied cert.
 Hard case without exemption, normally territorial relocation is a pro se violation (when
restrained). Not really a franchise relocation case, a territorial rights case.





San Jose Arguments
AT exemption should be limited to
the reserve clause (Piazza,
Butterworth).
Territorial rights are not essential to
the business of baseball (about this,
not franchise relocation).
Flood v. Kuhn should be overruled
because SC made the mess and
should clean it up.
Judge made exemptions should be
construed narrowly.
Congressional inaction is a bad
method of statutory interpretation.



MLB Arguments
Flood v Kuhn should be affirmed
because Congress has acted and
chose only to remove labor portion.
Curt Flood Act specifically excluded
franchise relocation.
Business of baseball is broadly
construed and covers territorial rights
and franchise relocation.
13
Baseball Exemption Review
Overarching Themes
 All leagues which
have a union they
collectively bargain
with, enjoy some
AT exemption
(labor exemption,
Brown v. NFL).
Thoughts
 The AT exemption
is bad on policy
grounds: no reason
why baseball
should be exempt
and other
interstate
commerce business
aren’t. AND other
leagues aren’t.
 The AT exemption
is also bad on
common law
grounds: Federal
Baseball said
baseball wasn’t
interstate
commerce at the
time, that was it.
Toolson then took
that and ran with it,
despite the
broadening of
interstate
commerce that was
going on at the
time.
 Baseball is the only
one that enjoys
additional
exemption because
Congress hasn’t
acted explicitly
(Curt Flood Act?)
and the SC has not
overwritten their
precedent.
 The Federal
Baseball case
started the
direction towards
baseball
exemption, Flood v
Kuhn was the last
time the SC spoke
on this issue.
 There are two
 Curt Flood paved
different current
the way for the
approaches: applies
Arbitrator Seitz
only to reserve
decision eliminating
system OR applies
the reserve system.
to the business of
baseball.
Cases
Federal Baseball
Toolson
Flood v. Kuhn
Piazza
Butterworth
San Jose
Takeaway
 Ruled that baseball
was not interstate
commerce (this was
in 1922) and that is
ALL.
 Ruled that Federal
Baseball ruled that
baseball was not
subject to AT
scrutiny (wrong
reading of Federal
Baseball).
 Ruled that Congress
inaction and
Toolson’s
precedent make
baseball exempt
from AT laws.
 Can challenge
franchise relocation
on AT grounds.
 Shows the narrow
v. broad views.
 Cert denied, takes
broad view towards
the baseball AT
exemption.
14
GENERAL ANTITRUST PRINCIPLES
*Sports are almost always decided under Rule of Reason Analysis
Purpose of Antitrust Laws: Consumer protection. Courts are reluctant to cancel anything that
leads to lower prices for consumers. Some monopsony is allowed, this is necessarily lawful.
 Not all restraints of trade are illegal. Section 1 is only illegal if it is unreasonable.

Broadcast Music v.
Columbia
Broadcasting


Northwest
Wholesale v. Pacific
Stationary


Continental TV v.
GTE Sylvania
National Society of
Professional
Engineers v. US


Cases from Text
Narrowed pro se price fixing by rejecting a claim that an
organization that held nonexclusive copyright licenses for the
musical compositions of hundreds of composers engaged in the
precise type of price fixing that automatically violates antitrust laws
(would sell to commercial broadcasters at a set price).
They achieved major cost savings for their consumers by doing
this. SC remanded, sent back to be looked at under Rule of Reason.
Court limited group boycott. Per se rule to group boycotts applied
only to agreements where firms sought to disadvantage
competitors by persuading or coercing suppliers to customers to
deny relationships the competitors need in the competitive
struggle.
Restrictive labor practices harming players, rather than rival clubs
or leagues, is NOT a per se illegal group boycott.
Manufacturing company was allowed to place vertical restrictions
on its distributors. Such restrictions may improve efficiency and
eventually lead to better quality and lower prices (which is the goal
of AT laws).
Rule of Reason requires judges and juries to balance only an
agreement’s effects on economic competition.
Sports leagues: restrictive practices on players are justified by
sports leagues as improving the quality of the overall product.
*REMEMBER it is about whether an action harms consumers. That is when courts step in.
Actions that decrease competition is not automatically illegal, it is about whether it
unreasonably harms consumers.
Ancillary Restraints Doctrine: Established in United States v. Addyston, restraints are
reasonable if “ancillary” to a lawful agreement among the parties, and reasonably necessary to
protect the parties “legitimate” interests.
 Ancillary = Providing necessary support to the primary activities or operation of an
organization, institution, industry, or system.
15

Sports leagues: leagues have the freedom to adopt restraints on competition for player
services that can be justified as reasonably necessary to produce a sporting competition
that maximizes fan appeal.
Mackey
1. Dealt with the Rozelle Rule: deterred teams from signing opposing players because they
would have to pay something, determined by Commissioner Rozelle, to the old team.
2. Court outlined 3 steps in eventually finding it to be unreasonable under Rule of Reason:
a. It is harmful to players, deters player mobility. (Anticompetitive Effects).
b. Whether the restraint imposed justified by legitimate business purposes
(Procompetitive Effects).
c. Whether the restraint is no more restrictive than necessary. (Least Restrictive
Means Test).
NCAA v. Board of Regents of the University of Oklahoma & University of Georgia Athletic
Associations (1984 – Supreme Court of the United States)
Facts: The NCAA implemented television restrictions on schools broadcasting college football
games. They could only appear on television a certain amount of times, citing negative impacts
on ticket sales as the reason for the TV restriction. Several bigtime college football programs
challenged the restriction as being in violation of Section 1 of the Sherman AT act.
Holding: Court sides with the schools. The restriction is unreasonable. The court decided this
case under a quick look Rule of Reason as the restriction was obvious, didn’t weigh the
procompetitive vs. anticompetitive effects.
Takeaway: The NCAA lost, but it many ways it won because the opinion talks in great detail
about the UNIQUE PRODUCT that is the collegiate/amateur/NCAA sports. “Academic traditions
makes it distinct from the NFL…athletes are not to be paid.”
 The restrictions were normally pro se violations, but not in sports. Sports are subject to
Rule of Reason analysis to determine if they are unreasonable.
 “Some horizontal restraint on competition are essential if the product is to be available
at all”
 Sports are different and thus allowed some horizontal restraint. The NCAA is different
too, different, unique product from NFL and other leagues.
 NCAA Justifications:
o Joint Venture is Procompetitive. Court: if it was procompetitive it would increase
outputs and reduce price.
o Protect Live Attendance: No evidence to support that theory in today’s market.
o Interest in Maintaining Competitive Balance: (All leagues argue this) Court finds
plan does not accomplish this, no evidence showing revenue will be split evenly.
o Unique Product: Court recognizes this, but still feels the plan is unreasonable.
Quick Look: Obvious restriction, considered and rejected business justification.
Full Rule of Reason: Force P to establish high prices, lower output, output unresponsive to
competition…burden then shifts to D to show procompetitive effects and/or that it is the least
restrictive means.
16
SINGLE ENTITY
*If you are a single entity, you are exempt from Section 1 of the Sherman Act (like how the MLB
is because of precedent/Congress inaction).
Copperweld Corp.
v. Independence
Tube
NASL v. NFL
Fraser v. MLS
LA Memorial
Coliseum v. NFL
Chicago
Professional
Sports v. NBA
Cases Touching on the Single Entity Defense
 Supreme Court held that a parent company was incapable of
conspiring because they always had a unity of purpose/interests.
 Parent company could assert control at any time.
 Establishes that focus needs to be on “substance rather than form”.
 Question: does the agreement join together independent centers of
decision making?
 NFL has a rule blocking owners form owning soccer clubs in NFL cities
(other than the city they have an interest in).
 Appeals reverses the TC single entity defense saying NFL teams are
separate economic entities engaged in a joint venture.
 Appeals relies on the different money generating mechanisms, despite
the fact that some are shared.
 Cert denied at SC level: Rehnquist dissented saying the NFL was one
single entity, rarely competed off the field. Also an ancillary restraints
doctrine argument: NFL needs to be able to regulate itself.
 MLS sets up league so that owners are investors. Players challenge
the league for restraining player mobility.
 Court says players failed to show anticompetitive effects, no point in
determining single entity defense (could have gone either way).
 Al Davis tries moving to LA, league blocks it, Al challenges on AT
grounds. Court says the league is a single entity for some stuff, but not
this. Al Davis wins.
 Bulls want to broadcast Michael Jordan more than NBA would allow.
 Court says Copperweld does not require complete conflict-free
enterprises, in order to be a single entity. Sides with NBA.
 DISSENT: there are conflicting economic interests, rejects Easterbrook.
American Needle, Inc. v. National Football League (2010 – United State Supreme Court)
Facts: NFL grants exclusive licensing deal to Reebok. American Needle loses K with NFL and is
upset, files AT lawsuit on Section 1 and 2 grounds. NFL says they can’t conspire, a requirement
of Section 1, because they are a single entity.
Holding: Court sides with American Needle. NFL team objectives are not common. Granting all
IP rights to one company deprives the marketplace of independent centers of decision making.
Takeaway: The NFL is not a single entity, despite the fact that 90% of its revenue is shared. This
effectively does away with the single entity defense: sports need to be looked at under RoR.
 A huge slippery slope concern: antitrust immunity could be abused if granted.
 Single entity defense is effectively dead. If NFL can’t get it, no league can.
17
PLAYER RESTRAINTS
*Rookie Draft – Player can sign with team that drafted him, or else he just doesn’t play in
league.
**Arguably, if you have hard cap and 100% revenue distribution, you don’t need the draft.
***Baseball allows players to be drafted multiple times, arguably the fairest system.
Smith v. Pro Football, Inc. (1978 – D.C Cir. Appeals)
Facts: Player is injured at the end of his rookie season, career over. Sues saying that he would
have been paid more in his one season had the draft been legal. NFL argues that draft is for
competitive balance between the teams.
Holding: Draft is an unreasonable restraint of trade, sides with Smith.
Takeaway: Smith wins, but Court says NFL draft can continue if they should positive economic
(procompetitive benefits) that offset its anticompetitive effects.
Mackey v. National Football League (Part I) (1976 – 8th Cir. Appeals)
Facts: NFLPA is challenging the Rozelle Rule (Commissioner determines compensation to former
team who loses a player). Saying it is in violation of Section 1. Rule is not protected by labor
exemption.
Holding: Sides with Mackey, the Rozelle Rule unreasonably restrains trade in violation of
Section 1 of the Sherman Act.
Takeaway: Court places the burden of proving it is the least restrictive means on the NFL (P
should have the burden though). Also, the NFL’s only justification was competitive balance,
which wasn’t enough for the Court to side with the NFL.
*Past two cases show that the players were winning, but they decided to unionize and grant
the NFL its desired labor exemption. Arguably, this was a bad decision on their part.
**Today, the draft is still in place because it is collectively bargained for.
***Problem union has today (and players) is that labor law trumps antitrust law. If it is
collectively bargained for, antitrust lawsuit fails.
*MLS has the least fair system. They are effectively a single entity: players negotiate with a
board that works with MLS, distributes to team after that.
