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Oral argument in American Needle hints at NFL’s broader position

The National Football League has been careful to keep narrow the aim of its current effort to obtain a finding that, for the purposes of selling hats and shirts, the 32 teams are a “single entity” that cannot conspire with each other in dealing only with Reebok and shutting out companies like American Needle.  However, the transcript of Wednesday’s oral argument before the Supreme Court suggests that, if push comes to shove, chief NFL outside counsel Gregg Levy (a finalist for the position of Commissioner in 2006) believes that the league is a single entity, for all of its relevant business purposes.

The key moment in the exchange between Levy and the Court comes at page 47 of the transcript, when Justice Sonia Sotomayor poses this question:  “What decision could the sports teams make that would be subject to the antitrust scrutiny under your definition of the permissible range of the joint venture activities?  It seems to me that if the venture wanted to make sure all the teams hired secretaries at the same $1,000-a-year salary, that under your theory, that’s okay, because it’s a joint venture.”

In response, Levy didn’t say, “We are taking that position only as to matters relating to the promotion of the league,” which is what he basically said in the NFL’s written brief.    Instead, Levy said, “Your Honor, my view is that the — the NFL clubs are not separate sources of independent power.  As a result, they are a unit.  They are a single entity and it’s –“

At that point, Justice Sotomayor cut him off.

“So to the answer to my question is, there is — you are seeking through this ruling what you haven’t gotten from Congress:  An absolute bar to the antitrust claim.”

Though Levy claimed that the NFL isn’t seeking such a ruling, his original answer to the question, which was made in extemporaneous fashion without the luxury of carefully splitting words in written form, indicates that, yes, the league believes it’s a single entity for all purposes.

Thus, it’s reasonable for the NFLPA, based on Levy’s moment of abject candor, to fear that a victory by the NFL in the American Needle case would result in an effort by the league to bootstrap the ruling into an eventual finding that the NFL is a “single entity” for the purposes of determining the rules of player acquisition, which as a practical matter would remove from the union’s arsenal the ability to decertify and sue the league for violating federal antitrust laws.

Later in the argument, Levy offered further insight into the NFL’s actual position on matters of this nature.  Applying Levy’s apparent reasoning, Justice Antonin Scalia asked whether the league could determine the price at which a franchise would be sold, by concerted agreement.

Said Levy:  “Could they agree on prices for their franchises to be sold?  Yes, I assume they could agree because they are not independent sources of economic power.”

Justice Scalia responded by saying, “I thought I was reducing it to the absurd.” (It’s the legal equivalent of “boom . . . roasted.”)

Though we highly doubt (especially in the wake of Wednesday’s arguments) that the Supreme Court would ever agree with the league’s position as it relates to rules regarding player salaries and free agency, we finally understand why the union had been sounding the alarm.

Based on Levy’s comments to the Court, the end game is obvious.  Levy, and thus the league, would like to ultimately obtain a ruling that the 32 member teams are completely immune from antitrust laws relating to price fixing and other business activities that are contrary to the concept of fair and open competition, even when the topic relates to the procedures for acquiring and keeping players.

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22 Responses to “Oral argument in American Needle hints at NFL’s broader position”
  1. bearsrule says: Jan 13, 2010 11:06 PM

    If the owners win, all these million dollar salaries will disappear. Guys will be playing for $100,000 instead of $1,000,000. This would change the professional sports landscape unbelievably…. very,very bad for players, very, very good for owners.

  2. Dr. Hannibal Lector says: Jan 13, 2010 11:09 PM

    Everyone needs to remember Mr. F’s opinions are his own and up to you to decide if he actually is an expert. Considering this is his thing and can say whatever he wants, it’s another reminder to never take a blogger’s word as law.

  3. ohmanbeliefs says: Jan 13, 2010 11:19 PM

    Hahhahahah. It’s sooooo funny that you’re a lawyer, Florio. This is ridiculously high level analysis. Extremely well done and a fascinating legal issue.
    One other thing to note in the transcript is the Justices’ collective lack of interest in the NFL. (I bet the only true fan is Thomas, who at least cares about the Huskers I believe, and of course doesn’t ask a question at oral argument.) When it comes to irrational sportsfan legal reasoning, I’m not exactly expecting Justice Blackmun’s majority opinion in Flood v. Kuhn from this group of nerds. And in this case, that’s really, really a good thing.

