Reynolds v. National Football League

• Decision Date: 27 September 1978
• Docket Number: Nos. 77-1753,77-1758 and 77-1821,s. 77-1753
• Citation: 584 F.2d 280
• Parties: 1978-2 Trade Cases 62,272 Jack REYNOLDS, Appellant, v. NATIONAL FOOTBALL LEAGUE et al., Appellees. Charles YOUNG et al., Appellants, v. NATIONAL FOOTBALL LEAGUE et al., Appellees. Marvin CRENSHAW, Appellant, v. NATIONAL FOOTBALL LEAGUE et al., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 280

584 F.2d 280

1978-2 Trade Cases 62,272

Jack REYNOLDS, Appellant, v. NATIONAL FOOTBALL LEAGUE et al., Appellees.

Charles YOUNG et al., Appellants, v. NATIONAL FOOTBALL LEAGUE et al., Appellees.

Marvin CRENSHAW, Appellant, v. NATIONAL FOOTBALL LEAGUE et al., Appellees.

Nos. 77-1753, 77-1758 and 77-1821.

United States Court of Appeals Eighth Circuit.

Submitted May 16, 1978.

Decided Sept. 27, 1978.

Gerald Tockman, St. Louis, Mo., argued and on brief, for appellants, Jack Reynolds, et al.

Paul J. Tagliabue, Covington & Burling, Washington, D. C., argued, for appellees, National Football League, et al.; Hamilton Carothers and Jeffrey H. Howard, Washington, D. C., and James B. Loken of Faegre & Benson, Minneapolis, Minn., on brief.

Edward M. Glennon of Lindquist & Vennum, Minneapolis, Minn., argued for appellees, Kermit Alexander, et al.; Nadine Strossen and Mark R. Johnson, Minneapolis, Minn., on brief.

Before GIBSON, Chief Judge, and HEANEY and BRIGHT, Circuit Judges.

GIBSON, Chief Judge.

In these cases, fifteen active and one inactive National Football League players object to the settlement of an action brought on behalf of 5,706 former and present professional football players. The class action was prosecuted to secure monetary damages and other relief for the players from the National Football League, individual teams, and other defendants for violations of the antitrust laws. The settlement approved by the District Court ¹ will provide a total of $13,675,000 for distribution to members of the plaintiff class. After carefully considering the record and the briefs and oral arguments of the parties and the objecting class members, we affirm the order of the District Court approving the settlement.

The present suit is an outgrowth of this court's decision 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). In Mackey, the Rozelle Rule was challenged as a violation of section 1 of the Sherman Act. The Rozelle Rule, we noted,

essentially provides that when a player's contractual obligation to a team expires and he signs with a different club, the signing club must provide compensation to the player's former team. If the two clubs are unable to conclude mutually satisfactory arrangements, the Commissioner may award compensation in the form of one or more players and/or draft choices as he deems fair and equitable.

543 F.2d at 609, n.1.

The District Court in Mackey had concluded that the Rozelle Rule was a Per se violation of the Sherman Act. A panel of this court concluded that it was not a Per se violation of the Sherman Act, but was a violation when considered under the standard of reasonableness, as being more restrictive than reasonably necessary to meet legitimate business needs. We also noted that the matter of restrictions on player movement was a subject of mandatory collective bargaining under § 8(d) of the National Labor Relations Act, 29 U.S.C. § 158(d). Had the Rozelle Rule been a result of bona fide arms-length bargaining between the National Football League Players Association (Players Association) and the league teams, it would have qualified for the labor exemption from antitrust scrutiny. Since there was evidence to support the District Court's decision that the Rozelle Rule had not been the result of arms-length bargaining, we concluded that the labor exemption did not apply.

The National Football League applied to the Supreme Court for certiorari in Mackey. That petition was not acted upon prior to its being withdrawn by the football league as a part of the settlement of the present action. Thus, this court's decision in Mackey stands as the final decision regarding the antitrust implications of the Rozelle Rule.

Following our decision in Mackey, the Players Association sponsored the present class action seeking damages and other relief. The Players Association is the bargaining representative for the National Football League players. They supplied financial support for this action, which was commenced by seventy-eight named players or retired players. The class was represented by Edward M. Glennon of the firm of Lindquist & Vennum of Minneapolis. Lindquist & Vennum had represented and continues to represent the Players Association.

