Powell v. National Football League

• Decision Date: 17 January 1990
• Docket Number: No. 89-5091,89-5091
• Citation: 930 F.2d 1293
• Parties: Marvin POWELL; Brian Holloway; Michael Kenn; Michael Davis; James Lofton; Michael Luckhurst; Dan Marino; George Martin; Steve Jordan and the National Football League Players Association on behalf of themselves and all class members, Appellees, v. NATIONAL FOOTBALL LEAGUE; * et al., Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1293

930 F.2d 1293

Marvin POWELL; Brian Holloway; Michael Kenn; Michael

Davis; James Lofton; Michael Luckhurst; Dan Marino;

George Martin; Steve Jordan and the National Football

League Players Association on behalf of themselves and all

class members, Appellees, v. NATIONAL FOOTBALL LEAGUE; ^* et al., Appellants.

No. 89-5091.

United States Court of Appeals,

Eighth Circuit.

Submitted May 12, 1989.

Decided Nov. 1, 1989.

Rehearing and Rehearing En Banc Denied Jan. 17, 1990.

Paul J. Tagliabue, Washington, D.C., for appellants.

Carol T. Rieger, Minneapolis, Minn., for appellees.

Before JOHN R. GIBSON, and WOLLMAN, Circuit Judges, and HEANEY, Senior Circuit Judge.

JOHN R. GIBSON, Circuit Judge.

The National Football League appeals from a district court order which denied the League's motion for partial summary judgment, ruling that the nonstatutory labor exemption to the antitrust laws expires when, as here, the parties have reached "impasse" in negotiations following the conclusion of a collective bargaining agreement. This antitrust action was brought by Marvin Powell, eight other professional football players, and the players' collective bargaining representative, the National Football League Players Association (hereinafter the "Players"). ¹ Although this action also includes claims that both the League's college draft and its continued adherence to its uniform Player Contract constitute unlawful player restraints, the only League practice at issue in this interlocutory appeal is that provision of the Players' collective bargaining agreement establishing a "Right of First Refusal/Compensation" system. These employment terms restrict the ability of players to sign with other teams, a right commonly termed "free agency." On appeal, the League contends that the challenged practices are the product of bona fide, arm's-length collective bargaining and therefore are governed by federal labor law to the exclusion of challenge under the Sherman Act, 15 U.S.C. Secs. 1-7 (1982). The Players, on the other hand, argue that the labor exemption to the antitrust laws expires when parties reach "impasse" in negotiations, and that the First Refusal/Compensation system therefore may be challenged as an unlawful restraint of trade. As we conclude that this action is at present governed by federal labor law, and not antitrust law, we reverse.

In 1977, the League and the Players entered into a collective bargaining agreement containing a new system governing veteran free agent players. The First Refusal/Compensation system provided that a team could retain a veteran free agent by exercising a right of first refusal and by matching a competing club's offer. If the old team decided not to match the offer, the old team would receive compensation from the new team in the form of additional draft choices. This system was substantially modified and incorporated into a successor agreement executed in 1982, which was reached at the end of a 57-day strike.

After the 1982 Agreement expired in August, 1987, the League maintained the status quo on all mandatory subjects of bargaining covered by the Agreement, including the First Refusal/Compensation system. In September, 1987, after intermittent negotiations on a successor collective bargaining agreement proved unsuccessful, the Players initiated a strike over veteran free agency and other issues. The strike ended in mid-October, 1987, without producing a new agreement. The Players commenced this antitrust action immediately thereafter, attacking the League's continued adherence to the expired 1982 Agreement.

In late November, 1987, the Players moved for a preliminary injunction to bar the League's twenty-eight constituent football clubs, as members of a multi-employer bargaining unit, from continuing to abide by the terms of the 1982 Agreement on veteran free agent salaries and movement among clubs. The Players also moved for partial summary judgment on the issue of whether the League's continued imposition of the First Refusal/Compensation system was protected by the labor exemption to the antitrust laws, or instead violated sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. Secs. 1, 2.

