No In the SUPREME COURT OF THE UNITED STATES OF AMERICA
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1 No In the SUPREME COURT OF THE UNITED STATES OF AMERICA AVON BARKSDALE, OMAR LITTLE, and STRINGER BELL, individually and on behalf of all others similarly situated, Petitioners, v. NATIONAL BASKETBALL ASSOCIATION Respondent. ON A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL FOR THE EIGHTH CIRCUIT BRIEF FOR PETITIONER TEAM #5
2 TABLE OF CONTENTS TABLE OF CONTENTS.1 TABLE OF AUTHORITIES...2 QUESTIONS PRESENTED 4 ARGUMENT...5 I. The Court of Appeals erred in reaffirming the arbitration award because the award violates The Federal Arbitration Act.5 A. The arbitration award violates the Federal Arbitration Act because Commissioner Burrell exceeded his powers 5 B. The arbitration award violates the Federal Arbitration Act because Commissioner Burrell is guilty of misconduct...10 II. The Court of Appeals erred in concluding that the lockout was protected from antitrust liability by the non-statutory labor exemption...13 A. The lockout is not protected from antitrust liability by the NSLE because there is no collective bargaining relationship between the NPBA and the NBA and affiliate teams.14 B. The Court should consider the underlying purpose of the exemption and the parties relative bargaining power when determining whether the NSLE should apply
3 TABLE OF AUTHORITIES Cases 187 Concourse Assocs. v. Fishman, 399 F.3d 524 (2d Cir. 2005).5-6 Brown v. Pro Football, Inc., 518 U.S. 231 (1996) , 20 Clarett v. National Football League, 369 F.3d 124, 131 (2d Cir. 2004)...19 In Re Lehman Bros. Holdings Inc., 761 F.3d 303 (2d Cir. 2014).9 In Re Marine Pollution Serv., Inc., 857 F.2d 91 (7th Cir. 1988)..7-8 In re Pittsburgh Steelers, Case 6-CA-23143, 1991 WL , *1 (June 26, 1991)...13, 15, Kaplan v. Alfred Dunhill of London, Inc., No. 96 Civ. 259 (JFK), 1996 U.S. Dist. LEXIS (S.D.N.Y Nov. 4, 1996)..10 Local Union No. 189, Amalgamated Meat Cutters, and Butcher Workmen of North America, AFL-CIO v. Jewel Tea Company, Inc., 381 U.S. 676 (1965) 13-15, 17, 20 Mackey v. National Football League, 543 F.2d 606 (8th Cir. 1976) 14-16, 18, 20 McNeil v. National Football League, 764 F. Supp (D. Minn. 1991) , 20 NFL Players Ass n v. NFL, 88 F. Supp. 3d 1084 (D. Minn. 2015)..6-8 Powell v. National Football League, 930 F.2d 1293 (8th Cir. 1989)...20 Queen s Table, Inc., 152 N.L.R.B (1965).17 Tempo Shain Corp. v. Bertek, Inc., 120 F.3d 16 (2d Cir. 1997)
4 United Steelworkers v. Warrior Gulf Nav. Co., 363 U.S. 574, , 80 S. Ct (1960)..6 Wall Street Assocs., L.P., v. Becker Paribas Inc., 27 F.3d 845 (2d Cir. 1994)..5 Federal Statutes Federal Arbitration Act, 9 U.S.C. 10 (2016)..5, 10, 12 National Labor Relations Act, 29 U.S.C. 158 (2016)..16 Secondary Sources Kieran M. Corcoran, When Does the Buzzer Sound?: The Nonstatutory Labor Exemption in Professional Sports, 94 Colum. L. Rev. 1045, 1053 (1994)..20 3
5 QUESTIONS PRESENTED I. WHETHER THE ARBITRATION AWARD GIVEN IN AVON BARKSDALE S DISCIPLINARY DECISION SHOULD BE VACATED. II. WHETHER THE NON-STATUTORY LABOR EXMEPTION SHIELDS THE LOCKOUT FROM ANTITRUST SCRUTINY. 4
6 ARGUMENT I. The Court of Appeals erred in reaffirming the arbitration award because the award violates The Federal Arbitration Act. The arbitrator s award should be vacated. Under the Federal Arbitration Act ( FAA ), the validity of an award is subject to attack only on those grounds listed in 10, and the policy of the FAA requires that the award be enforced unless one of those grounds is affirmatively shown to exist. Wall Street Assocs., L.P., v. Becker Paribas Inc., 27 F.3d 845, 849 (2d Cir. 1994). As grounds for challenging an arbitrator s award, section 10(a)(4) of the FAA provides that where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. 9 U.S.C. 10 (2016). Additionally, section 10(a)(3) of the FAA provides as grounds for challenging an award that where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced. Id. Therefore, where an arbitrator has exceeded their powers or where the arbitrator is guilty of misconduct in refusing to hear evidence pertinent and material to the controversy, the Court may vacate the arbitration award. A. The arbitration award violates the Federal Arbitration Act because Commissioner Burrell exceeded his powers. Commissioner Burrell exceeded his powers under section 10(a)(4) of the FAA. Section 10(a)(4) provides that if the arbitrator exceeds his powers, the court may vacate the award. 187 Concourse Assocs. v. Fishman, 399 F.3d 524, 527 (2d Cir. 2005). The principal question for the reviewing court is whether the arbitrator s award draws its essence from the collective 5