Fraser v. Major League Soccer (2002 – 1st Cir. Appeals)
Facts: At issue is the league’s control over player employment. Players are arguing that by
signing with league, instead of team, they are depressing market for Div. I college players in US.
Holding: Jury finds no relevant market for players in US, could go anywhere in the world to play
soccer. Jury then sides with MLS on Section 1, 2 and Clayton Act 7 claims.
Takeaway: Jury feels that the system is necessary for maintaining the structure and survival of
the league (Section 1); MLS is not monopolizing market because players can go elsewhere
(Section 2); and no liability for monopolization because MLS did NOT acquire or merge with
existing business or enterprise (Clayton 7). The only tool MLS players have is to go on strike.
18
LABOR EXEMPTION
Labor Exemption from Antitrust
1. There is a fundamental tension between AT law and labor law.
a. Antitrust: bars any contract, combination or conspiracy in restraint of trade.
b. Labor: organizes and reaches agreements in unison.
2. If it is a critical matter, negotiated at arm’s length, it is exempted from AT laws.
Nonstatutory Labor Exemption, Development in Lower Courts
1. Original Goal of the Clayton Act: labor is not a commodity, nothing can forbid or restrain
individual members of such organizations from lawfully carrying out the legitimate
objects therof. Can reach agreements as a group without violating AT laws.
a. Wanted to allow unions to strike.
2. Norris La Guardia Act of 1932: no injunctions against union activity including strikes.
a. This is the statutory exemption.
3. Goals of Nonstatutory Labor Exemption
a. Protect Unions.
b. Further Goals of Collective Bargaining.
4. Jewel Tea: Chicago butchers case, Court applied the NSE to CBA between butchers union
and Chicago meat sellers preventing meat counters at nighttime.
a. Union required nighttime hours be prohibited, company challenged their actions
on AT grounds.
b. Plurality opinion held that the contract term was protected from AT challenge by
the labor exemption.
How to Balance AT Laws and Labor Laws – NSE (5 Approaches)
1. No NSE from AT laws at all. Can’t collectively bargain what would otherwise be illegal.
2. NSE only for provisions in the CBA inserted at behest of union to benefit employees.
This complies with the historic purpose of the exemption.
3. NSE protects all existing terms of CBA. Consent by union is key.
4. Exemption should protect all employment practices that exist in an employee unit
represented by a union, since the employees now have the right under labor law to
force the employer to negotiate about the practice, they should not also have AT laws.
5. No AT liability at all for restraints in employment.
Mackey v. NFL: Held that restraints on competition within the market for players’ services fall
within the ambit of the Sherman Act (adopted #5).
 Three part test:
1. Does it only affect parties exempted?
2. Was it mandatory subject of collective bargaining?
3. Was it bona fide, arms-length bargaining?
McCourt v. California Sports: Holding the NHL reserve system was a product of bona fide
bargaining. Dissent argues that this deviates away from the original purpose of the statutory
exemption (protecting unions).
19
Wood v. NBA: Wood was upset about being paid $75K as a rookie, wanted more. Court said it
was a product of collectively bargained. Puts a lot of emphasis on the freedom of contract.
Court further establishes that CBA binds future members, it is most important to promote CB.
Brown v. Pro Football Inc. (1996 – Supreme Court of the United States)
Facts: NFL implements a set salary of $1K for practice squad players, no collectively bargained
for. Players file suit saying you can’t fix their salaries, have to negotiate like everybody else.
NFL argues this was protected under the labor exemption.
 District Court says that the exemption ended when the CBA expired, players can sue on
AT grounds. DC also says that before the CBA expires, only stuff in the CBA is exempt
and a fixed salary was not in there. Sides with players.
Issues: (1) When does the NSE expire; (2) what is the scope of the NSE in the sport’s context?
Holding: Breyer (majority) says that labor law sometimes welcome anticompetitive behavior to
produce harmony within an industry, antitrust law seeks to avoid it. Also, doesn’t see anything
different between sports and traditional unions.
 The exemption extends past the CBA expiration (NFL wins). Extends to the period
where there is no K and negotiations have broken down.
 Does not want AT courts interfering with federal labor law.
 Doesn’t really address (2), but it should be for collectively bargained provisions from the
most recent CBA.
Takeaway: The NSA benefits the owners more than the players, which counteracts what the
exemption was designed for. Players get around the exemption by decertifying and filing AT
lawsuits.
Dissent: Sports are different. The purpose of AT laws is to promote competition, help the
consumers. The purpose of labor law is to prevent unfair competition that reduces employee
wages. These two are reconciled by the exemption.
 Sports are different in that players negotiate their own salaries, have some free market.
 NSE should not apply to employers’ attempts to depress wages.
 The majority has gone too far by applying the exemption in a way that shielded from
antitrust scrutiny “collective action initiated by employers to depress wages below the
level would be produced in a free market”.
*Swords for the players union: (1) file an unfair labor practice (ULP), the remedy is cease-anddesist orders; (2) decertify and sue on AT grounds, remedy is treble damages.
Language in Brown:
1. “Parties were required to negotiate collectively” and “concerned only the parties to the
collective-bargaining relationship”.
a. Sounds an awful lot like the Mackey requirements for the exemption to apply.
2. Brown stands for: the exemption applies after the CBA has expired, owners were OK to
implement the practice-squad salaries because they were protected by the labor
exemption. When the exemption ends? Nobody knows.
20
Clarett v. National Football League (2004 – 2nd Cir. Appeals)
Facts: Clarett has a good championship run at Ohio St. and wants to enter the NFL. Is
challenging the NFL’s three year requirement. NFL justifies this requirement by stating that
players need to mature before entering, desire to protect current players. DC sides with Clarett.
Holding: Court of Appeals reverses, saying a multiemployer bargaining unit can act jointly in
setting terms and conditions of players’ employment and rules of sports without AT liability.
Takeaway: But this wasn’t collectively bargained for! Brown doesn’t explicitly uphold Mackey
but has similar language, requirement that is a mandatory subject and that it concerns only the
parties to the collective-bargaining relationship.
 The rule was in the NFL’s constitution, not the CBA. Thus, according to Brown, the NSE
should not apply.
 Clarett challenges:
o This rule does not concern a mandatory subject of collective bargaining.
o Primarily affects prospective, rather than current, employees (but unions do this
every day).
o Was not the product of good faith, arm’s length negotiations between the NFL
and the NFLPA.
 Case was probably wrongfully decided because it wasn’t a mandatory subject of CBA, as
evident by the fact that it wasn’t in the CBA to begin with.
QUESTION: when does the exemption end? Brown never answered this. What if the players
decertify and then sue under AT grounds? Next case.
Brady v. National Football League (2011 – 8th Cir. Appeals)
Facts: Players and owners reached the end of their lockout in 2011. The owners proceeded to
lock the players out. Players then responded by decertifying and filing an AT lawsuit on group
boycott grounds as well as anticompetitive practices (in case of rule of reason). DC sided with
players.
Holding: Appeals reverses and holds that the Norris-LaGuardia Act applies. Looks at the plain
language, rather than purpose, which says NLGA prohibits injunctions “involving or growing out
of a labor dispute.”
 DC said it wasn’t a labor dispute. Appeals says it is. Appeals feels that a labor dispute
doesn’t disappear after 2 years of negotiations because they decertified.
Takeaway: Court looks past the decertification and argues that it is still labor dispute.
Personally, I disagree with this. How can it be a labor dispute if there isn’t a union anymore?
 Kessler Article: Says 8th Circuit got it wrong because after decertification it becomes an
AT case, not a labor law case which is what the NLGA is for: this case should be
evaluated and decided under either a pro se group boycott, or more likely, a rule of
reason analysis.
 Dissent: Legislature made the NLGA to help unions, majority is using this act to help
employers by letting them lockout non-unionized employers.
o At some point exemptions have to end, when they decertify seems ideal.
o Can’t forget about statute’s intent, look past the plain language.
21
Labor Exemption Review
Overarching Themes
Thoughts
 There is an inherent
 Sports are always
tension between AT
different, do not
laws (designed to
forget this. The fact
promote competition,
that athletes
protect consumers)
negotiate their own
and Labor law
salaries make them
(designed to increase
much more different
wages for unions) an
than the standard
exemption was
steelworkers union.
created in recognition
of this.
 How do you reconcile  The Brown Case is
the two? Well
arguably wrong as
Mackey laid out three
the salary caps on
tests. Also, the 5
practice squad
options listed above
players were NOT
has seen #4 win out
collectively bargained
the most: AT laws are
for. It further shows
not available to unions
that Mackey, while
utilizing the benefits
not explicitly
of labor law: but what
followed, is more or
about when you
less good law in the
decertify?
three factors that it
laid out.
 The exemption is the
 After initially
hardest thing to get
agreeing with the
around when trying to
Clarett case, I’ve
challenge a rule that
accepted that it was
professional sports
poorly decided. For
have. MLB has the
the exemption to
exemption, all leagues
apply it needs to
have the labor
certainly be
exemption, which
collectively bargained
trumps most AT
for, and probably be
challenges.
a mandatory subject.
Further Brown says it
needs to only
concern the parties in
the CB relationship.
Cases
Brown v. Pro
Football
Clarett
Brady (not
deflategate, but
the 2011
lockout)
Takeaway
 The exemption
extends past the
expiration of the
CBA.
 Language that it
needs to involve a
matter the parties
were required to
negotiate; only
concerns parties in
the CB relationship.
 Ignores the Brown
precedent (or
incorrectly applies
it) in ruling that
Clarett could not
challenge the age
restriction under AT
grounds, because it
was CB for and a
mandatory subject
of CB.
 2nd Circuit was
wrong.
 DC gets it right,
IMO, as it threw
out the labor laws
after decertification
and said the players
could challenge on
AT grounds.
 Appeals reverses
and says NLGA
applies. 2 year
negotiations don’t
go out the door
because you
decertified.
22
STADIUMS AND TELEVISION
FRANCHISE OWNERSHIP AND RELOCATION
Essential Facilities Doctrine
1. “When facilities cannot practicably be duplicated by would-be competitors, those in
possession of them must allow them to be shared on fair terms”.
2. Usually is for stadiums, railroads, etc.
Hecht v. Pro-Football, Inc. (1977 – D.C. Cir.)
Facts: A guy is trying to establish an AFL team in Washington D.C. and says they need to use RFK
stadium because there are no other alternatives. P is arguing for essential facilities doctrine.
Holding: Court sides with Redskins in that the AFL team could’ve used Maryland Stadium and
the AFL wouldn’t have given the guy a team in the first place.
Takeaway: The P had an interesting claim for why they should have access to RFK stadium, but
eventually lost at trial because there were other stadiums available in the D.C. market.
USFL v. NFL (1986 – S.D. N.Y.)
Facts: USFL wants to switch to a fall schedule, more natural time of the year for football.
Couldn’t land a K with networks, blamed NFL; however, NFL had not required networks to ONLY
broadcast NFL games, they could broadcast USFL if they wanted.
Holding: P lose, Court feels that the USFL isn’t failing because of lack of network deals, you are
failing because of poor decisions. Also, the Trump guidance doesn’t help the USFL.
 TV contracts can be an essential facilities though. Leagues need them for survival.
Takeaway: Court felt like USFL wanted them to rewrite the business of the NFL, didn’t want to
do that.
