WASHINGTON — The Supreme Court rejected the National Football
League's request for broad antitrust law protection Monday, saying that
it must be considered 32 separate teams — not one big business — when
selling branded items like jerseys and caps.
"Although NFL teams
have common interests such as promoting the NFL brand, they are still
separate, profit-maximizing entities, and their interests in licensing
team trademarks are not necessarily aligned," said the retiring Justice
John Paul Stevens, writing for a unanimous court.
Had the NFL won
this case, it may have been able to — as one business entity —
implement salaries for its players and its coaches instead of having the
current system of individual players bargaining for deals. The biggest
thing that came from this ruling on Monday is it could kick-start labor
extension talks and prevent a lockout in 2011.
DeMaurice Smith,
the NFLPA's executive director, welcomed the ruling.
"Today's
Supreme Court ruling is not only a win for the players past, present and
future, but a win for the fans. While the NFLPA and the players of the
National Football League are pleased with the ruling, we remain focused
on reaching a fair and equitable Collective Bargaining Agreement. We
hope that today also marks a renewed effort by the NFL to bargain in
good faith and avoid a lockout," Smith said in a statement Monday.
The
high court reversed a lower court ruling throwing out an antitrust suit
brought against the league by one of its former hat makers, who was
upset that it lost its contract for making official NFL hats to Reebok
International Ltd.
American Needle, Inc. sued, claiming the league violated antitrust
law because all 32 teams worked together to freeze it out of the
NFL-licensed hat making business and gave Reebok an exclusive 10-year
license.
The company lost and appealed to the Supreme Court but
the NFL did as well, hoping to get broader protection from antitrust
lawsuits.
Major League Baseball is the only professional sports
league with broad antitrust protection. The National Basketball
Association, the National Hockey League, the NCAA, NASCAR, professional
tennis and Major League Soccer supported the NFL in this case, hoping
the high court would expand broad antitrust exemption to other sports.
But
Stevens said NFL teams directly compete on many levels. Citing the two
teams in this year's Super Bowl, the New Orleans
Saints and the Indianapolis
Colts, Stevens said that teams compete against each other "to
attract fans, for gate receipts and for contracts with managerial and
playing personnel."
"Directly relevant to this case, the teams
compete in the market for intellectual property," Stevens said. "To a
firm making hats, the Saints and the Colts are two potentially competing
suppliers of valuable trademarks."
American Needle was one of
many companies that made NFL headgear until the league awarded an
exclusive contract to Reebok. Lower courts threw out American Needle's
lawsuit, holding that nothing in antitrust law prohibits NFL teams from
cooperating on apparel licensing so the league can compete against other
forms of entertainment.
But the high court turned away that
theory and sent American Needle's antitrust lawsuit back to the lower
court.
"Decisions by NFL teams to license their separately owned
trademarks collectively and to only one vendor are decisions that
'deprive the marketplace of independent centers of decision making …
and therefore of actual or potential competition,'" Stevens said.
Just
because NFL teams have a single organization, the National Football
League Properties, to jointly develop, license and market its logos does
not mean it can escape antitrust scrutiny, Stevens said.
"If the
fact that potential competitors shared in profits or losses from a
venture meant that the venture was immune from" antitrust law, Stevens
said, "then any cartel" could evade the antitrust law simply by creating
a 'joint venture' to serve as the exclusive seller of their competing
products."
The argument that NFL teams also need each other to
play an NFL season also doesn't work, Stevens said. "A nut and a bolt
can only operate together, but an agreement between nut and bolt
manufacturers is still subject to" antitrust scrutiny, Stevens said.
The
league argued that a court decision against it "would convert every
league of separately owned clubs into a walking antitrust conspiracy"
and bring legal challenges to any decisions that the teams make
collectively like scheduling.
But Stevens disagreed.
"The
fact that NFL teams share an interest in making the entire league
successful and profitable, and that they must cooperate in the
production and scheduling of games, provides a perfectly sensible
justification for making a host of collective decisions," he said.
The
case is American Needle v. NFL, 08-661.