7 bargaining agreement, since the arbitrator is not free merely to dispense his own brand of industrial justice. Id. In evaluating whether the arbitrator s award draws its essence from the collective bargaining agreement, courts consider several factors including whether the arbitrator followed the law of the shop and whether the award was based on terms contained in the contract. An arbitrator s award does not draw its essence from the collective bargaining agreement if the arbitrator fails to follow the law of the shop. NFL Players Ass n v. NFL, 88 F. Supp. 3d 1084, 1090 (D. Minn. 2015). The arbitrator s source of law is not confined to the express provisions of the contract, as the industrial common law is equally part of the collective bargaining agreement although not expressed in it. United Steelworkers v. Warrior Gulf Nav. Co., 363 U.S. 574, , 80 S. Ct (1960). The industrial common law includes past practices of the industry of the shop. 88 F. Supp. 3d at It is the law of the shop to provide professional athletes with advanced notice of prohibited conduct and potential discipline. Id. In NFL, the professional athlete, Adrian Peterson, was given a sanction based on a new policy regarding domestic violence that was applied to him retroactively. Id. The policy was forward looking because the League is required to provide proper notice. Id. The court noted that the Commissioner understood he was constrained to apply the new policy prospectively and that he failed to explain why the well-recognized bar against retroactivity did not apply to Peterson. Id. at The court held that the Commissioner simply disregarded the law of the shop and in doing so failed to meet his duty under the CBA, which warranted vacating the arbitration award. Id. Furthermore, an arbitrator s award does not draw its essence from the collective bargaining agreement when it is clear that the arbitrator must have based his award on some 6
8 body of thought, or feeling, or policy, or law that is outside the contract. In Re Marine Pollution Serv., Inc., 857 F.2d 91, 94 (7th Cir. 1988). In Maine Pollution, the arbitrator s award was vacated when it was found to have been based on his concerns for equity and not on terms found within the contract. Id. at 96. The Court asserted that because the arbitrator drew upon what he regarded as his carte blanche in determining the award and basing it on his guiding principle of equity, he eschewed the remedies that were available to include in the award. Id. at 93. The Court held that the arbitrator s award drew its essence from something outside of the contract and, as such, he dispensed his own brand of industrial justice. Id. at 94. In the instant case, Commissioner Burrell failed to follow the law of the shop. Like the Commissioner in NFL, Commissioner Burrell s basis for discipline is flawed because it is premised on Barksdale s notice that his conduct was prohibited and his notice of the possible discipline, when he in fact had no such notice. First, Barksdale had no notice that general awareness of the misconduct of others was prohibited and that it could result in disciplinary action against him. The law of the shop includes past practices of the industry. 88 F. Supp. at No NBA policy or precedent notifies players that they may be disciplined for general awareness of others misconduct and the NBA has never punished players for such an alleged violation. R. at 8. Second, Barksdale had no notice that the conduct could result in game suspensions. Under the Discipline for Game-Related Misconduct section of the Player Policies, any misconduct related to equipment results in a $5, fine for a first offense. R. at 8. Barksdale only had notice that he could be disciplined with a fine, not game suspensions, if he was ever found to have violated the equipment rule in the Player Policies Manual. Instead of applying the disciplinary action in the Player Policies, Commissioner Burrell punished Barksdale pursuant to the Competitive Integrity Policy, which allows for game suspensions as a 7