Blackhawks Case: Guy trying to sell programs outside the United Center. Court views his claim
(team had blocked him selling the programs) as too insignificant to warrant antitrust
evaluation.
Sullivan v. National Football League (1994 – 1st Cir. Appeals)
Facts: Patriots old owner wanted to have a public stock offering for his team, wasn’t allowed to
so he sold the team to another guy…who then sold for much more. Sullivan is pissed about this
and is suing the NFL for not letting him have his stock offering.
Holding: Court rejects the NFL’s no competition argument (that there is no market for the sale
of NFL teams). Court then affirms the jury’s decision because it was plausible enough: 1) there
is a market, consumers would buy stocks of teams; 2) rule decrease competition for sports
franchises. NFL then argues there are procompetitive benefits, but Court says there is a less
restrictive means to accomplish this (non-voting shares of stock).
Takeaway: The NFL loses on the least restrictive means test. But the larger point is that the NFL
needs to be able to make rules, if you don’t like the rules then you shouldn’t buy in.
23
Secondary Source
1. NFL has a rule against public stock offerings because it wants to preserve the NFL as a
private group, composed of private owners. They further justify this by saying:
a. Efficiency of team management (but the Packers have Murphy).
b. Economic Benefits (desire to avoid placing private owners at a disadvantage
because public teams would be able to increase revenues quickly).
c. Can’t have minority public ownerships (but this isn’t rational as some teams have
minority owners already, what’s the difference if it is the public?).
Doctrine of Ancillary Restraints (Again)
1. Anticompetitive conduct is necessary for joint venture.
2. Sports leagues need to be able to make rules and govern themselves, at what point can
these rules be challenged on AT grounds?
3. Doctrine usually shifts challenges from per se to rule of reason. Arguably it is an
affirmative defense and should lead to a thrown out case.
4. NCAA kind of gets to do what they want.
Los Angeles Memorial Coliseum Comm’n v. National Football League (Al Davis) (1984 – 9th Cir.
Appeals)
Facts: Al Davis is attempting to move his team from Oakland to Los Angeles, needs to get the
league’s approval. Davis signs lease, goes to vote and 22 say no (needed unanimous consent to
go into Rams territory). TC: Davis wins, injunction against blocking his move to LA, NFL appeals.
Issue: Is blocking an owner from going to a more profitable city an unreasonable restraint of
trade in violation of the Sherman Act?
Holding: Court sides with Davis because the TC verdict had enough evidence to sustain it. Feels
as if the rule was not reasonably necessary to the production and sale of the NFL product.
Raiders eventually only got $8M because the Court offset the damages with the increase in
Raiders value of around $25M.
Takeaway: Territorial rights are ancillary to having pro football, having the league. Need to
allow the teams to make rules upon themselves. What is really going on here is that the league
doesn’t like Al Davis.
 Court said the relevant market was LA, rejected the NFL’s nationwide argument.
NBA v. San Diego Clippers Basketball Club (Donald Sterling) (1987 – 9th Cir. Appeals)
Facts: Clippers go from San Diego to Los Angeles. NBA files suit saying they can legally restrain
a team from relocating to another franchise’s market (waited till after they moved).
Holding: Summary judgment is given to NBA, then reversed on appeal (needs to go to a Rule of
Reason analysis). Court distinguished from NFL by saying that this case required its own rule of
reason analysis. Eventually, Clippers end up paying several million for their move.
Takeaway: Teams should not be able to move at will, or else everyone will move to big
markets. Doctrine of Ancillary restraints is real and teams should be able to control their
markets they operate in, or else it would be total chaos.
 Teams ended up settling this case after the 9th Circuit said there was genuine issues of
material fact remaining for the jury to decide.
24
Stadiums and Television Franchise Ownership and Relocation Review
Overarching Themes
Thoughts
 Owners typically
 I agree that leagues
want to have their
need to be able to
cake and eat it too.
conduct themselves
They want the
and implement
benefits of being in
rules such as
the league, but
requiring a vote for
want complete
franchise
control of their
relocation. This is
teams w/o differing
within their rights
to league rules.
under the Doctrine
of Ancillary
Restraints
 NFL and other
leagues are
monopolies in
many ways (have
control over the
cities they operate
in). But, this isn’t
automatically
illegal, because
they are sports
leagues not
steelworkers
unions/companies.
 Doctrine of
essential facilities
can be applied to
TV contracts.
 Doctrine of
Ancillary restrains
allows the NFL to
operate, to some
extent
 You have to be a
little bit nutty, like
Al Davis, to sue
your own league for
AT violations.
 The doctrine of
clean hands seems
to be at issue here,
although not
explicitly
mentioned.
Sullivan was trying
to make up for
money he could
have made.
 I’m not sure what
all of this implicates
for the NFL today
with teams trying
to go to LA and
needing to clear a
vote to do so.
Cases
Hecht
USFL
Sullivan
Raiders (Al Davis)
Clippers
Takeaway
 P trying to get
football team to D.C.
loses on essential
facilities doctrine
challenge.
 Team challenges the
NFL’s monopoly over
sport stadiums and
networks. USFL
eventually loses
because they were
failing for other
reasons.
 NFL loses on their
rule against public
stock offerings for
teams. There were
less restrictive means
available.
 Al Davis wants to
move to LA and
successfully
challenges R4.3
which requires ¾
vote for a move to be
complete. The rule
illegal restraints
competition.
 NBA waited for
Sterling to complete
his move, then filed
suit in San Diego
(smart). Court
eventually said this
case needs to be
decided under Rule
of Reason, remanded
back down, then
settlement.
25
NCAA
Chris Borland Article: Discussed his reasons for quitting football.
Kain Colter Article: Discussed his attempt to unionize the Northwestern players.
Northwestern Player’s Union (NLRB)
Facts: NW trying to be declared employees under Section 2 of the NLRA. The request the
players put in outlines the large amounts of hours they put into football, the meal plans, the
structured academic environment and the way they generate money for the university.
 Regional Director: “A person who performs services for another under a K of hire,
subject to the other’s control or right of control, and in return for payment”. Football
players perform services under a scholarship and thus are contracted for hire.
 Brown University Case where grad assistants were trying to unionize:
o Are they primarily students? Football players are athletes first.
o Is there relationship to school more academic than economic? Football, no.
o Faculty monitors their academic or athletic activities?
o Players can lose their scholarship.
 Employer fits the description of a labor organization under the act.
Issue: Can college football players be declared employees for the purpose of unionization?
Holding: NLRB denies jurisdiction. Feels as if granting jurisdiction would not promote stability
in labor relations. Effectively, they are punting, may decide later, but not now.
Takeaway: The players won a monumental decision by having a regional director declare them
to be employees for the purpose of unionization. This steam fizzled out when they reached the
NLRB, who did not exercise jurisdiction.
DUE PROCESS
National Collegiate Athletic Association v. Tarkanian (1988 – Supreme Court of the United
States)
Facts: Jerry Tarkanian was the UNLV coach suspended for two years. Challenged the
suspension by arguing that he wasn’t given a chance to prove his innocence. Goes to NV SC and
argues that UNLV delegated its functions to NCAA, making NCAA actor for purposes of his
S1983 claim.
Issue: Is the NCAA a state actor?
Holding: SC reversed the NV decision by holding that the NCAA was not a state actor. UNLV’s
compliance with the NCAA’s rules and regulations does not turn the NCAA into a state actor.
UNLV issued the final punishment, could’ve done something different and thus did not give up
any control to the NCAA.
 DISSENT: NCAA and UNLV acted jointly in suspending Tarkanian. UNLV, by joining
NCAA, agreed to follow their legislation. Therefore, they are joint actors and the NCAA
is a state actor.
Takeaway: The NCAA is not a state actor, but I’m more persuaded by the dissent.
26
AMATEURISM
If you are upset about the NCAA, how would you attack them?
1. Unionization (Northwestern)
a. Hard to move the needle. Even if you do unionize, your playing years in school
are still 3-5, hard to stand strong and strike to get more favorable terms.
2. Due Process (Tarkanian, Univ. of Denver, Shelton)
a. NCAA not a state actor according to Tarkanian, would have to sue the school.
3. Contract Law (Oliver, Taylor, English)
4. Antitrust (Keller, O’Bannon, Nigel Hayes)
a. Where the most ground can be made. Arguing that the NCAA rules are
unreasonably restrictive.
Colorado Seminary (Univ. of Denver) v. NCAA (1976 – D.C. Colorado)
Facts: The Canada Junior A league allows Canadian leagues to play for teams, get paid for room
and board and education purposes. Denver wins title with some Junior A players, NCAA says
they violated the rules by playing players who were getting paid early.
Issue: Is the NCAA discriminating against a certain group of people (Canadians) in violation of
equal protection laws?
Holding: No, the rules apply to all hockey players of all nationalities.
Takeaway: Court punts in some ways, argument that the penalties were too severe compared
to other schools: Court says talk to the NCAA about that one. As for the equal protection, the
Court recognizes the rule harms Canadian players more but says the Constitution cannot be
used as a vehicle to alleviate the consequences of differences in economic circumstances that
exist wholly apart from any NCAA action.
*Easiest way to lose NCAA eligibility is by signing a K to play professionally or promising to play
professionally down the road.
Shelton v. NCAA (1976 – 9th Cir. Appeals)
Facts: P signs an ABA K (argues it was under undue influence). Saying that he shouldn’t lose his
K until it is proven whether or not the K was the product of undue influence.
Holding: The rule is upheld as constitutional. Court acknowledges the NCAA may create
hardship because the player may not have legally signed the K, but this hardship does not make
it unconstitutional. There is a bright line between college and professional: don’t sign a K.
Takeaway: Sides with NCAA, the rule has a rational basis behind it. Court concerned about
slippery slope: players arguing the K is invalid on some grounds, playing at the college level,
then saying the K was good and leaving.
*Can’t sign with a team: lose eligibility. Same thing for agents: lose eligibility if you sign with
them, but you’re allowed to have a family advisor?
**Next case: challenging the distinction between family advisor and agent.
27
Oliver v. NCAA (2009 – State of Ohio)
Facts: Oliver was a pitcher at Ohio St. Negotiated an offer with the Twins, but turned it down
and went to OSU. After two years, he switches to Scott Boras. The former ‘family advisers’
who negotiated the Twins K that failed, then present him with an $118K invoice.
Issue: Whether the NCAA bylaw is void as against public policy or arbitrary and capricious. P is
trying to get an injunction blocking the rule.
Holding: Sides with P, injunction granted. The rules allow players to have an attorney, but they
can’t advise them or be present when they are with the team. This is counterintuitive, student
athletes should be allowed to have the representation to make sure they make a sound choice.
Takeaway: A lot of NCAA rules are arbitrary or conspicuous. This rule was viewed as such and
also voided on public policy grounds (good idea to file suit in Ohio). I agree with the court,
players should be allowed legal representation to make sure they make a sound decision.
Why ban players from having agents? Because they are slimmy and they want to protect the
player’s interest (NCAA says). Under Oliver, agents are there to make sure players make sound
decisions.
Aren’t a lot of NCAA rules arbitrary or conspicuous? They are all justified, by the NCAA, as
furthering the goals of amateurism.
What is the definition of amateurism? Fuzzy, depends on what sport you’re playing. Baseball
and hockey are exceptions because they can get drafted twice and play collegiately in between.
