Labor Disputes in Professional Sports: How Federal Judges Referee Antitrust Lawsuits-- False Starts and Technical Fouls
Using a database of 83 published court opinions from 1970-2011, I show that players have utilized conflicting federal laws to improve their labor market mobility. They formed unions under the National Labor Relations Act, and bargained collectively with leagues. Often, however, they lacked bargaining power to modify the draft or reserve clause, which bound them to a team. Players sued, therefore, under the Sherman Act to challenge these practices as restraints of trade. Thus, players have used a dual engagement strategy of bargaining with leagues under the NLRA while holding identical negotiations under the threat of Sherman Act treble damages.
The dual engagement strategy has created jurisdictional and choice-of-law conflicts for federal judges. District courts often ruled that league restrictions on free agency are anti-competitive business practices. Seeing no conflict between antitrust and labor law, they issued injunctions or found antitrust violations.
But the data in this study show a different side to the jurisdiction and choice-of-law story. After passage of the Sherman Act, businesses used this law ironically to challenge unions. Congress concluded that federal judges subverted antitrust law by enjoining union activities in labor disputes; and consequently, enacted a “labor exemption” to protect workers from this potent economic regulation. But the Clayton Act stated the labor exemption vaguely, referring to labor organizations but not their activities. When courts continued to issue injunctions in labor disputes, Congress responded again by stripping their jurisdiction in the Norris-LaGuardia Act.
This history came to life in my sample. Some courts perceived an intolerable conflict between antitrust and labor law. Thus, they denied jurisdiction to player complaints, or ruled that league-imposed labor restraints are immune under the antitrust “labor exemption.” This background provides essential context for the main findings in my statistical analysis:
(1) When leagues pleaded the Norris-LaGuardia Act as a jurisdictional defense to an antitrust injunction, district and appellate courts differed significantly in their rulings. Trial judges rejected Norris-LaGuardia arguments in 5.0% of cases in the district court sample, and accepted it in 1.7%. But appellate courts reversed this pattern by applying the Norris-LaGuardia defense in 13.0% of their decisions—meaning that these judges ruled that lower courts lacked jurisdiction.
(2) Ruling on the antitrust labor exemption, district courts rejected this league defense in 15.0% of cases, and applied it in 8.3%. Appellate courts treated the issue differently, applying the exemption in 26.1% of their cases and rejecting it only once (4.3%). Thus, appellate courts were more likely to immunize the disputed restriction from antitrust enforcement. In other words, appellate courts chose to apply the NLRA over the Sherman Act more often than district courts.
(3) District courts usually did not rule on a motion for an injunction (73.3% of the cases). But when they ruled on this motion, they were more likely to grant (20.0%) or affirm (1.7%) an injunction than deny this order (5.0%). Appellate courts behaved differently. More than half their rulings did not involve an injunction (60.9%). However, when they ruled on an injunction, they stayed or vacated 8 injunctions (34.8% of their cases), and affirmed only 1 order (4.3%).
In sum, district and appellate judges behaved differently in these hybrid labor law-antitrust cases. Some cases involved the highly technical antitrust labor exemption. In those cases, district judges committed “technical fouls” by failing to apply this exemption as required by federal labor law. In injunction cases, where district courts often granted the motion but appellate courts routinely overruled them, the former were guilty of “false starts.” On the one hand, the data suggest that appellate courts have cleaned up these district court “fouls,” and therefore, no legislative remedy is indicated. But the cases also imply that by the time appellate courts corrected lower courts, a judge’s “false start” or “technical foul” altered the balance of bargaining power, enabling players to gain an advantage that they could not achieve through collective bargaining. Regardless of whether federal judicial power should be legislatively curbed in sports labor disputes, or left to appellate correction, my study shows that district courts often misuse their power in these antitrust cases.
Michael Leroy. 2011. "Labor Disputes in Professional Sports: How Federal Judges Referee Antitrust Lawsuits-- False Starts and Technical Fouls" ExpressO
Available at: http://works.bepress.com/michael_leroy/10