9 disciplinary action for any conduct that is considered detrimental to the League. R. at 3. The Competitive Integrity Policy, however, is part of the Game Operations Manual and is given to Chief Executives, Club Presidents, General Managers, and Head Coaches, but not to players. In punishing Barksdale with game suspensions for general awareness of the conduct of others, the Commissioner s award is based on a prohibited conduct and an applicable disciplinary action of which Barksdale had no notice. Like the Commissioner in NFL, Commissioner Burrell disregarded the law of the shop and failed to draw his award from the essence of the collective bargaining agreement. Additionally, Commissioner Burrell based his award on terms outside of the contract. The discipline included in his award was based on a Steroid Policy found incorporated into the 2014 Player Polices. R. at 6. The Commissioner concluded that for the general awareness of ball deflation by others and for non-cooperation in the ensuing investigation, it was appropriate to apply the same disciplinary action that is applied for steroid use. The Steroid Policy describes testing procedures, procedures in response to positive tests or other evaluation, suspension and related discipline, appeal right, burdens and standards of proof, and discovery. None of these pertains to Barksdale s conduct or his discipline, so Barksdale could not have been on notice that his discipline would be the same as a player who violated the NBA Steroid Policy. Like the arbitrator in Maine Pollution, Commissioner Burrell based his award on terms outside of the contract because the award was based on a disciplinary action found in an unrelated policy. In doing so, he incorrectly applied a punishment that was unavailable for him to apply for Barksdale s alleged misconduct. Like the arbitrator in Maine Pollution, Commissioner Burrell dispensed his own brand of industrial justice and failed to draw his award from the essence of the collective bargaining agreement. 8
10 Respondent contends that Barksdale was on notice as to the prohibited conduct as well as the potential punishment because he was not punished under the Competitive Integrity Policy, but rather under the conduct detrimental to the League standard. Their argument asserts that because the rule governing the pressure of NBA balls is well established, Barksdale was aware of it and was on notice that a violation of the rule would be considered conduct detrimental to the League and that the resulting discipline could be suspension. This argument is misguided, however, because the conduct detrimental standard as well as the disciplinary action of game suspensions was included in the Competitive Integrity Policy. Barksdale had no notice of discipline under the Competitive Integrity Policy because it was not given to players. He only had notice of equipment violations under the Player Policies, which was a fine for a first offense. Barksdale also had no notice that general awareness of ball deflation by others would be considered conduct detrimental as it is a general concept. An applicable specific provision within the Player Policies is better calculated to provide notice to a player than a general concept such as conduct detrimental. In Re Lehman Bros. Holdings Inc., 761 F.3d 303, 313 (2d Cir. 2014). Respondent also contends that it was appropriate for the Commissioner to take the same discipline that is applied for misconduct for steroid use and apply it to misconduct for general awareness of ball deflation by others. Respondent s argument is based on the conclusion that both violations involve an effort by a player to secure an improper competitive advantage. This argument fails, however, because the award offers no evidence of actual comparability between general awareness of ball deflation by others and steroid use. The factors that are the concern of the Steroid Policy, including but not limited to health, injury, addiction and peer pressure, R. at 9