Taylor v. Wake Forest (1972 – North Carolina Appeals Ct.)
Facts: P signed a letter of intent to play football at Wake Forest. Stops after one year because
he has bad grades. Then loses his scholarship for his decision to stop playing football.
Issue: Is the P entitled to monetary damages for his K being cancelled after he left for academic
purposes?
Holding: Court sides with D, player agreed to maintain athletic eligibility and he failed. Loses
because he did not comply with his contractual obligations. Looks past the P argument that the
K included an oral agreement that conflict between academics and athletics would not result in
revocation of scholarship.
Takeaway: AD’s switching to one year scholarships, reviewed at the end of the year. TODAY:
allowed to give 4/5 year scholarships which can’t be rescinded for poor athletic performance.
English v. NCAA (1983 – LA Ct. Appeals)
Facts: P was a player at Michigan St. who leaves and transfers to several different schools.
Then goes to Tulane to play for dad. Is arguing that he does not have to sit out a year because
the scholarship says “…since the transfer from the first four-year college”.
Issue: Does P textualist based argument allow him to play without sitting out a year?
Holding: Sides with NCAA, has to sit out a year. The rule is designed for protecting players from
being lifelong free agents. Says this is the price you have to pay to transfer.
Takeaway: The Dissent is persuasive because it argues that the NCAA screwed up with the
language and the player should be bound to the language. Have to sit out 1 year.
28
NCAA & ANTITRUST
Overarching Question: Is amateurism enough? It really is the last defense the NCAA has for
protecting its current business model. Next question becomes, does amateurism make sense in
today’s climate when athletic departments have $150M budgets, the NCAA has an $11B deal
with CBS/Turner Sports and conferences have hundred million dollar deals with ESPN to
broadcast the College Football Playoff?
*Remember: NCAA didn’t opt into the SBA because it felt like it didn’t have to, big mistake.
NCAA v. Board of Regents (AGAIN, Dissent) (1984 – Supreme Court of the United State)
Facts: One of the biggest cases of the course: court ruled the NCAA TV restrictions to be
severely restrictive. But also outlined the unique product that is college sports, “athletes are
not to be paid.”
Issue: How was Board of Regents wrongly decided? This is the dissent’s POV.
Holding: The majority made a mistake. The NCAA is in place to maintain the goal of educational
desires first and profit maximization second. We do not want to professionalize college
athletics.
Takeaway: Justice White argues that the NCAA is not totally shielded from AT laws, but they are
different in that they do not have profit maximizing objects, education comes first. Justice
White feels that the rule is reasonable because it avoids professionalism, spreads finances for
competitive balance and furthers the NCAA’s goals of education first.
*Dissent views almost every rule by the NCAA as shielded from AT liability.
**BCS was heavily criticized for violating AT laws.
***NIT filed suit against NCAA for Section 2 claim, they eventually settled for damages and
future rights for the NCAA to maintain the top 65 teams in college basketball.
****IRS treats college athletics income as non-taxable because they are non-profit
organization, many tax breaks provided to college athletic departments and the NCAA.
Law v. NCAA (1998 – 10th Cir. Appeals)
Facts: Rule that restricted the amount of money that could be paid to assistant, or part-time
coaches. Court undergoes a full Rule of Reason analysis by recognizing that Board of Regents
requires this, instead of ruling it a pro se horizontal price restraint.
 Anticompetitive effects: reduces salaries for part-time coaches. Typically horizontal
price fixing, but it goes into a Rule of Reason analysis.
Issue: Are the reductions in assistant coaches’ salaries reasonable?
Holding: No. Sides with Law. The restrictions are unreasonable because they do not provide a
legitimate procompetitive reason for its rule. NCAA attempted to justify the rule by arguing:
 Competitive Balance – Court doesn’t buy this argument, despite it being the strongest.
 Retaining entry-level coaching positions
 Cost Reduction – Court says they place the cost savings into other areas of the program
anyway, not a procompetitive justification by itself.
29
Takeaway: Because the NCAA is sort of its own animal, you need to always evaluate the rule
under Rule of Reason analysis. Here the anticompetitive effects greatly outweighed the
procompetitive justifications the NCAA attempted to put forward.
Banks v. NCAA (1992 – 7th Cir. Appeals)
Facts: Banks was a player at Notre Dame, tested the draft and wasn’t selected, tried to return
to school, NCAA blocks it. Banks argues that refusing to allow him to retain his eligibility while
testing the market under the advice of an agent is a violation of AT laws.
Issue: Has the NCAA violated AT laws by blocking Banks from returning to school?
Holding: P has failed to identify the market, no anticompetitive effects established. Court says
the rule is justified because it has no anticompetitive effects on college football labor market,
promotes fair competition among amateurs.
Takeaway: The court feels that the no-agent and no-draft rules are vital to preservation of
amateurism. Feels that agents would turn NCAA football into a sham.
 Dissent: colleges are purchasers of labor, anticompetitive effect on college football
players.
 Majority: if no-draft and no-agent rules violate Section 1, then all eligibility rules do.
THOUGHT: would salary caps survive rule of reason without Brown v. Pro Football?
Recap – Rule of Reason Procedure:
1. Burden initially on the P to show anticompetitive effects in an identifiable market.
a. Sometimes so obvious that it jumps to procompetitive effects (quick look rule of
reason).
2. Burden then shifts to the D show procompetitive effects.
3. Burden shifts back to P to show the less restrictive ways of accomplishing the goals.
a. This is the ‘Least Restrictive Means Test’
b. Pretty subjective for the judges, Judge Wilkens got into trouble with this in Board
of Regents at the DC stage.
*O’Bannon, Board of Regents and Kessler’s complaint establish that the identifiable market is
college football and basketball players. For Kessler, it is those players on scholarship.
O’Bannon v. NCAA (2015 – 9th Cir. Appeals)
Facts: O’Bannon recognized himself in a video game, felt like players should be compensated
for the NCAA’s use of their NILs.
Issue: Are the NCAA’s rules subject to an AT lawsuit and if so whether they are an unlawful
restraint of trade? DC said yes they are subject to AT lawsuits, placed $5K in trusts. O’Bannon is
arguing that players not being compensated for the use of their NILs were an illegal restraint of
trade under Section 1 of the Sherman Act.
Holding: NCAA is not exempt from AT lawsuits under Board of Regents (what the NCAA was
really gunning for), affirms DC here; have to give scholarships up to cost of attendance (already
started doing this); and the $5K in trusts is wiped away.
30
Takeaway: Board of Regents does not exempt the NCAA from AT scrutiny, rather it establishes
that the NCAA is unique and all lawsuits against the NCAA are subject to Rule of Reason
analysis.
 Court found two legitimate procompetitive benefits:
o Preserving the popularity of the NCAA’s product by promoting its current
understanding of amateurism.
o Integrating academics and athletics (don’t want social wedge).
 Court finds a less restrictive way of accomplishing the NCAA’s goals: providing for full
cost of attendance.
 The $5K was arbitrary, what the DC gave.
 Doesn’t want payment for NILs because that would disrupt “their particular brand of
football”.
 Says that offering cash sums is a quantum leap from today’s NCAA model.
 Dissent: There is a less restrictive means, even with money for NILs in trust you would
still have consumer demand.
1)
2)
3)
4)
NCAA can be attacked under AT lawsuits. (NCAA frowns)
Amateurism is still a procompetitive benefit. (NCAA smiles)
Cannot give money for NILs.
Board of Regents stands for the premise that the NCAA is subject to AT lawsuits, has to
go to Rule of Reason, and amateurism is a procompetitive benefit that is strong enough
to get you to the third step. Debate over whether or not there is a less restrictive
means of maintaining your unique product while entitling the players to fairer grounds.
Lester Munson: A win for the NCAA because it shows that amateurism is still standing strong,
“not paying student-athletes is precisely what makes them amateurs”.
Michael McCann: A win for O’Bannon because it places the NCAA’s amateurism argument on
life support. Says this case is about whether or not the NCAA has worked together to conspire
against college players. NCAA can’t be happy with appeals reaffirming that the NCAA is subject
to AT lawsuits.
Kessler v. NCAA (Present – 9th Cir.)
Facts: Similar to O’Bannon except that it is more about scholarships. Argument that caps on
scholarships are too restrictive, in violation of AT laws. Nigel Hayes is one of the named
plaintiffs and feels that players should have a free market to determine their scholarship
amount.
Issue: Whether the caps on scholarships are too restrictive and in violation of AT laws.
Holding: Only at the complaint stage.
Takeaway: These guys are gunning for an open market where schools will be empowered with
making business decisions to determine how much players should be paid via scholarship. The
argument is that schools should be treated as businesses who make businesses decisions
regarding how to allocate their resources.
31






Case is limited to football and basketball players on scholarship (no walk-ons). This is the
identifiable market they are operating in.
GOAL is to strike down restrictions, let the schools decide.
Stated that amateurism is not what drives interest: it is about alma mater and
geography.
Integration argument: DC in O’Bannon felt that paying players would drive a social
wedge between players and students on campuses. They recognize they have to tackle
this.
Does it harm other sports who are ‘funded’ by football and basketball: these are
business decisions, let the schools decide what they do with the money.
o A procompetitive benefit cannot be the negative harm that would be sustained
against non-revenue sports.
Argument: NCAA’s rules are a restraint of trade without any procompetitive effects, has
restrictive rules can be implemented to achieve any purposed procompetitive objectives
of D. This will continue if the NCAA is allowed to get away with it, need an injunction.
NCAA’s Procompetitive Arguments
Benefit
Amateurism
Competitive
Balance
Integrate
Academics and
Athletics
Increase Output
in College
Education Market
Post-O’Bannon
 Still standing strong. Highlights
Board of Regents language:
precisely what makes them
amateurs; they are not to be
paid.
 Recognizes the other reasons
why people support college
athletics too.
 Recognizes that amateurism
increases consumer appeal to
the sport.
 Weak. Evidence shows that
amateurism rules do not
promote competitive balance.
 A legitimate benefit. Desire to
avoid driving social wedge in
between athletes and everyone
else (long term benefits to the
athletes).
 Finds this argument unproved,
appeals affirms.
 Argument: academic beliefs
draw more schools to athletics.
My Take
 Amateurism is an
outdated concept, at
time of Board of
Regents (31 years ago)
it made sense, but
there are billions at
stake now.
 Amateurism isn’t the
only, or perhaps
biggest, reason why
people tune in: alma
mater and geographical
reasons why people
tune in and support
teams.
 Weak because
competitive balance is a
myth: same teams win
every year.
 They are already
separated, the players
live in their own
complex (Kansas
basketball) and operate
on their own schedules.
 I don’t really
understand this
argument, feel like it’s
not that important.
Kessler’s Position
 Doesn’t really tackle
hard. Recognizes they
will have to overcome
it, but doesn’t directly
challenge in the
complaint.
 Feels that schools
should be empowered
to make business
decisions on how they
spend their large
amounts of revenue.
 Argues that same
teams win every year
so it clearly is NOT a
procompetitive
balance.
 Recognizes that courts
have found this to be a
procompetitive benefit,
something they will
have to tackle.