On January 29, 1988, the district court held that, after expiration of a bargaining agreement, the labor exemption from the antitrust laws terminates with respect to a mandatory subject of bargaining when employers and a union reach a bargaining impasse as to the contested issue. Powell v. National Football League, 678 F.Supp. 777, 788 (D.Minn.1988) ("Powell I "). The court further stated, however, that it would not determine whether a negotiating impasse then existed between the parties until the National Labor Relations Board had passed upon a pending charge by the League asserting that the Players were not bargaining in good faith. Id. at 789. On February 1, 1988, one day after the district court filed its opinion setting forth the impasse standard, the Players advised the League that, in their view, the parties had indeed reached impasse on the free agency issue.

On April 28, 1988, the Office of the General Counsel of the National Labor Relations Board issued two Advice Memoranda declining to issue a complaint against the Players for either bad faith bargaining or failure to meet, and finding that the parties had been at impasse since October 11, 1987. This prosecutorial judgment was based on staff analysis, not on an adversarial hearing on the record. The League nevertheless withdrew its unfair labor practice charge against the Players.

The Players then renewed their motion for a preliminary injunction, contending that the district court should adopt the decision of the General Counsel of the National Labor Relations Board that impasse existed. The district court granted the Players' motion for summary judgment on June 17, 1988, holding that the parties had reached an impasse on the free agency issue as of that date. This ruling opened the doors for a trial on whether the League, in adhering to the First Refusal/Compensation system, had violated the Sherman Act's Rule of Reason. The court declined to issue a temporary injunction, however, reasoning that it lacked jurisdiction to grant injunctive relief in a labor dispute governed by the Norris-LaGuardia Act, 29 U.S.C. Secs. 105-15 (1982). Powell v. National Football League, 690 F.Supp. 812, 814-15 (D.Minn.1988) ("Powell II ").

This court granted the League permission to appeal the district court's grant of summary judgment under 28 U.S.C. Sec. 1292(b). The League argues that federal labor laws control exclusively where the challenged "restraint" relates to a mandatory subject of collective bargaining, the restraint has been developed and implemented through the lawful observance of the collective bargaining process, the employees are represented by a union vested with collective bargaining authority, and the restraint affects only a labor market involving the parties to the collective bargaining agreement. According to the League, such circumstances exist in this case and recourse to antitrust sanctions by a bargaining party such as the Players is incompatible with the purpose and operation of the federal labor laws.

I.

This is not the first time that this court has considered whether a labor exemption shields the League from antitrust liability for the restraints it imposes on its players. In Mackey v. National Football League, 543 F.2d 606 (8th Cir.1976), cert. dismissed, 434 U.S. 801, 98 S.Ct. 28, 54 L.Ed.2d 59 (1977), the League appealed from a district court ruling that the "Rozelle Rule," a restraint on competition for player services, violated section 1 of the Sherman Act. ² We first analyzed the statutory labor exemption to the application of the antitrust laws, observing that while the exemption applies to legitimate labor activities unilaterally undertaken by a union in furtherance of its own interest, it does not extend to concerted action or agreements between unions and nonlabor groups such as employers. ³ Id. at 611. We further held, however, that employer groups such as the League may invoke the nonstatutory labor exemption to their benefit where there has been an agreement between management and labor with regard to the challenged restraint. Id. at 612.

In Mackey, we proceeded to analyze the principles which undergird the nonstatutory labor exemption, and the determinative issue of whether relevant federal labor policy was deserving of preeminence over federal antitrust policy under the circumstances of a particular case. In resolving these competing labor and antitrust interests, we found the proper accommodation to be:

First, the labor policy favoring collective bargaining may potentially be given preeminence over the antitrust laws where the restraint on trade primarily affects only the parties to the collective bargaining relationship. * * * Second, federal labor policy is implicated sufficiently to prevail only where the agreement sought to be exempted concerns a mandatory subject of collective bargaining. * * * Finally, the policy favoring collective bargaining is furthered to the degree necessary to override the antitrust laws only where the agreement sought to be exempted is the product of bona fide arm's-length bargaining.

Id. at 614 (citations omitted).

In Mackey, we determined that the Rozelle Rule satisfied the first two of these factors but not the third. We held that the Rule affected only the parties to the labor agreements sought to be exempted from the antitrust laws, and that it constituted a subject of mandatory bargaining within the meaning of the National Labor Relations Act. Id. at 615. The district court found that the Rule, although it was later incorporated into two labor agreements, was not the product of bona fide, arm's-length bargaining, but rather was unilaterally promulgated by the League. Upon review, we concluded that the district court's finding was supported by...