11 6, are not present in Barksdale s alleged misconduct and cannot serve as notice as to the possible punishment for general awareness of ball deflation by others. Therefore, because Commissioner Burrell failed to follow the law of the shop and he based his award decision on terms outside of the contract, the arbitration award does not draw its essence from the collective bargaining agreement. Since the award does not draw its essence from the collective bargaining agreement, Commissioner Burrell exceeded his powers in violation of the Federal Arbitration Act and the arbitration award should be vacated. B. The arbitration award violates the Federal Arbitration Act because Commissioner Ervin Burrell is guilty of misconduct. The Commissioner is guilty of misconduct that amounts to fundamental unfairness of the arbitration proceeding. Section 10(a)(3) of the FAA provides that an order can be made to vacate an arbitration award where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced. 9 U.S.C. 10. Courts have interpreted 10(a)(3) to mean that except where fundamental fairness is violated, arbitration determinations will not be opened up to evidentiary review. Tempo Shain Corp. v. Bertek, Inc., 120 F.3d 16, 20 (2d Cir. 1997). A fundamentally fair hearing requires that the parties be permitted to present evidence and cross-examine adverse witnesses. Kaplan v. Alfred Dunhill of London, Inc., No. 96 Civ. 259 (JFK), 1996 U.S. Dist. LEXIS 16455, at *14 (S.D.N.Y Nov. 4, 1996). If the arbitrator refuses to hear pertinent and material evidence to the prejudice of one of the parties, the arbitration award may be set aside. Id. In evaluating the fairness of the hearing courts, consider whether there was a reasonable basis for determining that the admittance of the evidence was unnecessary. 10
12 A hearing is fundamentally unfair where there is no reasonable basis to determine that omitted testimony would have been cumulative. 120 F.3d at 20. In Tempo Shain, witness testimony was not admitted by the arbitration panel because they determined that the testimony would be cumulative. Id. The arbitration panel did not indicate in what respects the testimony would be cumulative, but only stated that there were a number of documents in the file and that the witness would be speaking through those documents. Id. The court held that although the documents could speak to the breach of contract claim in the suit, nothing suggested that the documents addressed the fraudulent inducement claim in the suit. Id. Because the witness was the only one who could rebut oral testimony concerning this claim, the panel excluded evidence plainly pertinent and material to the controversy by not allowing him to testify. Id. In the instant case, there was no reasonable basis to deny Barksdale s motion to compel the testimony of co-lead investigator Cedric Daniels. Like the arbitration panel in Tempo Shain, Commissioner Burrell did not specify in what respects the testimony would be cumulative. Cedric Daniels was publicly declared by the NBA as the co-lead investigator along with Maurice Levy and he reviewed the Levy report and gave written comments before its release. R. at 9. As General Counsel to the NBA and given his role as co-lead investigator, Daniels would have valuable insight into the investigation and the content of the Levy Report. Maurice Levy also admitted that he was unaware of the nature of Daniels edits to the report. R. at 10. Therefore, given that Levy would be unable to answer questions concerning the changes that Daniels made to the report, Daniels testimony would not have been cumulative since he would have been the only one able to testify about those changes. Just like the panel in Tempo Shain, Commissioner Burrell excluded evidence pertinent and material to the controversy. 11
13 Respondent contends that Commissioner Burrell s decision to exclude the testimony of Cedric Daniels is not challengeable because arbitrators must be given discretion to determine whether additional evidence is necessary or would simply prolong the proceedings. 120 F.3d at 19. Respondents position is based on the argument that Cedric Daniels played no substantive role in the investigation and any comments he gave on the report did not change the findings. This argument is flawed, however, because while arbitrator s have broad discretion in deciding what evidence to admit, they are nonetheless subject to the constrains listed in section 10 of the FAA. Section 10(a)(3) specifies that where an award is based on a hearing in which pertinent and material evidence to the controversy was excluded, a court has the power to vacate the award. Since the testimony of Cedric Daniels was not cumulative, as a co-lead investigator, he was the only person who could testify about the nature of his edits to the report, his testimony was pertinent and material to the controversy and should have been admitted. Therefore, by denying Barksdale the opportunity to examine a lead investigator, the Commissioner refused to hear evidence pertinent and material to the controversy. This amounts to fundamental unfairness rising to the level of misconduct under section 10(a)(3) of the Federal Arbitration Act and requires vacating the arbitration award. 12
