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Federal Jurisdiction in Sports Labor Disputes

 |  January 14, 2013

Posted by D. Daniel Sokol

Michael H. LeRoy (University of Illinois College of Law) analyzes Federal Jurisdiction in Sports Labor Disputes.

ABSTRACT: My database of 83 published court opinions from 1970-2011 shows that pro players used conflicting federal laws to improve their labor market mobility. They formed unions under the National Labor Relations Act (NLRA), and bargained collectively with leagues. But they often failed to negotiate significant changes to league rules that bound them perpetually to a team. Consequently, they challenged these practices as restraints of trade under the Sherman Antitrust Act. Thus, players used a dual engagement strategy of bargaining with leagues under the NLRA and negotiating antitrust settlement agreements under the threat of treble damages.

My study exposes a recurring jurisdiction problem that Congress addressed 80 years ago — the inappropriate role of antitrust courts in labor disputes. Ironically, companies used the Sherman Act, a law meant to curb corporate monopolies, against unions. By 1914, Congress enacted a “labor exemption” in the Clayton Act to protect workers from this misuse of antitrust law. But the labor exemption was vaguely phrased. After judges continued to order injunctions against unions, Congress angrily stripped their jurisdiction in the Norris-LaGuardia Act. This history sprang to life in my study. Some courts recognized the conflict between antitrust and labor law — and therefore denied jurisdiction to player complaints, or ruled that labor restraints are immune under the Clayton Act exemption. But these courts were outnumbered by those that intervened under the Sherman Act in these labor disputes.

This sets the context for my key findings. In 21.7% of their cases, district courts issued antitrust injunctions, but rarely denied a motion for this order (5.0% of their cases). But appellate courts behaved differently: They stayed or vacated injunctions in 34.8% of their cases, but affirmed only one injunction (4.3%). In a second key finding, district courts rejected the antitrust labor exemption, a league defense, in 15.0% of their cases, and granted it in only 8.3% of their cases. However, appellate courts differed, applying this defense in 26.1% of their cases and rejecting it once (4.3%). Viewed together, the statistics show that district courts treated these disputes as antitrust issues amenable to federal jurisdiction, while appellate courts strongly disagreed by viewing them as labor disputes that were inappropriate for their jurisdiction.

My study yields three conclusions. First, Congress did not want the Sherman Act to supply one side in a collective bargaining relationship with more bargaining chips to play against the other side. Unfortunately, district courts ignored congressional intent to stay out of labor disputes which players dressed-up as antitrust problems. Second, federal courts unwittingly contributed to labor disputes by creating uncertainty as to whether bargaining over league-imposed labor market restraints were governed by labor or antitrust law. Courts were therefore partly to blame for the economic interruptions that grew out of sports labor disputes in 2011. Finally, I observed a deep conflict between district and appellate courts. Until district judges restrain their sympathies for players, these judges will be integral actors in professional sports labor disputes. And unless these judges learn from their appellate brethren, they will risk the institutional disrepute that befell the federal judiciary in the early twentieth century.