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No Good Argument in American Needle

By Jeffrey Standen

Two observations about last week's oral argument before the Supreme Court in American Needle v. NFL:

1. Neither position seemed entirely plausible
Lawyers like to ask questions based on completely unrealistic hypothetical situations because they allow us to locate the outer limits of a rule. Figuring out to what situations a rule of law would not apply helps lawyers determine where it does. The Justices in the American Needle argument spent much of the time trying to locate limits. They took turns asking the lawyers for each party about football leagues playing on Saturday, rogue non-sanctioned games between NFL teams, Red Sox fans wearing Yankees' shirts, and purchases of office stationery by NFL commissioners. No matter how far-fetched and silly the Justices' questions appeared, they couldn't find a limitation to the rules proposed by the litigants. The lawyers blithely insisted that antitrust law would (or would not) apply to everything.

The Court couldn't find limits because there weren't any. American Needle's position is that the antitrust law must be used to examine all aspects of a joint venture. Since the NFL teams are independent businesses, in Needle's view, then when those teams conspire to take joint action then that joint action is subject to examination under the antitrust law. That sounds fine, until one realizes that "subject to examination under antitrust law" is lawyer's code for intrusive and very expensive federal litigation. Expensive antitrust lawsuits to review every action of the joint venture, from awarding trademark licenses to buying one brand of football; that sounds sub-optimal, no? Similarly, the NFL's position is exactly the opposite, that the league is a single entity for virtually anything it does that is related to the game of football, which means that the NFL is basically immune to antitrust liability. Which also sounds about right, until one recalls that the owners have a long history of restricting the salary and movement of players, and that the players won much of their labor rights through antitrust litigation in the 1980's. In short, no hypothetical seemed too outrageous. Neither proposed rule appeared to have a limit.

It will be difficult for the Court to write an opinion embracing either position, since both lead to places the Court will surely not wish to go. The lawyers did their clients no favors by not being able to articulate a plausible limiting principle to their proposed rules.

2. This case might not be about sports law at all
What was also strange about the argument before the Supreme Court was that most of it had nothing to do with the question the Court had intended to answer, which involved an economic analysis of single entity vs. multiple economic actors with respect to the NFL. Instead, the argument was all about the meaning and reach of the rule of reason. The problem with the rule of reason is that, although it is generally thought to be a generous approach to antitrust law (and it is, compared to the dogmatic "per se" approach that dominated the early antitrust jurisprudence), it is nonetheless onerous in terms of its costs of application. What the Court seemed interested in doing was to use the "single entity" idea much as did the Seventh Circuit: to cabin or calibrate the rule of reason element of Sherman Act liability. In other words, the rule of reason is so uncertain, and thus so costly to implement, that the single entity doctrine might become a proxy to allow for rapid and cheap resolution of joint action litigation.

If I'm right in this analysis of the argument, then the eventual decision of the Court will not be about sports law. We won't know if, as a matter of law, the NFL (and other professional sports leagues that share key attributes with the NFL) are to some extent "single entities" that are incapable of concerted action. Instead, American Needle v. NFL will become another antitrust decision about the rule of reason, a case that just happened to have a sports league as a litigant. The decision will fail to secure a place in the pantheon of sports law, a position it once appeared poised to hold. An opportunity to answer an important and perduring question in sports law will go by the boards.

Full post as published by The Sports Law Professor on January 14, 2010 (boomark / email).