Score One for the Little Guy

In an opinion handed down today, the United States Supreme Court rejected the NFL's bid for exemption from antitrust laws. American Needle Inc. v. National Football League, 560 U.S. ___ (2010). More accurately, the Supreme Court allowed the antitrust lawsuit against the National Football League to proceed at least a little further when it ruled unanimously that the league and its member owners (a.k.a. teams) do not have immunity from a federal lawsuit brought by American Needle, a sports apparel company, understandably annoyed about losing its contract to make NFL-licensed hats and other league merchandise.

Stemming from the days of the Teddy Roosevelt and the big trust-busters, the Sherman Act holds illegal any arrangement, contract, combination, or conspiracy that unreasonably restrains trade. The inquiry before the Court was whether the agreement in question joined together separate economic actors pursuing separate economic interests in a way that “depriv[ed] the marketplace of independent centers of decisionmaking" and, therefore, limited actual or potential competition. If it did, the agreement is covered by §1 of the Sherman Act; and, the court had to decide whether the restraint of trade was unreasonable. The arrangement at issue in American Needle gave Reebok exclusive rights to manufacture and sell NFL-licensed apparel.

The Supreme Court unanimously said "oh no you didn't" to the NFL. The opinion, written by Justice Stevens, noted - i believe correctly - that The NFL teams do not possess either the unitary decisionmaking quality or the single aggregation of economic power characteristic of independent action. Each of them is a substantial, independentlyowned, independently managed business, whose “general corporateactions are guided or determined” by “separate corporate conscious-nesses,” and whose “objectives are” not “common.” They compete with one another, not only on the play-ing field, but to attract fans, for gate receipts, and for contracts with
managerial and playing personnel. The teams are competing suppliers in the market for intellectual property. When teams license such property, they are not pursuing the “common interests of the whole” league, but, instead, the interests of each team itself.

However, and most importantly, the Court did not hold the agreement illegal on its face. Instead, the case was sent back down to the trial court for a determination of its legality under the "Rule of Reason." Under the Rule of Reason, the true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition. The Court left this decision for the trial court. With that said, a' la' Desmond Hume of Lost, we may see this case in another life brutha'.

By the way, the NFL is a non-profit organization. I just find that absurd.