  4. halen11 says: Jan 13, 2010 11:31 PM

    Florio,
    Thanks for explaining all of this in what is probably as close to layman’s terms as possible. I feel like yours and scotusblog.com have been especially helpful in allowing us non-lawyers to see this matter for what it is… despite it’s complexity.
    Big thumbs up.

  5. Malblack says: Jan 13, 2010 11:45 PM

    It will be a long time before Justice Sotomayor and Justice Scalia are on the same side of a decision (apparently).
    Leave it to the NFL to bring those two together…

  6. Delaware78 says: Jan 13, 2010 11:48 PM

    Can you sum this up in 1 sentence & repost?

  7. DJSlyBri says: Jan 14, 2010 12:03 AM

    Sotomayor playing the “poor, underpaid women” card, and very badly I must say. But she was right that the NFL is seeking through the courts what they cannot get through Congress.
    Personally, I think the NFL is an anamoly in the same manner that Justice Holmes said about Major league Baseball in 1922, and as such the issue is for Congress. If Congress hasn’t granted the NFL the same protections as MLB, then the Court should rule against them. the league is not a “single entity,” and they know it.

  8. Favre On HGH says: Jan 14, 2010 12:36 AM

    Justice Sotomayor is Pres. Obama’s puppet and everyone knows DeSmith’s link to him and Obama’s love for unions.
    Reduced salaries would not be a bad thing, ticket prices can be reeled in a little bit, but waiting lists would go up. The HD experience is slowing taking over game day at the stadium. Nothing like being there once or twice a season, but better off at home after that.

  9. slothism says: Jan 14, 2010 12:43 AM

    Mike – this is good work. Thank you. Now please – quit using the site to promote has been coaches like Mariucci, who wasn’t in the plans at USC and who isn’t a darkhorse in Oakland. Nobody is going to hire Mariucci (unless Favre pulls a coup in Minneapolis and tells Ziggy to hire him).

  10. PurpleNGold says: Jan 14, 2010 12:54 AM

    single entity
    only when it suits their need
    not actually

  11. rayg says: Jan 14, 2010 1:10 AM

    If you’ve been following the Supreme Court at all, you would know that Clarence Thomas rarely, if ever, ask any questions at oral arguments. He just sits there like a lump on a log. In fact, there was a stretch from 2006 through 2008 where Thomas didn’t speak a word at oral arguments for 144 consecutive cases. Two years of dead silence.

  12. YouthofToday says: Jan 14, 2010 2:03 AM

    While I am hardly arguing for the league’s position, to argue player’s salaries would suddenly drop by 90 percent is ludicrous.
    The UFL would see an incredible business opportunity and begin to steal a significant portion of talent in the NFL by offering higher wages… drawing more fans and a much better broadcast contract.
    Wouldn’t happen overnight, yet the NFL would have serious competition in the very near future.

  13. Mike McCarthy's Moobs says: Jan 14, 2010 3:05 AM

    The NFL is going to lose this case. That means more video games than just Madden and more Sunday ticket options besides Direct TV. Good news in my book.

  14. brian_21 says: Jan 14, 2010 4:23 AM

    Justice Blackmun is my favorite justice! Ironic that Nixon appointed him. Everyone should read Jeffrey Toobin’s “The Nine”

  15. PatricktheDookie says: Jan 14, 2010 4:37 AM

    Interesting stuff. Thanks for keeping on top of this.

