As the Supreme Court gets ready this week to hear arguments about how antitrust laws apply to the National Football League, the players are making a case — against the NFL.
The case, American Needle v. NFL, involves an exclusive contract the league signed in 2000 with Reebok to manufacture licensed apparel. But players are concerned that a ruling in favor of the NFL could lead teams to restrict players’ salaries and reverse gains they’ve made as free agents since the 1990s. They’ve mounted a PR campaign to argue against the league’s position.
“Why should the government get involved here and make the NFL untouchable?” Chicago Bears linebacker Hunter Hillenmeyer said to Main Justice in an email.
Saints quarterback Drew Brees opined on the case in an op-ed in the Washington Post, and the Minnesota Vikings’ Steve Hutchinson told the Associated Press: “If the NFL wins this case, they can set ticket prices and stop nearby teams from competing for fans by offering discounted tickets. With the economy the way it is, I don’t see how that’s good for fans.”
Reebok’s rival, clothing manufacturer American Needle, argues that the apparel contract violated antitrust laws and raised prices for fans.
The NFL responded that the league functioned as a “single entity” for business purposes and could sign exclusive deals. Both a federal judge and the U.S. 7th Circuit Court of Appeals in Chicago agreed.
The potentially far-reaching implications of an opinion and the general interest nature of the case has generated a lot of media attention.
When lawyers for the NFL and American Needle face off in court on this week, the players will be looking for one thing.
How far might the court be interested in going? Could a ruling allow the league to coordinate to restrict salaries or hike prices on tickets and paraphernalia?
“Key thing to watch for is hints on how broad or narrow the court is likely to rule,” said Jeffrey Kessler, a partner at Dewey & Leboeuf who chairs the firm’s litigation department and authored a brief on behalf of the players associations in the NFL, the National Basketball Association, the National Hockey League, and Major League Baseball.
“The first issue in this case is whether the court is just going to consider the specific situation of joint licensing on trademarks or whether they are going to announce a broad rule for sports leagues” that would apply to other contexts, Kessler said, in an interview with Main Justice.
Richard Berthelsen, general counsel of the NFL Players Association, also told Main Justice: “Through this licensing process, are they operating as a single entity? There is a real risk of such a single entity being broadened beyond the case in question.”
Assistant to the Solicitor General Malcolm Stewart will be arguing on behalf of the government, which initially recommended that the court not take the case. But after the court granted cert, the U.S. filed a brief arguing that courts should assess such scenarios on a case-by-case basis to determine whether they restrict competition.
Certain aspects of the NFL’s business are integrated enough that the league should be treated as a single entity, the brief said. In other cases, the government said, the teams compete with each other and a joint agreement could be considered illegal.
Both the Federal Trade Commission and the Justice Department, including the Antitrust Division’s Assistant Attorney General Christine Varney and her appellate deputy, Philip Weiser, signed the government’s brief.
The court usually gives the government time during oral arguments and subtracts it from the camp the government is closer to. In this case, the court divided time equally between the two parties, signalling the government is not on either side.
In antitrust issues, the court tends to give deference to the agencies’ perspective.
“The general Supreme Court philosophy [has been], we should hear what the experts have to say,” said Kessler, “and the court recognizes the antitrust agencies as experts.” A decision in the 2007 Leegin case about minimum retail prices, for example, he said, largely followed advice given by the Justice Department.
In a 2001 article in the Antitrust Law Journal, Wayne State University Law School professor Stephen Calkins noted that the Court often listens to what the government says in antitrust cases, especially when it advocates a position that doesn’t necessarily support its litigating interests. For example, in a 1997 case that involved an existing ban on manufacturers setting maximum prices that retailers could charge for their products, the government urged the Justices to overturn the ban.
“[I]t became hard to imagine that the Supreme Court would hold onto the per se rule against vertical resale price maintenance once the Antitrust Division and the FTC (led by Joel Klein and Robert Pitofsky, respectively) counseled against doing so in State Oil Co. v. Khan,” Calkins wrote.
Read other briefs in the NFL case here.