SBD/Issue 84/Law & Politics

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  • Arguments In American Needle V. NFL Focus Mainly On Licensing

     
    Despite the hype surrounding a potentially precedent-setting antitrust case, the oral arguments before the U.S. Supreme Court this morning between the NFL and cap manufacturer American Needle largely focused on the narrow question of whether the league's exclusive licensing contract with Reebok should be subject to antitrust law. Not once did the issue of players arise, despite tremendous coverage around whether a broad ruling in favor of the league would give it more leeway on labor issues. Perhaps the furthest afar was a question from Justice Antonin Scalia, who asked NFL outside counsel Gregg Levy whether if the league could pool apparel rights, could it set franchise prices. Levy said yes, and the justice exclaimed, "Wow." This interchange was recounted by NFLPA outside counsel Jeffrey Kessler on the steps of the Supreme Court after the hearing. The NFLPA filed an amicus curiae brief on behalf of American Needle, arguing the case could extend into labor relations. Kessler used the exchange to underscore his contention that the league is seeking sweeping powers.

    WHAT NEEDS TO BE PROTECTED: The justices addressed matters pertaining to which league functions should be protected from antitrust review, a continuing thorn in the side of sports leagues and bodies. "You are seeking to get from the courts what you can't get from Congress," Justice Sonia Sotomayor told Levy. But American Needle's outside counsel, Glen Nager, was also aggressively questioned. Justice Samuel Alito asked him when could the league's 32 teams work together. Even rules changes, which both sides have said are the proper function of the league, could be challenged, Alito said, if say, for example, the league voted to go from 16 to 14 games, but some teams disagreed. The NFL's core contention is that the license signed with Reebok in '00 and which bumped American Needle from team contracts is protected from antitrust scrutiny because the NFL is a joint venture for the purposes of playing and promoting games. But some of the justices asked if selling caps was really about promoting the game. Sotomayor in particular frequently came back to this point, asking Levy how long the NFL has sold collective apparel rights (since '63), and saying later, "Is it so evident that T-shirts promote the game?" Levy said that selling intellectual property like caps and T-shirts was intrinsic to the game because the logos meant nothing unless a team was playing.

    Kessler Says Labor Became Issue When
    Stewart Discussed Things NFL Couldn't Do
    POST-HEARING THOUGHTS: After the hearing, Kessler argued that labor had been introduced into the equation when U.S. Deputy Solicitor General Malcolm Stewart talked about things the NFL could not do, like setting pay rates for secretaries across the league. American Needle's counsel, Nager, talking as he walked away from the court, disagreed, saying the secretaries question was only a hypothetical point. He did say that just because labor was not raised did not mean the justices would not consider it. Levy after the hearing told assembled reporters on the frigid courthouse steps that the case was about licensing only and not about the players' union. Asked by a reporter about that subject, Levy, referring to a recent editorial in the Washington Post by Saints QB Drew Brees on the case's possible affect on labor, said, "You have been spending too much time reading the papers and Drew Brees."

    NOT 100% WITH EITHER SIDE: Daniel Glazer, who runs the sports practice at Patterson Belknap Webb & Tyler and who was in the courtroom, said he thought the justices seemed uncomfortable giving either the NFL blanket immunity from antitrust laws or completely agreeing with American Needle's position. In the end, he said, the U.S. Solicitor General's brief, which described a framework in which there would be some instances that the league could be deemed a single entity exempt from antitrust scrutiny and others where it is not, seems the most logical outcome. For his part, Levy said not to read too much into the questioning in terms of how the justices would vote, but he said that Justice Stephen Breyer, who seemed particularly enthusiastic in his questioning of Levy, probably was a lost vote.