  16. owumd says: Jan 14, 2010 6:28 AM

    Driving to work yesterday, I spent the first twenty minutes listening to a few different sports shows rehashing the same tired discussions about the NFL playoffs. As expected, not a single fresh word was mentioned, just the same old tired sports media machine of giving me the same product, ad nauseum, while pandering to the lowest common denominator of fans.
    Then I flip to NPR at commercial and hear a full, well reasoned conversation on the basis of this Supreme Court case. It’s simply pathetic that in the age of the 24-hour sports cycle, with blogs, talk radio, 10 ESPN channels, twitter, et al, one still gets better sports coverage on a station that doesn’t claim to have any particular expertise in the field.
    As to the case, my impression after thinking things over yesterday was essentially the same as Sotomayor’s, and apparrently, Florio’s. The extension of this ruling basically permits price fixing on all levels. $70 for a parking space at the stadium? $15 for a hot chocolate? $35 for a beer? All the while players’ salaries take a collective dive, and low and behold, an already declining product will soon become unwatchable completely.
    After reading this overview from yesterday, it’s hard to imagine the league coming out with the W. Good news for football fans.

  17. last starfighter says: Jan 14, 2010 6:44 AM

    Why has the NFL become so creepy? I know the owners are businessmen who want profits but they need to remember how their league got so profitable before greed completely blinds them. You know a business is overstepping its bounds when even Scalia disagrees with your reasoning. Sheesh

  18. DC_Bengals_Fan says: Jan 14, 2010 7:14 AM

    —At that point, Justice Sotomayor cut him off. “So to the answer to my question is, there is — you are seeking through this ruling what you haven’t gotten from Congress”—
    Right, like the Supreme Court doesn’t have a long history of, well, creating bench legislation that plaintiffs couldn’t get through Congress.

  19. winfield5815 says: Jan 14, 2010 7:45 AM

    The players lose a bargaining chip. They can’t threaten legal action on the antitrust violation however they still have the strength of the body of the union which should be far stronger than legal action anyway in my estimation.
    NFLPA should take a few lessons from the MLBPA. Take away the owners money-making opportunity and reduce the value of their billion dollar franchises and see what happens. The owners won’t be a single entity at that point. You’ll see some results, but you have to stay organized and strong. The NFLPA has not shown a tendency to do that to this point. That’s why we have HOF retired veterans that started the league getting screwed, and rookie jokes like Aaron Maybin get $20 million guaranteed. NFLPA has a chance to fix this mess…but will they fail, again?
    Fans have to do their part too though. Not everything the NFL does is gold. I can’t believe some of the treatment of veteran players and retired players, and what they pay the rooks. It’s a sham. The NFLPA has to fix this but they will need to strike. And they won’t. Cool.

  20. last starfighter says: Jan 14, 2010 8:22 AM

    # DC_Bengals_Fan says: January 14, 2010 7:14 AM
    —At that point, Justice Sotomayor cut him off. “So to the answer to my question is, there is — you are seeking through this ruling what you haven’t gotten from Congress”—
    Right, like the Supreme Court doesn’t have a long history of, well, creating bench legislation that plaintiffs couldn’t get through Congress.
    ——————————————————————
    Did you just discover the Constitution yesterday?

  21. radioboy20010 says: Jan 14, 2010 8:32 AM

    Imagine for a moment what a court ruling which, in essence, would do to any other entity who wanted to start a competing football league?
    The NFL would strengthen it’s hold on a monopoly which it virtually has now.
    Couple this potential win for the NFL machine with the(likely) upcoming lockout in 2011.
    After the union eventually caves what you have is a single entity, able to pay much lower wages, keeping all the revenue for itself with virtually no competition.
    And all this fully sanctioned by Congress and the courts.
    Three cheers for the Red, White and Blue!

  22. geek says: Jan 14, 2010 8:45 AM

    Wow! Who would have thought that Sotomayor would be the one to be able to boil down the NFL’s argument to its core: we should be able to do whatever we want to do. I wonder how the owners feel about their chief lawyer basically saying that the league can tell them what to do in everything. I wonder if they really are so willing to give their own individual power to control team decisions over to a league that may not have their values in mind. Couldn’t the league (if this ruling goes the way the league is arguing it) arbitrarily decide that Jacksonville or Buffalo aren’t profitable enough and move those teams to Los Angeles, “for the best interests of the league?” The implications of the argument could be really bad for players, but are they any better for other interests?

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