14 II. The Court of Appeals erred in concluding that the lockout was protected from antitrust liability by the non-statutory labor exemption. The lockout imposed by Respondent is not protected from antitrust scrutiny by the nonstatutory labor exemption ( NSLE ) because the collective bargaining framework collapsed when the National Basketball Players Association ( NBPA ) decertified and disclaimed interest in representing the players in the collective bargaining agreement ( CBA ). The NSLE was created to further national labor policy favoring collective bargaining and requiring good faith bargaining on wages, hours, and working conditions. Brown v. Pro Football, Inc., 518 U.S. 231, 236 (1996). The NSLE specifically applies when there is conflict between antitrust law and labor law that might hinder the collective bargaining process and resulting agreements. See Local Union No. 189, Amalgamated Meat Cutters, and Butcher Workmen of North America, AFL-CIO v. Jewel Tea Company, Inc., 381 U.S. 676, 689 (1965). The National Basketball Association ( NBA ) asserts the claim that the NSLE applies to shield the lockout from antitrust scrutiny because the NPBA s decertification was an unfair labor practice. R. at 4. But a union s disclaimer of representing its members need only be unequivocal, made in good faith, and unaccompanied by inconsistent conduct. In re Pittsburgh Steelers, Case 6-CA-23143, 1991 WL , *1, *4 n. 8 (June 26, 1991). The NBPA s disclaimer was accompanied by decertification with the National Labor Relations Board ( NLRB ), changing its tax status to a professional association with the Internal Revenue Service ( IRS ), and instituting bylaws to prohibit its members from collectively bargaining with the NBA, team, and agents. In addition, the Court should apply more scrutiny in determining whether the NSLE should apply if an employer is asserting the protection because the original grant of protection 13
15 was for the benefit of unions. Although the non-statutory exemption extends to both parties in the collective bargaining framework, Brown, 518 U.S. at 237, the underlying purpose of the NSLE, the parties bargaining power, and the balancing of the interests against the anticompetitive restraint should be considered in determining whether the NSLE applies. Unions should be afforded more protection and less scrutiny than employers when asserting the NSLE because the original conception of the NSLE was to protect unions in collective bargaining, who often have less bargaining power than employers, and are advocating for terms that involve members interests of great importance. A. The lockout is not protected from antitrust liability by the NSLE because there is no collective bargaining relationship between the NPBA and the NBA and affiliate teams. The NSLE does not shield the lockout from antitrust liability because the collective bargaining relationship between the NBA and NPBA ceased with the NPBA s decertification and disclaimer of interest in representing the players in disputes concerning the CBA. The NSLE is applicable only when there is a conflict between labor and antitrust law. See Local Union No. 189, Amalgamated Meat Cutters, and Butcher Workmen of North America, AFL-CIO v. Jewel Tea Company, Inc., 381 U.S. 676, 689 (1965). The NSLE only protects parties when there is ongoing collective bargaining. See Brown v. Pro Football, Inc., 518 U.S. 231, 250 (1996); McNeil v. National Football League, 764 F. Supp. 1351, 1389 (D. Minn. 1991). Furthermore, the three-prong test from Mackey is often used to determine whether the NSLE applies to a certain restraint on competition. Mackey v. National Football League, 543 F.2d 606 (8th Cir. 1976). The three-prong test asks whether the restraint involves only the parties to the agreement that seeks to be exempted, whether the restraint is a mandatory subject 14