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  • Supreme Court Skeptical Of NFL's Claim In American Needle Case

    Levy Argues Teams Must Form "Single,
    Cooperative Unit" To Produce Football League
    Supreme Court justices yesterday signaled that they are "not inclined to shield the NFL and other pro sports leagues from federal antitrust laws," according to David Savage of the L.A. TIMES. The league, in American Needle v. the NFL, is "seeking a high court ruling that the league is a 'single entity' and, therefore, shielded from antitrust claims." But that argument "ran into skepticism from most of the justices" during yesterday's hearing (L.A. TIMES, 1/14). In DC, Robert Barnes notes the justices "showed little support for exempting" the NFL from federal antitrust laws. NFL outside counsel Gregg Levy argued that "decisions by the NFL relating to football and its promotion should not be subject to antitrust lawsuits." He said that teams "compete on the field," but must form a "single, cooperative unit in order to produce a football league." Levy: "They are not independent sources of economic power, because none of them can produce the product of the venture on their own. No NFL club can produce a single unit of production, a single game." But American Needle attorney Glen Nager said, "These teams are separately owned. They are separate decision-makers joining together, and they are making a decision about how they are going to jointly produce something or not produce something." Supreme Court Justice Ruth Bader Ginsburg "seemed sympathetic to the argument that even frivolous lawsuits can cost the NFL millions of dollars in court costs and legal fees." Chief Justice John Roberts added "there are some things that it just seems odd to subject" to antitrust scrutiny. But there were "more skeptical questions for Levy," and some justices "wondered about other ventures the NFL might undertake that would be far afield from football, throwing out hypotheticals such as tractor sales or building houses." Several justices suggested the possibility of "returning the case to the lower courts, as the Obama administration recommends, with new instructions about how to determine if the league's action was anti-competitive" (WASHINGTON POST, 1/14).

    FIRST DOWN & LONG: In N.Y., Adam Liptak writes under the header, "Justices Skeptical Of NFL's Court Claim." Several justices yesterday suggested that they "might rule against the league on the narrow question in the case -- whether it was entirely immune from antitrust scrutiny because it is a single entity" (N.Y. TIMES, 1/14). BLOOMBERG NEWS' Stohr & McQuillen noted several justices suggested that they "would give American Needle a chance to prove that the NFL's apparel marketing was anticompetitive." Justice Stephen Breyer said to the NFL, "Why shouldn't they have their shot? You might well win, but they want to make that claim." Much of the debate during yesterday's hearing "centered on how closely connected apparel sales are to the league's core functions." Levy told the justices that apparel sales are a "means of promoting the on-field product, an argument that Justice Antonin Scalia disparaged." Scalia said, "The purpose is to make money. I don't think that they care whether the sale of the helmet or the T-shirt promotes the game" (BLOOMBERG NEWS, 1/13). ESPN.com's Lester Munson noted there were "important indications that the NFL may not succeed." Comments and questions from an "unlikely combination of three justices -- Antonin Scalia, Breyer and Sonia Sotomayor -- seemed to lay the foundation for the court to make a more limited ruling." The word that the NFL "really didn't want to hear -- 'remand' -- was mentioned eight times" yesterday, a decision that would "send the American Needle lawsuit back to Chicago for a trial." Munson noted instead of "focusing on the broad immunity question initiated by the NFL, the Scalia-Breyer-Sotomayor line of questioning pushed" Levy "into a corner he wanted to avoid" (ESPN.com, 1/13).

    NFL States Teams License Trademarks
    Jointly To Better Promote The League
    TURNOVER ON DOWNS? USA TODAY's Joan Biskupic notes the Supreme Court appears "unlikely to completely shield" the NFL. The justices focused on "how they might distinguish which NFL activities would be central to league business and likely free from antitrust liability" (USA TODAY, 1/14). The WALL STREET JOURNAL's Jess Bravin writes under the header, "Justices Look Tough In NFL Antitrust Case" (WALL STREET JOURNAL, 1/14). In N.Y., Paul Tharp writes the NFL "didn't seem to score a lot of winning points" during yesterday's hearing. Judging from the "questions and comments by the high court justices, the NFL didn't win the clear victory it sought" (N.Y. POST, 1/14). SI.com's Stefan Fatsis wrote the NFL seems "not only further from the end zone" in this case, but "at risk of losing the game entirely." None of the justices "seemed sympathetic to a central position articulated by Levy: that the NFL teams license their trademarks and logos jointly in order to better promote the league as a whole." After yesterday's hearing, there seems to be a "problematic possibility for the NFL: that the court not only could say that it and leagues aren't single entities, but specify areas in which they aren't" (SI.com, 1/13).

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