Legal News

In Big Antitrust Case, Court Voices Skepticism Over NFL?s Position

By Ashby Jones

For the NFL, the thinking goes, it was a risk worth taking. A running play on third-and-seven, if you will.

The league urged the U.S. Supreme Court to take up the American Needle case, even though it had won both at the trial court and appellate court levels. The gambit: that given its current alignment, the justices were perhaps more likely than ever to give the NFL the holy grail: a sweeping acknowledgment that the league operated not as a collection of 32 separate teams, but as a single entity.

So how’d it go? Well, judging from Wednesday’s arguments, it seems unlikely that the court will give the league exactly what it wants. Click here for Jess Bravin’s story in the WSJ. Click here and here for the NYT and WaPo’s takes, respectively, and here for a LB post from earlier this week on the case. (For those visually inclined, click here for an interview I did Wednesday afternoon on the case.)

As Bravin explains, at oral argument Wednesday, the question was how far the league’s business model requires that the teams be treated as a single entity. American Needle, an Illinois cap maker, argued that the NFL violated antitrust law by selling a 10-year monopoly license for making souvenir caps to a single outfit, Reebok.

The NFL countered by arguing that that NFL souvenirs should not be treated as ordinary products under competition laws because they were conceived as a promotional tool for the sport rather than an independent source of profit.

But some of the justices reportedly balked at the NFL’s position. Justice John Paul Stevens said that under the NFL’s theory, practically any joint venture by NFL teams would be immune from competition laws.

What if the NFL decided that selling houses was “the most effective way to raise the money to pay these players who make so much money?” he asked.

When the NFL’s lawyer, Covington’s Gregg Levy said such a venture was implausible, Chief Justice John Roberts replied that the other side “is just saying selling logos is closer to selling houses than it is to playing football.” He suggested a trial was the place to sort out the facts. Lower courts ruled in the NFL’s favor without requiring a trial.

Most of the justices seemed to agree with the chief justice. If the court’s decision, expected by July, follows the justices’ comments, American Needle would get a chance to try to prove its claim at trial.

The high stakes were underscored by the friend-of-the-court briefs filed. A big win for the NFL could give team owners greater power to band together when negotiating contracts with players.

Full post as published by Law Blog - WSJ.com on January 14, 2010 (boomark / email).