16 of collective bargaining, and whether the agreement was a product of bona fide arm s length negotiation. Id. The restraint must satisfy all three prongs to qualify for protection by the NSLE. Finally, a union need only make a disclaimer that is unequivocal, made in good faith, and unaccompanied by inconsistent conduct to be valid. In re Pittsburgh Steelers, Case 6-CA , 1991 WL , *1, *4 n. 8 (June 26, 1991). This Court in Jewel Tea stated that the NSLE is an accommodation of the Sherman Act to labor law policies. 381 U.S. at 689. Thus, the accommodation applies when there is conflict between antitrust and labor laws. When a union decertifies and no longer represents its members in collective bargaining, labor laws concerning collective bargaining do not apply and the NSLE also ceases to apply. R. at 14. In addition, the NSLE only applies when there is ongoing collective bargaining. See Brown v. Pro Football, Inc., 518 U.S. 231, 250 (1996); McNeil v. National Football League, 764 F. Supp. 1351, 1389 (D. Minn. 1991). In Brown, this Court considered professional football players antitrust challenge to club owners unilateral implementation of terms from their last best bargaining offer after reaching an impasse. 518 U.S. at 233. This Court held that the club owners conduct was shielded from antitrust liability by the NSLE because it took place during the collective-bargaining negotiation, was directly related to and grew out of the collective bargaining process, was a mandatory subject of negotiation, and concerned only the parties to the collective-bargaining relationship. Id. at 250. This Court went further and stated that the holding did not insulate every joint imposition of terms by employers from antitrust review and that there may be a time when the agreement is sufficiently distant in time and in circumstances from the collective-bargaining process that a rule permitting antitrust intervention would not significantly interfere with that process. Id. This Court then cited to cases as an example of the sufficiently distant in time and in 15
17 circumstances where the NSLE would not apply, including a case that suggested that the NSLE only survives until the collapse of the collective-bargaining relationship which can be demonstrated by the decertification of the union. Id. In McNeil, the court addressed football players allegations against the National Football League (NFL) that a restraint called Plan B during the season were violations of Section 1 of the Sherman Act. 764 F. Supp. at The court held that the decertification of the National Football League Players Association (NFLPA) ended the collective-bargaining relationship and thus the NSLE did not apply to protect Plan B from antitrust scrutiny. Id. at Furthermore, in Mackey, the court first promulgated a test for determining whether the NSLE applied to a restraint. 543 F. 2d 606 (8th Cir. 1976). The three-prong test requires that the restraint involve only the parties to the collective-bargaining relationship, that it concerns a mandatory bargaining subject, and that it is the product of bona fide arm s length negotiation. Id. at 615. The restraint at issue was the Rozelle Rule that required mandatory compensation for teams that lost players once their contracts expired to other teams. Id. at The Rozelle Rule concerned only the parties to the collective-bargaining relationship and therefore satisfied the first prong of the test. Id. at 615. The Rule also concerned a mandatory bargaining subject as defined in the National Labor Relations Act, 29 U.S.C. 158(d), because it was related to wages, hours, or working conditions and thus satisfied the second prong of the test. Id. But the Rule did not satisfy the third prong of the test because it was not found to be the product of bona fide arm s length negotiation. Id. at It was imposed unilaterally by the NFL and was accepted as the status quo by the union and that could not qualify as bona fide arm s length negotiation. Id. at
18 Finally, an opinion by the General Counsel of the NLRB determined that a union s disclaimer of interest in representing its members is considered valid if it is unequivocal, made in good faith, and unaccompanied by inconsistent conduct. In re Pittsburgh Steelers, Case 6- CA-23143, 1991 WL , *1, *4 n.8 (June 26, 1991). A union does not need to go through the unnecessary process of a decertification election in order to have a valid decertification. Id. The opinion also stated that it is irrelevant to the inquiry that the disclaimer may have been motivated by litigation strategy. Id. at *2 n.8. A good faith disclaimer is defined in the case of Queen s Table. Queen