Friday, August 01, 2003

Sports: Clarret's Claim

My colleague Eric McErlain believes Ohio State running back Mauric Clarett should abandon college and seek his riches in the NFL. Fine by me. The only problem is that Clarett can't enter the NFL draft for another year. Under current policy, a player doesn't become eligible for the draft—and thus entry into the NFL—until he's been out of high school for two years, and Clarett's only been out for one. McErlain states this shouldn't be a problem, however:
Were I in [Clarett's] shoes, knowing that my athletic talent might be lost forever on my next carry up the gut, I might seriously consider leaving Columbus early and challenging the NFL policy on drafting underclassmen (a situation where he would prevail in court, and quite easily, just like Spencer Haywood in the NBA).
I can find no authority to support McErlain's conclusion that Clarett would prevail in court. The Haywood case does not have the weight McErlain thinks it does. Indeed, Haywood's situation was not exactly like Clarret's.

Spencer Haywood graduated from high school in 1968, and following graduation he played for the U.S. Olympic team and enrolled at the University of Detroit. After his freshman year, Haywood signed a contract with the Denver Nuggets, then in the ABA, and quickly became a star, leading the league in scoring his rookie year and winning the Rookie of the Year and Most Valuable Player awards.

In 1970, Haywood tried to renegotiate his contract with Denver, and things turned ugly. For a variety of reasons I won't go into here, Haywood repudiated his new contract with Denver in August 1970, charging the team with fraud. In December of that year, Haywood signed a contract with the NBA's Seattle SuperSonics. Both Seattle and Haywood realized their contract would violate the NBA's bylaws, which require a player to be out of high school four years before becoming draft eligible. A U.S. district court in California issued an injunction permitting Haywood to play while he challenged the legality of the NBA's bylaw under the Sherman Act.

The Supreme Court's role in this matter was extremely limited. The Ninth Circuit had stayed the district court's injunction permitting Haywood to play, and Justice William O. Douglas, as the supervising justice for the Ninth Circuit, was asked to rule on a petition to reinstate the district court's order. Douglas did so, issuing a brief opinion which represented the Supreme Court's sole involvement in the matter. Douglas' opinion in substantive part held (1) the NBA, unlike Major League Baseball, was not generally exempt from the antitrust laws and (2) Haywood would suffer a far greater economic injury than the NBA if the district court's injunction was not granted pending the outcome of the underlying litigation.

The district court eventually invalidated the NBA bylaw prohibiting players like Haywood from entering the league. The judge considered the NBA's actions a "group boycott" plainly forbidden by the Sherman Act. How, then, is this different from Maurice Clarett's hyopthetical case? The main reason is that the Haywood case dealt with a rule adopted unilaterally by the league. The NFL's current policy, in contrast, reflects the current collective bargaining agreement (CBA) between the NFL and its players association. As a general principle, policies arising from labor agreements are immune from antitrust review, even if such policies would be plainly illegal under the antitrust laws outside the collective bargaining context.

Now, I've reviewed the NFL's CBA, and there is no express language defining draft eligibility, only several clauses that refer to it. But if the NFL Players Association felt the current "two years out of high school" policy violated the CBA, they have numerous channels to redress the situation. But under existing law, as best I can tell, it is the NFLPA's right alone to challenge the policies under the CBA. A third-party like Clarett cannot challenge valid provisions of the CBA under antitrust laws.

This is a principle well established in existing case law for sports leagues. In 1987, for example, the Second Circuit turned back an antitrust challenge to the NBA's CBA by Leon Wood. Wood was drafted in 1984 by the Philadelphia 76ers, who were then over the salary cap. As a result, the 76ers offered Wood a contract far below what he thought his value to be. Wood then sued to have the draft system and other parts of the CBA declared illegal under the Sherman Act. Both the district court and the Second Circuit rejected this claim. Circuit Judge Ralph Winter, writing for the Second Circuit, explained the defects in Wood's complaint:
Although the combination of the college draft and salary cap may seem unique in collective bargaining (as are the team salary floor and 53 percent revenue sharing agreement), the uniqueness is strictly a matter of appearance. The nature of professional sports as a business and professional sports teams as employers calls for contractual arrangements suited to the unusual commercial context. However, these arrangements result from the same federally mandated processes as do collective agreements in the more familiar industrial context. Moreover, examination of the particular arrangements arrived at by the NBA and NBPA discloses that they have functionally identical, and identically anticompetitive, counterparts that are routinely included in industrial collective agreements.

Among the fundamental principles of federal labor policy is the legal rule that employees may eliminate competition among themselves through a governmentally supervised majority vote selecting an exclusive bargaining representative. Section 9(a) of the National Labor Relations Act explicitly provides that "representatives . . . selected . . . by the majority of the employees in a unit . . . shall be the exclusive representatives of all the employees in such unit for the purposes of collective bargaining." 29 U.S.C. § 159(a). Federal labor policy thus allows employees to seek the best deal for the greatest number by the exercise of collective rather than individual bargaining power. Once an exclusive representative has been selected, the individual employee is forbidden by federal law from negotiating directly with the employer absent the representative's consent, NLRB v. Allis-Chalmers Mfg. Co., 388 U.S. 175, 180, 18 L. Ed. 2d 1123, 87 S. Ct. 2001 (1967), even though that employee may actually receive less compensation under the collective bargain than he or she would through individual negotiations. J.I. Case Co. v. NLRB, 321 U.S. 332, 338-39, 88 L. Ed. 762, 64 S. Ct. 576 (1944).

The gravamen of Wood's complaint, namely that the NBA-NBPA collective agreement is illegal because it prevents him from achieving his full free market value, is therefore at odds with, and destructive of, federal labor policy. It is true that the diversity of talent and specialization among professional athletes and the widespread exposure and discussions of their "work" in the media make the differences in value among them as "workers" more visible than the differences in efficiency and in value among industrial workers. High public visibility, however, is no reason to ignore federal legislation that explicitly prevents employees, whether in or out of a bargaining unit, from seeking a better deal where the deal is inconsistent with the terms of a collective agreement.
Now, not everything in a CBA would be exempt from outside legal review. For instance, if the NFL's CBA contained a provision preventing white people from becoming draft eligible, the courts would strike down such a provision as inconsistent with federal civil rights law. There is, however, no such public policy protecting against minimum age discrimination. There are laws preventing maximum age discrimination—you can't generally hire or fire an employee because of age if he's over 40—but that's inapplicable here.

None of this should be read to preclude the possibility Clarett could sustain an antitrust claim against the current NFL rule. But McErlain erred in asserting that it was a foregone conclusion that such a claim would succeed. All of the current evidence weighs decisively against challenging the NFL policy so long as it remains within the CBA's zone of influence.

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