 Doesn’t go into, only
the first three
32
NCAA Review
Overarching Themes
 NCAA gets attacked,
then they play the
amateurism card, in
addition to several
others. NCAA thinks
not paying athletes is
necessary to preserving
the popularity of
college sports.
 NCAA cases always go
to a Rule of Reason
analysis because of the
precedent set in Board
of Regents in 1984.
 NCAA has lost its share
of cases in Rule of
Reason land.
 Players have a valid
argument for
unionization. Whether
it accomplishes
anything or not is
another matter. But,
the NLRB isn’t ready to
make headlines in this
area yet, punted on the
N’Western case.
 Paying athletes would
be a seismic shift in
today’s sports
landscape, would
arguably make it
professionalized.
 9th Circuit interpreted
Board of Regents as
NOT exempting NCAA
from AT lawsuits, but
the case does have
language favorable to
NCAA for not paying
players.
Thoughts
 Not paying
athletes is merely a
fear of the
unknown: same
thoughts when
Curt Flood went to
SC and when
Olympics began
allowing
professional
athletes.
 It is right to have
leagues under a
Rule of Reason
analysis, rather
than per se AT
violations.
 Amateurism is the
trump card in all of
this, but in my
opinion
amateurism is
outdated (31 years
old), need to get
with the times and
recognize the $
involved today.
 The
procompetitive
benefits the NCAA
has are valid, but
IMO are
outweighed by the
anticompetitive
benefits the
system has on its
players.
 At the very least,
there is a less
restrictive way of
accomplishing it,
still having the
unique product.
Cases
Northwestern
Union Attempt
Tarkanian
Colorado
Seminary
Shelton
Oliver
Taylor
English
Law
Banks
O’Bannon
Kessler
Board of
Regents
Takeaways
 NLRB declines jurisdiction because it
does not want to disrupt labor
relations in college sports.
 NCAA is not a state actor. They do
not act with UNLV, need to sue them
to get suspension vacated because
they carried out the final suspension
penalty.
 Doesn’t buy discriminatory argument
against college hockey players,
subject to rules.
 Can’t sign K with pro team and return
to college, doesn’t matter that was
possibly undue influence.
 Player is entitled to legal
representation so that he can make a
sound decision.
 Player agreed to comply with
academic standards, OK to take away
scholarship.
 Player has to sit out one year before
transferring.
 Restrains on part-time coaches’
salaries are restrictive, lifted.
 Rejected challenge to ineligibility rule
for entering draft/signing agent.
 Appeals court vacated the NIL trust
money, said paying players cash
sums is a quantum leap.
 Trying to lift cap on scholarships,
tackles competitive balance well but
has yet to tackle amateurism.
 Broad: NCAA is exempt from AT
liability. Narrow: NCAA is subject to
AT laws.
 TV restrictions are unreasonably
restrictive.
 Athletes are not to be paid
 College football is a unique product.
 NCAA is Rule of Reason, not per se,
because of its unique model.
33
TELEVISION
Sports Broadcasting Act of 1961
 “Antitrust laws do not apply to any joint agreement for professional baseball, football,
hockey when the clubs are transferring any right they have for the sponsored
telecasting of games”.
o Limited to league-wide TV contracts that limited blackouts to home territories.
o FCC eliminated the NFL blackout rule in 2014.
Shaw v. Dallas Cowboys (1999 – 3rd Circuit)
Facts: Fan files lawsuit against the NFL and its DirecTV deal.
Issue: Is the NFL’s deal with DirecTV protected under the SBA?
Holding: No. SBA protects “sponsored telecasting” but does not include subscription television,
congressional exemptions should be construed narrowly.
Takeaway: Commissioners have been shown that the SBA does not protect cable and pay-forTV broadcasts. This means that ESPN is not protected under the SBA.
 SBA only for free, over the air television.
League Restrictions on the Sale of TV Rights by Individual Clubs
 NFL: only league that has National TV deals only.
 MLB/NHL/NBA: sell local deals, in addition to their national ones.
 Superstations (WGN) complicate things because they are regional, not really national or
local.
Chicago Professional Sports Ltd. & WGN v. NBA (1992 – 7th Cir. Appeals)
Facts: NBA implemented a deal that teams could only broadcast 20 games (down from the
previous 25 game limit). Bulls had deal with WGN for 25. Affects them the most because
people want to watch Michael Jordan.
Issue: Can the NBA implement a rule limiting the amount of telecasts a team has?
Holding: SBA does not protect NBA, it is a transferred to non-sponsored telecast. Goes to Rule
of Reason where the NBA fails to justify its rule, especially in light of Board of Regents.
Takeaway: Another quick look rule of reason analysis with Board of Regents guiding. NCAA
could not justify why they had the TV restrictions there, court does not see any difference
between the NBA and NCAA, sides with the Bulls.
*After this case the NBA signs new deal with NBC/TNT that says that no team can broadcast
their games on the same night as the National broadcast.
**BOTH SIDES APPEAL: NBA wants to limit the Bulls games on superstations, charge fee. Bulls
want to show 41 games on WGN.
Chicago Professional Sports Ltd. & WGN v. NBA (1996 – 7th Cir. Appeals) (BULLS II)
Facts: Same dilemma as previous case, both sides appeal for more favorable ruling.
34
Issue: Given the changes the NBA made after the last case, can they now restrict the WGN
broadcasts? NBA is trying to protect its small market teams who lose viewers when the Bulls
are available. People harmed: Bulls, WGN, advertisers and small market teams.
Holding: SBA still does not protect the NBA because they aren’t transferring all of their rights to
the NBA, and then to a sponsored telecast (NBC). Bulls can sell some of their games, and nonsponsored television still has some broadcasts.
Takeaway: Court rejects SBA defense, then slashes the arbitrary tax the NBA had (similar to
O’Bannon) and then remands for the Rule of Reason analysis by stating that market power for
the NBA needs to be established before a Rule of Reason analysis is undergone. Easterbrook
felt that NBA could be viewed as a single entity.
 SBA protects free TV, like CBS, does not protect cable or pay-for-TV broadcasting.
 Also, league has to transfer all of the team rights to the league headquarters. NFL has
the sole rights for its teams, NBA and other leagues grant some rights to the teams.
 Board of Regents helps the Bulls the most.
 Appeals saying it needs to go to Rule of Reason, the market power argument is kind of
stupid, of course they have market power…maybe different than college football, but
still some.
Laumann v. National Hockey League (2012 – S.D. N.Y.)
Facts: P are challenging the NHL and MLB choice to limit broadcasts over the internet and TV to
exclusive territories. Upset over the League Pass blocking local and national games.
Issue: Can the P successfully end the league practice of blocking games?
Holding: Need to raise a reasonable expectation that discovery will reveal evidence of an injury
to competition. The P have presented enough evidence of alleged harm to competition to
proceed to a full Rule of Reason analysis.
Takeaway: NHL then reached a settlement, MLB lost on SJ (exemption doesn’t apply to
everything). Supreme Court’s decision in Board of Regents helped P, showed that TV
restrictions may constitute an antitrust violation.
 D could’ve argued competitive balance or ancillary restraints doctrine, but aren’t.
 DC holds that there is a Section 1 claim because SBA doesn’t apply, harm to consumers,
and it is not a core activity immune from AT (ancillary restraint).
Comcast Cable Communications, LLC v. Federal Communications Commission (2013 – D.C.
Appeals)
Facts: Tennis Network suing Comcast because they feel as if they are not broadcasting their
product as much as the Golf Channel.
Issue: Does the Tennis Network have a valid claim against Comcast?
Holding: Court reverses FCC finding because there is no evidence that Comcast discriminated
against Tennis Channel in refusing to place them in the Tier 1 package.
Takeaway: Comcast wins, but the real lesson is that people should start to recognize the a la
carte TV model that is coming: people should be able to choose what programs they are paying
to have…people who don’t like sports are screwed with having to pay $6/month for ESPN.
35
Television Review
Overarching Themes
Thoughts
 Sports leagues
 I am a proponent of
lobbied to have
the a la carte
Congress enact the
business model. I
SBA, which allows
feel like it is fairer
them to give TV
to the consumers.
deals to networks
without AT
scrutiny.
 BUT the SBA is
 Leagues need to be
severely limited
able to regulate
because it is
themselves,
basically limited to
probably an
network TV deals
ancillary restraint
only, ESPN and
angle here. But
Direct TV are not
restricting telecasts
covered.
harm consumers a
lot because they
 Leagues try to use
want to watch their
the SBA as a
teams (who are
defense, but it
sometimes out of
usually gets blocked
market).
and goes to a Rule
of Reason analysis.
 Law in Action: small  Restricting telecasts
market teams like
for competitive
having restrictions
balance is a weak
blocking the
justification for
popular large
sports leagues, can
market teams being
do this with the
broadcast on their
draft, revenue
turf. Large market
distribution and
teams get pissed.
hard caps.
 All of this stuff is at  All of these cases
a big of a
end up in Rule of
crossroads because
Reason land
TV broadcast is
because sports are
vastly changing
different, need to
today, towards a la
evaluate as such.
carte broadcasting
and streaming.
Cases
Shaw
Bulls I
Bulls II
Laumann
Comcast
Takeaways
 The SBA protects
sponsored
broadcasts, deal
with DirecTV is not
protected by the
SBA (ESPN, TNT
probably have
same treatment).
 Board of Regents
establishes that
restrictions on TV
broadcasts can be
handled through
quick look RoR.
 Hung up on single
entity thing, have
to establish market
power before
anticompetitive
effects are
determined.
 Holding is against
the leagues,
restrictions on
broadcasts can be
unreasonably
restrictive/
anticompetitive.
 Reverse at the
appellate level
because there was
no evidence of
discriminatory
practice of golf
channel > tennis
channel.
36
INTELLECTUAL PROPERTY
RIGHT TO BROADCAST
*A lot of different legal elements going on, such as contract law. Many tickets have restrictions
placed on it for rebroadcasting the games inside the park. TV also has this, “without the
express written consent of the National Football League”.
Feist v. Rural: Facts aren’t copyrightable.
ProCD v. Zeidenberg: Boilerplate clauses can be used to restrict people with how they use facts.
Fantasy Sports: Do fantasy sports infringe on a league’s copyright claims or a player’s right to
publicity?
Pittsburgh Athletic Co. v. KQV Broadcasting Co. (1938 – W.D. Penn.)
Facts: D was broadcasting Pittsburgh Pirates’ games on the radio from a rooftop that was
capable of viewing the stadium. Pirates sought to enjoin KQV from broadcasting from outside
the stadium.
Takeaway: Court sides with Pittsburgh, the broadcast amounts to unfair competition and is in
violation of the property rights of the P. Injunction blocking KQV is granted.
INS v. Associated Press (1918): Created the misappropriation doctrine which confers a “quasiproperty right” on a person who invests “labor, skill and money” to create an intangible asset.
1. Don’t want people free-riding off of another person’s work.
2. “Hot News Exception” – the immediacy is at issue. Protecting the immediacy of the
information. If it wasn’t ‘hot’ it wouldn’t be protected.
a. Gametrackers are similar in that they use facts.
b. Courts granting protection on information that is costly to generate and has
value for only a limited time.
c. But, when does it end?
*Copyright Act protects the broadcast of the games, not the games itself.