s Table, Inc., 152 N.L.R.B (1965). A good faith disclaimer is one that is not inconsistent with the union s ongoing action s as its members bargaining agent. R. at 15. In this case, the lockout is not shielded from antitrust liability because the collectivebargaining relationship ended with the NBPA s disclaimer of interest in representing the players in disputes concerning the CBA. The NSLE applies when there is a conflict between antitrust and labor laws. See Local Union No. 189, Amalgamated Meat Cutters, and Butcher Workmen of North America, AFL-CIO v. Jewel Tea Company, Inc., 381 U.S. 676, 689 (1965). Additionally, the NSLE only extends protection to the parties during ongoing collective bargaining. See Brown v. Pro Football, Inc., 518 U.S. 231, 250 (1996); McNeil v. National Football League, 764 F. Supp. 1351, 1389 (D. Minn. 1991). Once the NBPA ceased to be a union by disclaiming interest and reclassifying as a professional association, the labor laws concerning collective bargaining no longer applied and therefore there was no conflict between labor and antitrust laws. The players were not bound by having to negotiate through the union and the NBA could have imposed new terms without negotiating with the union demonstrating that the collective bargaining framework did not exist. The NBPA even went further to amend 17
19 its bylaws to prohibit members from collectively negotiating with the NBA, affiliate teams, and agents. R. at 4. Because there was no ongoing collective bargaining after the NBPA disclaimed interest, the NSLE does not apply to the lockout. Furthermore, the lockout cannot pass the third-prong of the test set out in Mackey ( Mackey test ) because it was not the product of bona fide arm s length negotiation. 543 F.2d at 615. The lockout concerns only the parties to the collective-bargaining relationship because it affects only the players, NBA, affiliate teams, and agents, thus passing the first prong of the test. The lockout arguably passes the second prong of the test because it is intimately related to wages, hours, and working conditions because it prohibits the players from working completely. Although the lockout is not a mandatory bargaining subject on its face, the lockout s practical effect is related to player s wages, hours, and working conditions. Id. at 615. It can also be argued that the lockout does not pass the second prong of the test because it is a labor negotiation tool to force the players to negotiate and not a mandatory bargaining subject as defined in the National Labor Relations Act. The lockout cannot pass the third prong of the test because the NBA and teams conspired to impose it unilaterally on the players after the collective-bargaining relationship had ended a day before it was in effect. Therefore, the lockout is not a product of bona fide arm s length negotiation and cannot be protected by the NSLE. Lastly, the NBA s allegation that the NBPA s disclaimer of interest is an unfair labor practice is improper. The General Counsel of the NLRB stated that a valid disclaimer need only be unequivocal, made in good faith, and unaccompanied by inconsistent conduct. In re Pittsburgh Steelers, Case 6-CA-23143, 1991 WL , *1, *4 n.8 (June 26, 1991). The facts of the case demonstrate that the NBPA s disclaimer was valid because the NBPA not only disclaimed interest but went further to reclassify as a professional association with the IRS and 18
20 even amended its bylaws to prohibit members from engaging in collective bargaining with the NBA, teams, and agents. R. at 4. These actions are unequivocal, made in good faith, and unaccompanied by inconsistent conduct. The General Counsel of the NLRB also stated that there is no need to go through a decertification election if the disclaimer is valid. Id. Even if the disclaimer was motivated by the impasse reached in negotiations over the new personal conduct policy, it is irrelevant because disclaimers can be used as part of litigation strategy so long as it is unequivocal and adhered to. Id. at *2 n. 8. The NSLE can only apply when there is a conflict between labor and antitrust laws and there is ongoing collective bargaining. The lockout can only be protected if it passes the threeprong Mackey test. The NBPA s valid disclaimer of interest in representing the players in disputes concerning the CBA was the end of the collective-bargaining relationship. The lockout