SBJ/April 21-27, 2014/Law and Politics

Four years after high court ruling, judge allows American Needle’s case vs. NFL to proceed

It’s been nearly four years since the U.S. Supreme Court ruled unanimously against the NFL in its request to have an antitrust lawsuit from cap maker American Needle dismissed. The league lost its argument then that its collective commercial decisions should sidestep antitrust scrutiny.

The story hasn’t yet reached its ending, though.

The core case brought by American Needle — that the NFL’s 2000 grant of an exclusive cap license to Reebok violated the country’s antitrust laws and injured the Illinois-based company — has moved forward since the Supreme Court’s ruling in 2010. That’s because the high court’s ruling ultimately remanded the case back to a lower court for further review, noting with its ruling that the NFL, in not being immune from antitrust lawsuits, would therefore have to battle each case, like American Needle’s case, on its merits.

Earlier this month, a federal judge ruled that American Needle’s case, originally filed in 2004, could move forward because the company, which had been a league cap licensee before the league’s 2000 decision, made a reasonable enough case that a jury could rule the league violated the Sherman Antitrust Act.

“The court finds that the evidence presented by American Needle would be sufficient to support a jury finding of a less competitive market following the exclusive licensing arrangement,” wrote Judge Sharon Coleman of the Northern Illinois federal court. “American Needle has offered evidence that despite the asserted wholesale price increases and output reductions that followed the exclusive Reebok license agreement, total revenue paid by consumers for NFL hats rose.”

The judge rejected the NFL’s contention that the waiver agreement American Needle signed to bid on the cap license in 2000 meant the firm could not bring the lawsuit. Coleman also denied another NFL argument, that even had it given licenses to three cap makers in 2000, American Needle would not have been one of them. To that, Coleman responded that even the three-licensee approach could have been an antitrust violation, and she wrote there is no evidence that American Needle had not been a good licensee and thus could have retained its license.

John Goldman, a partner at Herrick, Feinstein who specializes in sports, said the judge’s ruling surprised him. He called it a win for American Needle.

“If I am American Needle, I am feeling better about this decision than if I am the NFL, because I am alive,” he said.
Goldman said the decision is notable because it calls into question the right of sports leagues to have exclusive licensing deals.

Reebok is no longer the cap and apparel licensee of the NFL, ceding that role in 2012. Nike is the official apparel manufacturer of the NFL, and New Era boasts the cap designation.

Gary Roberts, a former NFL outside counsel and dean emeritus of the Indiana University law school, said it is unsurprising that in an antitrust case a defendant has its bid to dismiss a case denied. “These are issues that juries are supposed to resolve,” he wrote in an email.

The NFL got one victory when Coleman rejected American Needle’s motion that she rule in its favor right away.

The parties are due for a status conference before the judge this week, where they may answer whether they will engage in settlement talks. The judge ordered them to reply by last week whether they wished to engage the services of a magistrate judge for such discussions.

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