NFL Case Illustrates Power of Unions

by Iain Murray on May 18, 2011

in Culture, Deregulate to Stimulate, Economy, Features, Personal Liberty, Zeitgeist

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The NFL’s protracted labor dispute with The Union Formerly Known As The NFL Players’ Association (TUFKATNFLPA) turned another corner yesterday. An Appellate Court ruling granted the NFL a stay of the District Court’s enjoining of their lockout… Yes, I know, I’ll explain this below. Suffice it to say for now that the Court’s decision has dealt a welcome blow against a union that has the legal deck stacked in its favor in its dispute with the owners.

The background: The NFL owners felt that under the previous collective bargaining agreement (CBA), they weren’t getting enough of pro football’s substantial revenue to allow further capital investment in teams (that’s why there hasn’t been a new privately funded stadium planned for about 15 years). So they announced their intention to renegotiate the revenue-sharing agreement with the players, as was their right. The players, however, were less anxious to give up their sweet deal, and failed to give enough ground during two-plus years of negotiations to reach a mutually agreeable conclusion.

Sounds like a pretty standard dispute so far, but here’s the kicker: Because the NFL is not a single corporate entity, but an alliance of sports teams that come together to form a league, our ridiculously outdated antitrust laws would normally treat it as a cartel. However, there are exemptions to antitrust law in the event of a collective bargaining agreement between multiple employers and a labor union (and the CBA in this case contained a clause that no player would sue the NFL for antitrust breaches). So, in the event of the labor union disappearing, the league automatically becomes a cartel once more, subject to antitrust law in all its terrifying fury.

This gave the NFLPA a nuclear option, which it quite happily deployed. On the day the collective bargaining agreement was due to lapse, the union decertified itself. In normal circumstances, a union decertifying indicates that its members have had enough of it and no longer need a go-between. But in this case, the NFLPA continues to exist, and is even handing out strike pay of $65,000 per player. The NFL objected to what it regarded as a sham decertification, and complained to the National Labor Relations Board (NLRB) about it.

Employers have few options in circumstances like this. One option is a lockout of workers. That’s what the NFL owners did, locking the players out from training facilities, forbidding them from contact with coaches or seeing playbooks, and stopping payments of salary and health insurance. It’s not a strategy that lends itself to a winning season, but it was the NFL’s nuclear option — its equivalent of decertification.

TUFKATNFLPA promptly funded Tom Brady among others (including Peyton Manning and this year’s #2 overall draft choice, Von Miller) to sue the NFL for restraint of trade. In April, a District Judge ruled that the NFL was irreparably harming the players and enjoined the lockout. The NFL’s application for a stay pending appeal was summarily dismissed by Judge Susan Nelson. For a brief moment, the players held all the cards.

However, the Appellate Court ruling that reinstated the lockout suggests that Judge Nelson may have overstepped her bounds, in that she had:

  • Pre-empted the NLRB’s decision by saying that TUFKATNFLPA was not a union anymore;
  • Ignored the irreparable harm to the NFL and owners in taking away their only real bargaining chip; and
  • Circumvented the provisions of the Norris-LaGuardia Act that removed union disputes from the realm of the court, and given too much weight to the interests of third parties.

The ruling allows the NFL owners a stay pending their appeal early next month. It thereby tips the scales once more towards — dare I say it — parity in the labor negotiations.

As this brief summary should make clear, labor law tips the balance so much in favor of the union in cases like this. Reform is needed. Wait, I hear you say, but this is a highly unusual case! In fact, it is not nearly as unusual as you might think.

As the Chamber of Commerce’s amicus curiae brief explains, there are many industries where multiple employers have collective bargaining agreements with unions. Removing their ability to lock out employees would significantly affect these industries, tipping the balance in favor of unions at a time when economic circumstances are still unfavorable to employers in general.

This is just one aspect of the light this fascinating dispute sheds on just how America’s union and antitrust laws are stuck in the 1930s. We’ll be exploring more of these aspects over the coming weeks.

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