cannot not pass the third-prong of the Mackey test because it is not the product of bona fide arm s length negotiation. Therefore, the lockout is not protected from antitrust liability by the NSLE. B. The Court should consider the underlying purpose of the exemption and the parties relative bargaining power when determining whether the NSLE should apply. This Court has not determined the precise boundaries of when the NSLE should shield a restraint from antitrust liability. Clarett v. National Football League, 369 F.3d 124, 131 (2d Cir. 2004). The Court should take into consideration important factors that affect the collectivebargaining relationship when determining whether the NSLE should apply. These factors include the underlying purpose of the NSLE and the relative parties bargaining power. 19
21 In the context of professional sports, the NSLE applies differently as it does in other industries. The original grant of protection from the NSLE was to benefit the union in disputes in which the employer was unhappy with a restraint imposed by the union in the CBA. This is demonstrated in the case of Jewel Tea. In Jewel Tea, the court held that the NSLE applied to a provision inserted by the butcher s union that prevented certain sales of meat after 6:00pm. Local Union No. 189, Amalgamated Meat Cutters, and Butcher Workmen of North America, AFL-CIO v. Jewel Tea Company, Inc., 381 U.S. 676 (1965). But in the realm of professional sports, the cases involve the players challenging restraints imposed by the employer as violating antitrust laws, the opposite of the traditional application of the NSLE. See Mackey v. National Football League, 543 F.2d 606 (8th Cir. 1976); Powell v. National Football League, 930 F.2d 1293 (8th Cir. 1989); McNeil v. National Football League, 764 F. Supp (D. Minn. 1991); Brown v. Pro Football, Inc., 518 U.S. 231 (1996). In determining whether the NSLE should apply, the Court should take into consideration the underlying purpose of the NSLE and its original grant of protection to unions. Although the NSLE is meant to extend to both the employer and employee, Brown, 518 U.S. at 237, the employees are usually in a lesser bargaining position than the employer. See Kieran M. Corcoran, When Does the Buzzer Sound?: The Nonstatutory Labor Exemption in Professional Sports, 94 Colum. L. Rev. 1045, 1053 (1994). Specifically, in the sports context, players may have weaker bargaining power because of their vastly differing levels of talent. The union representing the players thus has to collectively bargain on behalf of vastly different individuals, from first-round draft picks to developmental squad players, who all may have different priorities. These players may also have short work-lives due to the high occurrence of injuries 20
22 and the average age professional athletes retire. This creates a high turnover for the union putting them in a worse position than the employer. In the present case, the players have less bargaining power due to surrendering rights associated with union representation when the NBPA disclaimed interest in representing them. The NBA conceded that the lockout would be a violation of antitrust laws, R. at 13, yet it should be protected from liability by the NSLE. The NBA had numerous other options in encouraging negotiations for the new CBA, such as implementing the terms from the expired CBA unchanged, which would have been less drastic than a lockout and protected by the NSLE. The Court should apply more scrutiny to whether the NSLE applies, because it is the employer and not the union asserting its protection. In taking into consideration these two factors, the NSLE would not apply to the lockout. Since the NSLE was originally created to protect unions from antitrust allegations made by employers, the Court should effectuate that purpose when determining whether the NSLE should apply to the restraint at issue by applying more scrutiny when it is an employer and not a union asserting its application. The Court should also consider the relative bargaining power of the parties to ensure that the NSLE is being used to level the playing field. 21
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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION AMKOR TECHNOLOGY, INC., 1 1 1 1 1 1 1 v. TESSERA, INC., Petitioner(s), Respondent(s). / ORDER GRANTING RESPONDENT
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