NBA v. Sports Team Analysis and Tracking Systems (STATS) and Motorola (SPORTSTRAX)
(1997 – 2nd Cir. Appeals)
Facts: STATS and SportsTrax had a game tracker system that would allow people to track NBA
games/scores. NBA felt this interfered with their property right, invoked the “hot news”
misappropriation claim of INS v. AP: said this helps their argument in seeking an injunction.
Takeaway: Hot News survives Copyright preemption but game scores does not constitute
misappropriation of Hot News.
 Not Hot News misappropriation because not free riding, in direct competition with
product, or will reduce incentive to produce product like wire service.
 Not free-riding because they are putting in a lot of work.
 Also, no effect on its core business (making and televising games).
37



Bottom Line: Motorola is not free riding, because it is NOT ‘hot news’ and they are
adding value to the NBA broadcasting, using their own resources to produce a product.
Holding: the “hot news” claim survives preemption, but the transmission of real time
NBA scores does not constitute misappropriation of “hot news.”
o They are not free-riding & the NBA won’t be discouraged from making games.
Right to Publicity wasn’t argued, but probably could’ve been because Motorola was
profiting off of the information, selling their page system.
*IP and Antitrust are similar in that they are about economic incentives. Want to incentive
people to make their own products. NBA wouldn’t be disincentived from making games.
PGA Case
1. PGA had hole trackers at their tour events. Morris Communications would also
broadcast trackers of the golfers at events. Very similar to Motorola, but the sports are
slightly different: PGA has harder accessibility and relied heavily on the tracker
broadcasts for commercial purposes.
2. Court recognizing a valid business justification, begins a balancing act of sorts:
a. Morris is free-riding on PGA Tour’s efforts.
b. PGA has a property right in the scores.
Review
Themes
Thoughts
 Who owns the rights  Remember to focus
to the leagues? Is it
on incentives. Will
the owners, league,
___ still be
players? Essentially
incentivized if we
the stats of the
allow this other
games are facts,
company to continue
entered into public
their business?
domain where people
Antitrust and IP are
can do what they
the same in this
want with them
regard.
(Twitter).
 Also focus on free But when it interferes
riding. Is the
with a league’s core
company adding
business, a
value to the games?
misappropriation
 Hard questions:
claim may be raised.
modern day
 If it is
technology
misappropriation,
complicates things
needs to be
because if this is ‘hot
immediacy at issue:
news’ isn’t Twitter
then it is hot news
interfering with this
and protected under
stuff?
INS v. AP.
Cases
Pittsburgh Pirates Case
INS v. AP
NBA v. Motorola &
SportsTrax
Morris
Communications v.
PGA
Feist v Rural
Stand For
Could not broadcast
the games from a roof
across the street,
violates team’s
property interests.
AP is protected by the
“Hot News
Misappropriation
Doctrine”. The shot
lived information
cannot be free rided.
It is not “hot news”.
Motorola can take the
facts of the games and
place it into their game
tracker.
Morris is free-riding off
of PGA Tour’s work,
sides with PGA here.
Facts are not
copyrightable (in a
phone book here).
38
PLAYER RIGHT TO PUBLICITY
*There is an inherent conflict between an athlete/celebrity’s right to publicity and someone
else’s 1st Amendment right. There are different standards of whether an individual’s right to
publicity infringers on another’s 1st Amendment rights.
**Copyright laws may preempt the right to publicity claims, kind of set aside for class.
Right to Publicity: Personal property right to control the commercial use of his or her identity.
It is an economic right, the right to exploit your own persona.
1. P owns an enforceable right in the persona of a human being (themselves). Persona is
identifiable from the total context of the D’s use: name, meaning, images, voice.
2. D use is likely to cause damage to the commercial value of that persona.
Why Grant Someone a Right to Publicity?
1. Moral Arguments – Don’t want other people taking advantage of the fruits of their labor
(i.e. if TW hits golf balls for 20 hours a day during his childhood, he should be rewarded
for it).
2. Economic Arguments – Benefitting private property rights incentives people to work
harder.
3. Protecting Consumers – Don’t want to be misled by the willingness of a celebrity to
associate himself with a product or service.
Defenses: If it is proven that a person’s right of publicity is being harmed and their commercial
value is suffering, there are several defenses that can be utilized:
1. Consent: player agreed to have their picture taken.
2. Copyright Preemption: Perhaps a person’s copyright ownership is in conflict with an
individual’s right of publicity.
3. Statute of Limitations.
4. First Sale Doctrine: Similar to copyright, right of publicity does not apply to the resale of
items.
a. There was a Vintage Trading Cards case where the players lost because they had
a license with the initial sale, but not subsequent sales.
5. First Amendment: General principle from cases: depiction of celebrity that amounts to
an economic exploitation of the athlete is not protected under the 1st Amendment.
Protects information in the public’s interest.
a. Transformative Use Test: if you transform it enough into your own personal
piece of artistry, it is protected under the 1st Amendment.
Baltimore Orioles/Washington Nationals: The case involving TV rights deals. Court found that
the Nationals had conflict of interests issue with their legal representation, sided with Orioles.
Nationals had won $60 Million on arbitration, reduced to $40 Million.
39
Haelan Laboratories v. Topps Chewing Gum (1953 – 2nd Cir.)
Facts: P is suing another gum company for manufacturing packs of gums with baseball cards in
it, which they had exclusive rights to.
Takeaway: The Court recognized the right of publicity. This case was the first to recognize
someone’s right to publicity claims (baseball players here).
Zacchini v. Scripps-Howard (1977): Last time Supreme Court took on right to publicity. A key
fact was that the human cannonball artist derived his entire revenue from the performance,
which a TV station infringed upon by showing the entire broadcast on TV. Supreme Court sided
with the artist here.
1. Needed protection for “economic incentive for him to make the investment required to
produce a performance of interest to the public”.
Tony Twist/Todd McFarlane Case (1993)
Facts: Tony Twist was a popular hockey player. Todd McFarlane was a comic book artist who
had a character in his book named after Tony Twist. Tony Twist filed suit, won initially $24M.
Takeaway: The court outlined three steps for a player to win a right to publicity case: (1) use
name, (2) without consent, (3) for commercial advantage. P failed to show that D used his
name for commercial advantage. TC then reverses, said he used Twist as a way to create an
impression that Twist was associated with the comic books.
 McFarlane’s work was purely commercial and thus not entitled to 1st Amendment
protection.
o Also, McFarlane wasn’t deriving his entire income from the act, like Zacchini was.
 End result: Twist gets $15 Million.
 The First Amendment protection they have yields to Tony Twist’s right to publicity.
Right of Publicity Tests (Weighing the Balance)
 Celebrities clearly have a right to be rewarded for the fruits of their labor. But where is
the line drawn between this and someone’s First Amendment right? Courts are divided,
but the California Supreme Court created the transformative use test to help draw the
line. Still, the Supreme Court hasn’t addressed this issue since 1977.
1.
2.
3.
4.
5.
Right to Publicity Wins the Day
Tony Twist
Zacchini
Vanna White
Rose Parks
Three Stooges (transformative use
test used, not transformed enough)
First Amendment Wins the Day
1. Tiger Woods painting
2. CBC fantasy baseball case
3. Vintage Sports (trading cards case)
ETW Corp. v. Jireh Publishing Inc. (2003 – 6th Cir. Appeals)
Facts: Rick Rush made a painting of Tiger Woods, which TW claims interferes with his right to
publicity. The painting depicted TW in a red shirt at Augusta with famous golfers in the clouds.
40
Takeaway: TW lost on two grounds. First he lost because he is not a trademark (a person’s NIL
cannot serve as a trademark; however this is not accurate state of law). Second, he lost
because Rush’s First Amendment protection outweighed his right to publicity.
 Court focuses on the economics. Tiger makes money from all sorts of places, Rush
derives his entire livelihood from these paintings.
 Rush’s work has significant transformational elements and creative content outweighs
adverse effects on TW’s market.
 Court discusses Comedy III: there it wasn’t transformed enough. Here, it is transformed
enough.
 Paintings are more than literal depictions of Woods, has other artistic relevance aspects.
Ginfriddo v. MLB (2001): Former MLB player wants the right to highlights from his playing
career. Court does not grant him these rights.
Baltimore Orioles v. MLBPA (1986 – 7th Cir. Appeals)
Facts: MLB players are challenging who has the rights to the game broadcasts. TC sides with
owners saying the players are works for hire, which along with copyright law, preempts the
player’s right to publicity.
Takeaway: Players lose again. Appeals says that the broadcasts are copyrightable and the
players are employees of the clubs. The player’s performances are broadcast and therefore
copyrightable.
 Employers own all work products. The only way to give the players some rights to the
broadcasts is through collective bargaining (Brown v. NFL).
 The work products (telecast games) were created within the scope of the player’s
employment.
 Right to publicity and copyright law are in place to encourage production of works, not
to protect the public (with a small exception: want public knowing what players are
actually endorsing).
Thoughts on the Fantasy World
 Millions of fans participate in website that allow them to compete in fantasy sports.
Within these websites are images of the players, in addition to their stats, height,
weight, college, etc. Do the players have a right to this information? According to CBC,
no, the information is in the public domain. After Keller, fantasy sites should be nervous.
C.B.C. Distribution and Marketing, Inc. v. MLB Advanced Media, L.P. (2007 – 8th Cir. Appeals)
Facts: CBC sells fantasy information containing player statistics. TC sided with CBC, they were
not using the information to obtain a commercial advantage. TC further says even if they are
violating the player’s right to publicity, they are protected under the First Amendment.
Takeaway: On appeal, the court applies the three step process seen in Tony Twist. Here they
do find that CBC was using the players for a commercial advantage, thus everything is satisfied
for a right to publicity claim. The Court then conducts a balancing test which benefits CBC
because all of the information is in the public domain anyways, players aren’t really harmed.
41
Warren Spahn: Book on his life, filing suit. Court says the author was not entitled to First
Amendment protection because the book was infected with material and substantial
falsification…reckless disregard for the truth.
*In 2011 the Supreme Court made clear that video games are deserving of full protection under
the First Amendment; however, there is a clear pattern of holdings that the use of a living
person’s likeness in a video game will NOT be protected under the First Amendment due to that
person’s right to publicity outweighing it. Hart and Keller. Both of the cases sided with the P
despite the fact that their depictions were a very small part of the actual game.
Hart v. Electronic Arts: The Third Circuit’s version of Keller. Former player suing for the NCAA
Football game. Court uses the transformative use test on appeal, sides with player.
Comedy III Productions, Inc. v. Gary Saderup, Inc. (Cal. SC 2001)
Facts: Owner of all Three Stooges publicity rights filed suit against a company making t-shirts
with the three stooges on it without permission.
Takeaway: The Court created the transformative use test, but nevertheless found that the tshirts weren’t transformed or creative enough to warrant First Amendment protection.
The Transformative Use Test
 This is essentially a balancing test between the First Amendment and right of publicity
based on whether the work in question adds significant creative elements so as to be
transformed into something more than a mere celebrity likeness or imitation.
 When it is transformed enough, it warrants First Amendment protection and is NOT
likely to interfere with the celebrity’s economic interests protected by their right to
publicity.
 Is it the D’s own expression or the likeness of the celebrity?
Keller v. Electronic Arts
Facts: Sam Keller was a quarterback at Arizona State who did not like his image in the NCAA
Football games, because he wasn’t getting paid for it. Filed suit on right to publicity grounds.
