During oral arguments at the Supreme Court today in a case that will assess how antitrust laws apply to the National Football League, the Justices expressed skepticism at the league’s attempt to shield itself from future antitrust suits.
“You are seeking through this ruling what you haven’t gotten from Congress,” Justice Sonia Sotomayor said to the NFL’s lawyer, Covington & Burling’s Gregg Levy. ”An absolute bar to an antitrust claim.”
At issue in the case, American Needle v. NFL, is whether the NFL acted as a “single entity” in awarding an exclusive contract to Reebok in 2000 to manufacture licensed apparel.
Rival clothing manufacturer American Needle sued, arguing that the contract violated antitrust rules. The company’s lawyer, Jones Day’s Glen Nager, argued in court today that because the league is made up of 32 teams that are “separately owned and controlled,” its agreements are subject to federal antitrust laws.
Several Justices seemed to indicate they would send the case back to a lower court for a ruling on whether the agreement had anti-competitive effects.
“It seems to me to be something that you can’t decide in theory,” Justice Stephen Breyer said during the hearing. ”It’s a matter of going back to economic facts with witnesses and so forth.”
“If there is a factual dispute about whether a particular activity of the League is designed to promote the game or is designed simply to make more money,” asked Chief Justice John Roberts, “then that is the sort of thing that goes to trial?”
In a brief from Justice Department, the government argued that scenarios similar to those raised by American Needle should be determined on a case-by-case basis as to whether they restrict competition, a formula that several Justices seemed favorable to.
Chief Justice Roberts referred to the government’s proposed test, and asked American Needle’s attorney why he didn’t accept the government’s reasoning. “There are some things that it just seems odd to subject to a rule of reason analysis,” Roberts said. “Why doesn’t it make sense to sort of carve those out at the outset?”
The Justices also asked Nager about several hypothetical scenarios, some to laughter from the crowd.
JUSTICE BREYER: You want the Red Sox to compete in selling T-shirts with the Yankees; is that right?
MR. NAGER: The ability to compete. Yes.
JUSITCE BREYER: Yes. Okay. I don’t know a Red Sox fan who would take a Yankees sweatshirt if you gave it away.
I mean I don’t know where you are going to get your expert from who is going to say there is competition between those two products. I think they would rather – they would rather wear a baseball, a football, a hockey shirt.
….
MR. NAGER: But you’ve got to recognize what the competition is for. The competition is for fans. And the fact of the matter is, you’re right that someone who has lived in New York City for a long time is unlikely to be a Red Sox fan and be easily persuaded to be a Red Sox fan, but the person who is three years old can easily be persuaded.
JUSTICE BREYER: They have very small allowances at three years old.
Before today’s arguments, Assistant Attorney General for Antitrust Christine Varney introduced Deputies Philip Weiser and William Cavanaugh, and counsel Douglas Kramer to admit them as new members of the Supreme Court bar.
