If the recent oral argument in American Needle, Inc. v. National Football League is any guide, the U.S. Supreme Court might just thread the needle and decide that case on a narrower, more middle-ground, basis than the Seventh Circuit decision, which raised the specter of freeing all professional sports leagues from antitrust scrutiny.
The Supreme Court heard oral argument on January 13, 2010, in the much anticipated case, which may well result in a watershed opinion in antitrust law as applied to sports leagues and joint ventures generally.
American Needle, the plaintiff-petitioner and a manufacturer of NFL-licensed headwear, claims that the NFL acted anticompetitively by granting Reebok the exclusive license for certain NFL paraphernalia. The trial court granted summary judgment to the NFL, and the U.S. Court of Appeals for the Seventh Circuit affirmed. Both lower courts held that, in licensing individual team and NFL trademarks, the NFL is a single entity under antitrust law – as opposed to multiple, collectively acting teams – and thus not subject to the anticonspiracy prohibition of § 1 of the Sherman Act. For more detail about the case, click here for this blog’s prior discussion.
The Supreme Court’s treatment of the NFL’s claim to be a single entity will determine the extent to which the NFL’s actions are immunized from § 1 of the Sherman Act. (While the NFL would remain subject to the antimonopoly provisions of § 2, § 1 claims are typically easier to prove.)
At one extreme, the Court could hold that, because everything the NFL does promotes NFL professional football, the NFL is really an integrated single entity immune from the anticonspiracy prohibition. In this scenario, the NFL could fix prices for everything: players’ and coaches’ salaries; tickets; hats; jerseys; T-shirts; etc. At the other extreme, the Court could hold that, because the NFL is comprised of multiple ball clubs, everything it does is subject to the anticonspiracy prohibition. For example—in a hypothetical posed by Justice Kennedy, the likely swing vote—the antitrust laws could be used to challenge game rules providing greater protection to quarterbacks because the rules would disfavor teams with better running games.
The justices’ questioning of the lawyers indicated that the Court will likely reject both extremes. click here for more »