Takeaway: Court relies on the state’s right to publicity cases, most notably No Doubt, while
siding with Keller. Arguably, the case is like C.B.C. in that it is all public information, but the
visual element makes it a little different.
 Rejects First Amendment defense on precedent grounds; rejects Rogers Test defense on
grounds that the Lanham Act is for protecting consumers, right to publicity protects the
celebrities; rejects the public interest test on grounds that EA is not reporting factual
data.
 Kind of ignores the fact that you can modify the avatars.
 The game “literally recreates Keller in the very setting in which he has achieved renown”
 DISSENT: First Amendment trumps, the creative and transformative elements of EA’s
game predominate over the commercial use of the athletes’ likeness.
o Most information is publicly available, not protected by the individual’s rights.
42
Right to Publicity Review
Overview
Thoughts
 For the purposes of  Video games are
our class: athletes
crazy works of art,
have a right to
should get more
publicity. This is
common law
where they derive a
protection than
large percentage of
they have been.
their income (MJ
made a
boatload…still
does). This needs to
be protected. But,
this protection
 TW was probably
harms someone
wrong.
else’s ability to
make a living and
express themselves
under the First
 A player’s income is
Amendment.
relevant, to a small
extent, but players
are wealthy
because they can
 So how do we
profit off of their
juggle this? Well
NIL.
California has a
way:
transformative use
test.
 Fantasy websites
are still standing
strong under C.B.C.
but it is more
fragile after Keller.
 There is a Court
reluctance for
granting video
games First
Amendment
protection, as they
are entitled to.
 First Amendment is
the best defense, if
Copyright law
doesn’t preempt
the right to
publicity claims.
Cases
Haelan Labs v. Topps
Zacchini (Human
Cannonball)
Tony Twist
Tiger Woods
CBC
Comedy III
Keller
Stands For
Creates the Right to
Publicity. This right is
for everyone,
specifically
celebrities.
S.C. sides with
celebrity because
they derived all of
their finances from
the act that was
televised.
Artist forced to pay
hockey player for
taking advantage of
their right to
publicity
Artist DOES NOT
have to pay for
painting, First
Amendment wins.
Player data is public
information,
deserving of First
Amendment
protection.
Creates the
transformative use
test for balancing
someone’s right to
publicity with the
First Amendment.
Court sides with
Keller. Under the
transformative use
test, the video game
does not transform
Keller’s likeness
enough to warrant
First Amendment
protection.
43
TEAM TRADEMARK
Goal of Trademark Law: Develop distinctive names and symbols to identify their products, by
barring other producers from attaching the same name and symbols to other products and
thence misleading consumers looking to enjoy their favorite products.
 But you don’t receive a monopoly, competitors can advertise against you.
 Trying to protect against consumer deception.
 Trademark: solidifies your rights (there is also common law that you can rely on, but this
is weaker and more inefficient). You then can bar people from using your product
commercially.
*These cases are about the money, NFL has licensing rights they want to protect. They are
trying to avoid people free loading (AP Case) off of their work and profiting, when they are the
ones that should be profiting.
Indianapolis Colts v. Metropolitan Baltimore Football Club (1994 – 7th Cir. Appeals)
Facts: Colts moved from Baltimore to Indianapolis and maintained the same logo and team
name. A Baltimore team started up in the CFL as the Baltimore CFL Colts. Indianapolis sued.
Takeaway: Judge Posner felt that consumers were likely to be deceived by the same names. He
also relied on the TC relying on a study showing 64% of fans were likely to be confused.
 Procedural status benefitted Indianapolis, no clear error on the TC part. It needed to be
clearly erroneous for the injunction to be overturned, it wasn’t.
Augusta National Case: Masters received an injunction blocking the “Ladies Masters at Moss
Creak Plantation”.
Brooklyn Dodgers Case: Somehow the baseball team won against a restaurant using the
Brooklyn Dodgers name.
Boston Professional Hockey Association v. Dallas Cap and Emblem Mfg. Inc. (1975 – 5th Cir.
Appeals)
Facts: D were making emblems, which people would buy and sew onto a blank jersey, a
cheaper form of team apparel. Issue is, does TM law block this?
Takeaway: TM law is extended by granting protection to the hockey teams. The symbol is
entitled to legal protection against such unauthorized duplication.
 TM traditionally designed for protecting something with mark on, not the mark itself,
but Court reverses DC and extends TM law to such protections.
 Public and plaintiffs are better off by granting protection. Public: consumer deception is
avoided, Plaintiffs: major commercial value is derived from the emblems.
 Gets away from the consumer deception that TM law is founded on and into the
business interests of the clubs.
*Previous case shows the expansion of rights teams enjoyed for a long time. American Needle
was really the first case that reigned in team protection rights.
44
**Case broadens TM law to include any confusion. It also revises the doctrine of
misappropriation (INS case).
***1962 amendment to Lanham Act: removed requirement that the source of confusion be
related to the source of origin of such goods or services. This was good for the NHL because the
source of origin was the hockey club.
Boston Marathon T-Shirts: Marathon got an injunction against someone selling t-shirts that
wasn’t who they gave their exclusive license to. Court felt consumers were likely to be
deceived.
WCVB-TV v. Boston Athletic Association (1991 – 1st Cir. Appeals)
Facts: BAA granted TV rights to another Boston station. WCVB kept broadcasting anyways.
BAA filed suit and, rather than relying on Pittsburgh Athletic Broadcasting Case, they relied on
TM law, specifically the shirt case. Didn’t go to well.
Takeaway: Judge Breyer relies heavily on the race being on public streets in siding with WCVB.
Feels as if consumers are not likely to be deceived (people won’t think WCVB is operating
without our permission). Also rejects free riding argument because it is inapplicable to TM law.
Overarching Question: When do property rights stop and freedom rights begin?
Washington Football Team Filing (Present) – Pro Football, Inc. v. Blackhorse (E.D. Va. 2015)
Facts: Washington has a questionable team name, which P are arguing is disparaging. This has
been an ongoing battle for decades, Dan Snyder refuses to back down.
Takeaway: At the TC level, Washington loses because the court finds that people can find the
mark disparaging. Registration is forbidden if people find that it “may be disparaging”.
 Focus is on registration, which is cancelled pending appeal (on going). Even if
registration is cancelled, can still use mark with common law protection. However, this
could harm licensing revenue which, due to shared revenues, would 30 other teams.
o Symbolic impact more powerful than legal impact, increases public pressure.
 “May disparage” from the perspective of Native Americans.
 Government can cancel the USPTO registration without 1st Amendment scrutiny
because it is government speech under the Walker license plate case.
 Also there is not laches problem here (when you sleep for too long, miss opportunity to
get the registration cancelled) because the P were babies when the TM was registered,
need to be at least 18.
 Strong thing for Redskins: no mark has been revoked while still in use.
 Lanham Act: where it “may disparage” a substantial composite of the referenced group.
Court feels that yes, it may do so.
 Lastly, Redskin’s best argument is that the government is engaging in content
discrimination. When it does this: per se 1st violation. Rule is that government cannot
have a viewpoint on content discrimination…don’t want discrimination on people’s
views, that is for their own perspective. i.e. government is taking a side here.
45
Trademark Review
Themes/Goals
Desire to protect
against consumer
deception. TM are
issued so that people
know where their
products are coming
from. If Coca-Cola
didn’t have a mark,
people would
wonder where this
soda was coming
from.
There is also a
misappropriation
element here. It
isn’t as explicit, but
Courts don’t want
people free-riding off
of other people’s
hard work.
This is all reined in by
antitrust law, which
prevents people from
forming monopolies.
Even if your USPTO
TM goes away, still
have common law
protection. Federal
registration solidifies
your rights.
Thoughts
Cases
NFL gets a lot of
revenue, which is
shared, through
licensing rights. This
is also true in other
Indianapolis Colts v.
leagues. That is why
Baltimore Colts
they are fighting hard
against anything that
may interfere with
this revenue stream.
American Needle was
an attack against the
NFL granting an
Boston Hockey Team
exclusive license to
v. Dallas Emblem
Reebok for making
apparel (hats). The
legal issues were
slightly different, yet
it still represents the
first time licensing
Boston Marathon TV
rights for leagues
Case
were reined in in a
long time.
If you have an
exclusive right to a
TM and abuse it,
could subject
yourself to a Section
2 Sherman Act
Monopoly claim…TM
law is expanded, but
antitrust law can rein
it in and make sure
consumers are
protected, still.
Redskins Case
Stand For
Court sides with TC in
that consumers are
likely to be deceived
by another football
team named the
Colts. Also, the fact
that they are in
Baltimore is also a bit
confusing.
TM law is extended
to included emblems
that would be sewn
onto blank apparel.
Desire to avoid
consumer deception.
BAA loses because
race is on streets. No
free riding argument
and no consumer
deception about it
being the wrong
station that the race
is going through.
Redskins mark, under
the Lanham Act, is
void because it “may
disparage” some
people, notably the P
here. This would be
the first time a
registered mark is
cancelled.
Government speech
is going on here, no
1st Amendment
claim.
46
TORTS AND SPORTS PARTICIPANTS AND SPECTATORS
Overarching Thoughts
1. There are the written rules with established penalties (holding); then there are the
unwritten rules that, if broken, get a penalty and punishment within the court of public
opinion/other players (Chase Utley slide); and then there is a line past this which, if
crossed, are so far out of the scope of the game that tort liability is warranted.
2. Consent and assumption of risk are the primary defenses.
3. NFL: lots of stuff is outside the scope of tort liability because of the violence of the
game.
4. Hockey: many criminal charges, typically filed in Canada.
5. Is it an inherent part of the game?
Hackbart v. Cincinnati Bengals & Charles Clark (1977 – D.C. Colorado)
Facts: Hackbart was hit by a forearm across the head by Clark. He filed a tort claim against
Clark and a vicarious liability against his team, the Bengals.
Takeaway: TC said Hackbart had no claim, the game is based on violence. Appeals reversed
establishing that a tort could occur in sports.
 There is a line somewhere in sports that, if you cross, you will subject yourself to tort
liability.
Jane Costa v. The Boston Red Sox Baseball Club (2004 – Massachusetts Appeals)
Facts: A fan was hit by a foul ball in the face. Sues the Red Sox in Massachusetts Court (mistake,
obviously they will side with Red Sox). At time, no signs or warnings for foul balls except on
tickets.
Takeaway: Before liability can be imposed in torts, there has to be a legal duty first. Then you
ask if that duty was breached. Here: there is no duty to warn.
 Duty to warn does not extend to dangers that would be known to reasonable person of
ordinary intelligence (P loses here).
 “Baseball Rule”: Generally if you are in the stadium you either assume the risk OR the
team has no duty to warn of balls being hit at you. This is being squeezed out.
*Kansas City case: fan sued for being hit by a hot dog. State court said it wouldn’t be obvious,
so they can sue, jury then found that nobody was at fault.
**Fan hit by ball while getting a beer. State court said he had a claim.
***Just remember, is it an inherent part of the game? Punched in hockey = inherent part of
the game; hit in golf = outside the scope of the game.
NFL Concussion Case (Sort of Present)
1. NFL being sued for negligence and/or failing to warn about the dangers of helmet to
helmet collisions, despite having a helmet on.
