NFL loses antitrust case on Supreme Court 9-0 vote

The NFL lost a big one in the U.S. Supreme Court. It had hoped the court would allow it to act as one business, rather than a group of 32 teams, for all purposes.

Instead, it was denied the decades-old sweeping antitrust exemption given to Major League Baseball in a unanimous 9-0 decision. Some things cross political lines of individual justices and it appears this is one of them.

The opinion written by Justice John Paul Stevens ruled in favor of American Needle, Inc. who sued the league in 2004after it chose Reebok to supply team merchandise on a league-wide basis.

The clothing company challenged the right of the NFL to act in concert with its member teams when it made business decisions that limit competition.

The league countered by saying that its 32 teams are really only parts of one large organization and not separate businesses, which should exempt them from compliance with U.S. antitrust laws.

American lost at trial and at the intermediate appellate level, prior to petitioning the Supreme Court to hear the case. The NFL seemed confident it would be protected by the court. It was wrong.

There are two immediate results of Monday’s ruling. First, American was given the right to go back to the trial-level court and argue the original case, hoping a judge or jury will decide the league violated current law.

The clothing company might win or it might lose using the standard measure in antitrust cases. Is the complained of restriction reasonable or does it violate the law?

This may be of assistance to other similarly situated companies who hope to do business with teams within the league. In fact some owners will be happy for the opportunity to earn more money on individually negotiated terms. Think Jerry Jones and Al Davis.

The second immediate effect is on the players’ union. It breathed a sigh of relief since it is facing its own negotiation show-down with the owners and the league.

The new Collective Bargaining Agreement (CBA) is on the table and it was feared by the union that with a green light from the Supreme Court would have given the league more financial clout than it already has…and that’s pretty big.

“Although N.F.L. teams have common interests such as promoting the N.F.L. brand,” Justice John Paul Stevens wrote for the court, “they are still separate, profit-maximizing entities.” Some of the common interests are league rules and scheduling of games.

Other sports league threw their lot in with the NFL and submitted briefs in support of its case. They now will have to live (except for MLB) with the new rules set down by the high court. It’s morning in American sports.

Re-printed with permission of the author.
Paula Duffy is a national sports columnist for Examiner.com and the Huffington Post and regularly comments on sports/legal matters for radio affiliates of ESPN and Fox Sports. She founded the sports information site, Incidental Contact, is the author of a line of audio books designed for sports novices and in her spare time practices law in Los Angeles.
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