Eisenhardt_SportsLaw_Spring_2011
o How in Federal Court—diversity—Injunction?
o What law applies – Erie v. Tompkins (Procedural vs. Substantive)
o Conflicts of law – Oregon or California Law
o California Law – § 3423: you can get an injunction where skills are unique and the amount promised for has to be more than $6000. Graduates up.
1. The Legal Framework
a. Contract Remedies
i. Damages – difference between contract price and market price
ii. Equitable – Specific performance (usually in the sale of property).
1. Minnesota Twins case – Injunction to play season at Metrodome.
2. Generally won’t get injunctions against people for jobs.
b. Player Injunctions:
i. Erwing:
1. 1) Breach is one for which damages would be inadequate compensation
2. 2) party seeking the injunction must have “clean hands”
3. 3) Injunction must not be unduly oppressive to the defendant
4. 4) Contract must have mutuality or be founded on adequate consideration
5. 5) Terms of the contract must be definite
ii. Today (Good discussion Lewis v. Rahim):
1. Imminent and Irreparable Harm
a. Player cannot be easily replaceable. Current contracts now say that the skills are unique.
2. Clean Hands
a. Someone seeking equitable relief must have clean hands
3. Duration and Scope of Injunction
a. Factors: length, geographical reach, types of employment prohibited, potential effects in preventing employment or other opportunities for restrained party.
i. Balanced against the resulting damage if injunction not granted.
4. Injunction allowed – Lewis v. Rahim. But Machen v. Johansson.
c. Today contract issues aren’t as heated as they used to be because;
i. All leagues agree to arbitrate and most of these issues come up in the context of new leagues forming.
d. Cases
i. Lajoie – can’t force a person to work but not against negative injunction. Certain players can have such unique skills that you should be able to get a negative injunction.
1. Less of an issue today.
ii. Lewis v. Rahim – Lewis allowed a contractual refight. Lewis would be irreparably harmed if he’s denied opportunity to get championship back.
1. Would not impose a significant burden and Rahman had an obligation to fight him.
2. Grants negative injunction. Doesn’t force the fight but can’t fight anyone else until they fight.
3. BUT SEE Machen – injunction is not reasonable and should be granted sparingly.
2. Antitrust
a. Is the entity exempt from antitrust?
i. If yes, end of story.
ii. If no, does NSE Apply?
1. Mackey, Brown, Clarett
iii. If no, go to applicable antitrust laws
1. Per se, then rule of reason.
a. P must show that the practice has an actual adverse effect on competition as a whole in the relevant market.
b. D must then show a pro competitive justification
c. P must then show that there are less restrictive alternatives.
b. Main areas:
i. Horizontal
1. Price agreements
2. Territories
3. Boycott
ii. Vertical
1. Exclusive dealings
2. Requirements contract
iii. Tying
iv. Mergers and Acquisitions
c. Traditionally, baseball is exempt.
i. Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs; Toolson v. New York.
1. Flood v. Kuhn – upheld that baseball is a unique situation. Not under antitrust laws.
2. After this players used their own pressure to negotiate free agent system. Reserve for 6 years and then you can become a free agent.
3. 1998, Congress modified Sherman Act to give MLB players same antitrust remedies.
a. Most courts have interpreted Flood to find that the “business of baseball” aspects are exempt from antitrust law.
b. Act permits antitrust challenges only to conduct or agreements by those persons in the business of organized professional major league baseball directly relating to or affecting employment of major league baseball players to play baseball at the major league level.
i. Act does not provide basis for challenging conduct or agreements relating to employment as a minor league baseball player, the amateur or first-year player draft.
ii. MLB franchise ownership, location, or expansion issues, as well as matters b/t the commissioner’s office and clubs are unaffected by the act for Antitrust purposes.
ii. BUT Football, boxing, and basketball all are within antitrust laws.
1. American Needle – NFL is a collection of 32 teams. Not a single entity. So any decision that affects all 32 of the teams must be analyzed under the Rule of Reason.
2. Copperweld – Company and wholly owned subsidiary cannot conspire under antitrust law.
d. League complexity (MLB highest, NFL lowest)
i. NFL is 91% of revenues
ii. NBA is 25% of revenues
iii. MLB is 15% of revenues
1. The less revenue that is shared, the more each team has to generate their own revenues
e. League Structure
i. NBA:
1. 30 teams, owned and individually by separate ownerships.
2. NBA properties handles all the licensing.
3. NBA players association agreed to rules and the draft. Because the union signed off, it’s exempt from antitrust.
ii. WNBA:
1. Wholly owned subsidiary of the NBA. Own all teams.
2. Now it’s 12 teams—6 owned by NBA and 6 owned by individuals.
3. Labor Law
a. Unions have statutory labor exemption. Exempt from antitrust laws.
i. If non statutory labor exemption applies, then players have no redress.
ii. Non statutory labor exemption (meaning players have no redress):
1. Issue must only affect the people in the agreement
2. Must be a mandatory aspect of collective bargaining—wages, hours, terms and conditions of employment, working conditions, etc.
a. Non mandatory items can still be negotiated but don’t have to be.
b. Illegal subjects of bargaining (
ments about financial difficulty not imputed the PRC. No need to give financials.
b. Tried to say that they had financial concerns but didn’t provide info, but SDNY held that these weren’t in the course of bargaining.
c. After this case, players went on strike and a split season resulted.
d. Player issues:
i. Striking:
1. Not allowed to treat them differently
a. NFL Management Council – Different deadline for striking and non striking players clearly sought to punish striking players.
ii. Union Representation:
1. Must act arbitrarily to have a claim against the union. Union has a duty of fair representation. Does not have to be error free.
2. Peterson v. Kennedy – Player was told to file injury grievance against team. Later dismissed the grievance. Union not held liable for this.
e. Collective Bargaining:
i. Salary Caps;
1. Hard cap – NFL
2. Soft Cap (Cap with exceptions) – NBA
3. No cap – MLB
ii. Main Restraints:
1. The Draft – players associations agree on the draft
2. Uniform Player Contract – Same contract signed by everyone in the league
a. Depending on the particular player, several of the following are considered negotiable:
i. Basic salary and length of contract
ii. Bonuses—signing, roster, performance (individual and team)
iii. Guaranteed income (with details when this is applicable)
iv. Trade provisions (assignment of contract) and possible limitations
v. Special benefits
vi. Added injury protection
vii. Personal conduct provisions
3. Free Agency –
a. MLB, 6 years;
i. MLB free agency estabslihed in National & American League Professional Baseball Clubs v. MLBPA.
b. NBA, 3 years, 4th year option for team, 5th year where club has right of first refusal;
c. NFL, 5 years