The course of this class action litigation is set out in detail in the District Court's findings of fact and conclusions of law. Essentially, the National Football League, the Players Association, and the class action counsel proceeded to negotiate a collective bargaining agreement between the National Football League teams and the Players Association and a settlement of the class action between the National Football League and the other defendants and the plaintiff class. This approach was eminently practical in that it was obvious that the antitrust liability suggested by our decision in Mackey placed a potentially crippling strain on the resources of professional football. To have ignored this and the possibly devastating effect of operating without a means of compensating teams that lost premium players would have been irresponsible. It would have endangered the availability of any recovery for the players allegedly damaged by the Rozelle Rule and would have endangered the continued employment prospects of professional football players.

We do not say that the collective bargaining agreement that resulted and the class action settlement constituted a single entity. The evidence fully supports the District Court's conclusion that the collective bargaining agreement was not part of the consideration for the class action settlement, though there was not any great incentive to settle the class action absent some agreement on the procedural rules governing player movement. Thus the inquiry to be made by the District Court in reviewing the proposed settlement and by this court in reviewing the District Court's approval of that settlement is limited to the settlement itself rather than the labor agreement contained in the collective bargaining document. ²

As we stated in Grunin v. International House of Pancakes, 513 F.2d 114, 123 (8th Cir.), Cert. denied, 423 U.S. 864, 96 S.Ct. 124, 46 L.Ed.2d 93 (1975);

Our review of the settlement approved by the district court in this case is guided by the principle that:

Such a determination is committed to the sound discretion of the trial judge.

Great weight is accorded his views because he is exposed to the litigants, and their strategies, positions and proofs. He is aware of the expense and possible legal bars to success. Simply stated, he is on the firing line and can evaluate the action accordingly.

Ace Heating and Plumbing Co. v. Crane Co., 453 F.2d 30, 34 (3rd Cir. 1971). Only upon the clear showing that the district court abused its discretion will this court intervene to set aside a judicially approved class action settlement. In re International House of Pancakes Franchise Litigation, 487 F.2d 303, 304 (8th Cir. 1973). See also City of Detroit (V. Grinnell Corp., 495 F.2d 448, 455 (2d Cir. 1974)). With these precepts in mind we turn to appellant's charges of error.

Certification under Fed.R.Civ.P. 23(b)(1)

Appellants object to certification of the class under Fed.R.Civ.P. 23(b)(1) rather than under Rule 23(b)(3). ³ Certification under the former provision provides that all class members are bound by the outcome of the lawsuit, whereas certification under the latter provision would have given appellants the opportunity to opt out of the class, as provided in Rule 23(c)(2). ⁴

Certification under Rule 23(b)(1) is appropriate in two situations. To proceed under Rule 23(b)(1)(A) the court must find that individual lawsuits would create the possibility of establishing "incompatible standards of conduct" for the party opposing the class. Subdivision (B) of Rule 23(b)(1) requires the finding that individual adjudications might as a practical matter dispose of the interests of other class members or substantially impair or impede their ability to protect their interests.

Appellants argue that Rule 23(b)(1) has not been complied with because in essence the action involved only damages for an antitrust violation. See Green v. Occidental Petroleum Corp., 541 F.2d 1335, 1340 (9th Cir. 1976). This argument ignores the broad scope of this action. Antitrust violations involving the rules and practices governing professional players may require imposition of broadly based remedies. See Robertson v. National Basketball Association, 556 F.2d 682, 685 (2d Cir. 1977) and cases cited therein. In Robertson, professional basketball league players sought both damages and equitable relief to resolve an antitrust class action against the league and its constituent teams. The settlement which emerged illustrates the type of relief that may be necessary to resolve antitrust actions involving the rules and practices of professional sports associations. The agreement radically modified draft practices, virtually eliminated option clauses, and modified the compensation rule, eliminating it altogether after ten years. Id. at 686. Similar relief was sought in this action against the National Football League, although ultimately it and the Players Association entered into a collective bargaining agreement that obviated the need for this type of remedy at the time of settlement.

The need to revise or to eliminate past rules and practices of professional football, particularly the Rozelle Rule, plainly encompassed the possibility that adjudications of separate actions could set incompatible standards of conduct for the National Football League. Defendants recognized the potential risks involved in individual prosecutions and did not indicate an acceptance of the risks or attempt to waive the protection afforded by certification under Rule 23(b)(1)(A). See Chmieleski v. City Products Corp., 71 F.R.D. 118 (W.D.Mo. 1976). Also, as a practical...