2. 60 Minutes: they think the sport is becoming safer, Ed Reed says he would do it all over
again.
47
Criminal Law Cases
1. Hockey has the most criminal law cases.
2. There was one case that dealt with: were you intending to hit their head or shoulder?
Felt that if it were head, you don’t miss.
3. Bill in Ohio for excessive violence in sports failed.
Barrett Green v. Pro Football, Inc. & The Washington Football Team (2014 – D.C. Maryland)
Facts: Green played for Giants and was injured by a TE on the Washington Redskins. Felt at
time it was a suspicious hit, then found out in 2012 that there was a bounty program in place at
the time of hit (Saints). Sued for tort claims.
Takeaway: The statute of limitations started in 2012 when the player became aware of the
bounty program. The player would assume the injury occurred through the normal scope of
the NFL game; once it became the subject of a bounty program it exited the scope of football
and entered/crossed the line into tort.
 Intentional cut block: would be penalized, but still within the realm of the game. But
wouldn’t enter the Hackbart territory of tort liability.
 No tort on every illegal hit in football. But a bounty program rises to another level,
beyond the norms of football.
*Hackbart is the big case in this area. Established that there is a line drawn somewhere and a
player can cross it.
**Line can be drawn based on the norms of the sport. In football: you punch someone, you’re
done; whereas in hockey that is allowed. The reasonableness of violence is a big part of
deciding if an action should be subject to a tort liability.
What to Look For
 Is there an action
that, really based on
23 years of being a
sports fan, screams at
you: hey, that is
really outside the
scope of the game?
 A fan gets hurt; were
they warned of the
dangers? Think
about baseball rule
too.
The General Law
 Actions in sports can
reach the level of a
tort action. If it is so
outside the scope of
a game that a
reasonable person of
ordinary intelligence
would view the act as
nowhere near the
place of the game,
can be held liable for
a tort action.
Cases
Hackbart v. Bengals &
Clark
Costa v. Red Sox
Green v. Redskins
Takeaway
The big one.
Establishes that a tort
can occur in a game as
violent as the NFL.
There is a point, even
the course of the
game, where someone
so outside the scope of
that game can be
liable for tortious
behavior.
Tough for fans to win
against teams in state
courts.
Statute of limitations
starts when you know
of the bounty program,
which is outside the
scope of the game.
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EMPLOYMENT AND ENDORSEMENT CONTRACTS
General Rule: Can’t force someone to engage in specific performance. Why? Because it feels
like indentured servitude and, think about it, what type of performance are you going to get?
Negative Injunction: Preserves the status quo, prevents a future harm (can’t do something).
Positive Injunction: Require a D to take some type of action (have to do something, rare).
*College coaches jump to other leagues all the time. When they do, have to pay buyout
provisions (Tony Bennett has a large one, fear of going to Wisconsin).
Philadelphia Ball Club v. Lajoie (1902 – Penn. Supreme Court)
Facts: Lajoie was a 2nd baseman for the Phillies; wanted to jump ship to the new American
League for more money. Court granted a negative injunction blocking him from going to
another team (within Pennsylvania).
Takeaway: Lajoie argued that there was a lack of mutuality between the club and player, court
disagreed and sided with the team. Court blocks him from non-Phillies professional baseball
team, feels as if the contract established that and there was adequate consideration ($).
 The court also talked about the special skills Lajoie has and how irreplaceable they are.
 Essentially, ‘if you want to play baseball, you can’t play for any other team’.
 Could have argued for unconscionability, but didn’t. NFL players today could do this.
Barry Sanders Case: Had to pay back his signing bonus from the years he retired from the Lions.
Ricky Williams also had to do this, despite the contract being from the Saints who he was no
longer with. NFL contracts are insane.
New York Football Giants, Inc. v. Los Angeles Chargers Football Club (FLOWERS) (1961 – 5th
Cir.)
Facts: Mississippi football player signs with New York Giants before his bowl game, which he
wants to play in so they choose to keep it secret. He then signs with the L.A. Chargers for more
money after the bowl game. Giants file suit trying to enforce the contract.
Takeaway: DC did not enforce the contract because Rozelle hadn’t signed off on it. Appeals
court affirmed on grounds that the Giants did not come forward ‘with clean hands’.
 Clean Hands Doctrine: he who comes into equity must come with clean hands.
 Flowers wins, K with Giants is not enforced.
 Another case involving the Houston Oilers and Dallas Cowboys (Houston Oilers v. Neely).
This one didn’t really follow the Flowers case, sided with Oilers on grounds that the
player was well educated and knew what he was signing into.
Mike Keenan Case: New York Rangers coach wants out after winning Stanley Cup. After they
were a day late on a bonus he signed with Blues, said the contract was terminated. Bettman
came down hard on all of the parties, eventually a settlement was reached. Keenan should
have gone to Commissioner first before signing with the Blues.
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Bill Belichick Case: Was with the Jets, K said he becomes HC if Parcells leaves, he did leave.
Belichick says K was terminated when owner’s switched. Tagliabue says no, Belichick then gets
Jeffrey Kessler, who actually loses on antitrust grounds. Settlement then reached with Patriots.
Cincinnati Bengals v. Bergey (1974 – S.D. Ohio)
Facts: Bergey was with Bengals and signed a future K with the WFL Virginia Ambassadors (will
start once he left Bengals). Bengals filed suit saying this was illegal, interrupts current K.
Takeaway: Court said the future K was OK, does not disrupt current K. It is OK to sign a future K
with a future team, while under K with your current team, son long as the future team is in
another league (otherwise your current K would be a bit disrupted).
 This is how European basketball players sign Ks with an NBA team, then come over a
year later.
*This previous case was at a time when there was real league competition. Now, there aren’t
any leagues competing with the NFL (or any other league). So there really is a de facto
monopoly. Thus, if you can get around Brown v. NFL, you could have a Sherman Act Section 2
Monopoly claim.
Player Holdouts
1. Joey Galloway: held out 8 games, which was ruled to be a full season, one step closer to
becoming a free agent.
2. Yashin: stud hockey player, went to Russia for year then attempted to come back as a
free agent: argued that the calendar year elapsing made him a free agent. Team
countered that he hadn’t fulfilled his year of playing service.
a. “The player is obligated to fulfill length of contract” team won.
What is a Contract? (Deep, Important Philosophical Contract
Moral Obligation: Need to uphold contract because you agreed to do it. You are a property
right to the team…leads to negative injunctions being issued. Courts are in this camp.
1. Get injunctions as remedy.
Economic Efficiency: In Law & Economics, it is OK to breach contract, pay your damages and
move on to a higher contract. This is a liability based contract. Synder, Posner in this camp.
1. Get damages from the breached contract, and then everybody moves on.
2. NCAA coaches have this.
3. Synder on this, particularly with monopolies.
My Thoughts: Contract breaches occur all the time in the real world. Contracts are aware of
this, so you set up the liability for both the duration and ending points of the contract. Deal
with the liability. Then you move on. This allows an efficient allocation of resources (in this
case, athletes). And this applies to all players, from Aaron Rodgers all the way to Scott Tolzein,
it’s just that the Rodgers of the world will get more money (Ronaldo = 80M Euros).
 Also, teams trade players all the time. This is kind of like having your cake and eating it
to, they have the economic efficiency for trading players; but they have the moral
obligations for contract durations? Too one-sided, should be consistent.
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Boston Celtics v. Brian Shaw (1990 – 1st Cir. Appeals)
Facts: Brian Shaw was with the Celtics, left for Italy, wanted to come back so he signed with the
Celtics. THEN he signed an agent who said he would be a free agent if he waited a year to come
back to the NBA. Shaw is now trying to stay in Italy, to the Celtics objection.
Takeaway: Arbitrator says he has to give termination notice to the Italy team. Really? I mean,
really you can tell a player to break a contract with a team from another country?
 Shaw had a CBA argument, saying the K was altered, but Court differs to the arbitrator
because the arbitrator’s decision, ‘drew its essence from the CBA’.
 Court also used a balancing act of sorts: felt the Celtics were harmed more without the
injunction, than Shaw would be with the injunction…Thus, injunction granted and Shaw
has to play with the Celtics.
 Another example of the high bar to arbitrators, Court felt the arbitrator’s decision was
valid.
Rashard Mendenhall v. Hanesbrands, Inc. (2012 – M.D. N.C.)
Facts: Mendenhall had an endorsement deal with Hanesbrands (Champion) which Hanesbrands
wanted to void due to several tweets Mendenhall sent out during the killing of Osama Bin
Laden. The K was renewed and granted them permission to void the K for any “situation or
occurrence tending to bring Mendenhall into public contempt…based on the majority of the
consuming public or any protected class or group thereof…”
Takeaway: Hanesbrands voided the K and Mendenhall filed suit saying they can’t do that, it is a
breach of K, Hanesbrands then filed a M2D, which was denied. Court found that there was a
plausible cause of action for a breach of K.
 Need to make a factual finding for the public’s response.
Cari Stern on Morals Clause
 Many athletes and entertainers have morals clauses which outline, either narrowly or
broadly, grounds for terminating the K based on actions that draw negative attention to
the sponsor/program/team.
 There are stereotypes, sometimes justified, that athletes make bad decisions and end
up in situations that harm their image, along with their sponsors. Sponsors protect
themselves by granting themselves discretionary provisions that allow them to void a
contract for poor incidents.
o Also they are covered closely in the news, minor incidents become major
because of the amount of interest these celebrities draw.
 Rick Pitino had a clause, then the sex in restaurant incident; however, law in action,
president of Louisville didn’t void his contract.
51
PLAYER K REVIEW
What is a K?
Moral Obligation:
Need to uphold these
promises between two
parties, grant negative
injunction. Injunctions.
Courts are on this side
of things, grant
injunctions for teams.
Themes
Players switching
leagues.
Lajoie, Flowers
Players switching
within a league.
None
Coaches switching
teams (within a league
or outside of a league)
1. NCAA
2. Professional
Economic Efficiency:
People break K all the
time; that is fine. K are
just agreements for
how the liability will be
distributed throughout
its duration. We
should allow athletes
to break contracts, pay
damages, and go to
other teams. Damages.
Law & Economics
people are on this side
(Posner), and I think I
am a s
Cases
Belichick, Bielema,
Keenan
Player Holdouts
Galloway, Yashin
Future Contracts
Bergey
Players switching
internationally
Brian Shaw
Rashard Mendenhall
Case
Rashard Mendenhall
Stand For:
Typically, Players can
switch between
leagues by paying a
buyout fee. Lajoie was
sort of an outlier,
injunction granted.
Seeking equity: need
clean hands.
Governed by the CBA,
with free agency for
American sports.
Coaches switch all of
the time at the NCAA
level by paying a
buyout fee. At
professional level, sort
of bound, but
settlements typically
reached.
Free agency year is
accrued by performing
with team for that
year.
Can sign a future K with
a rival league, doesn’t
interfere with current
K.
Injunction granted to
force Shaw to play for
Celtics. Moral
obligation on full
throttle and arbitrator
hard to overturn.
M2D was denied
because the complaint,
taken in the light most
favorable to
Mendenhall, shows a
plausible cause of
action for breach of K.
Hanes may not of had
enough grounds for
voiding the K.
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