CBA Q&A

The OBR talks NFL's labor issues with law professor Geoffrey Rapp.

Since the NFLPA and NFL owners failed to agree on a new collective barganing agreement and the NFLPA decertified March 11, fans have been left in limbo. When will this be settled? Will there be football next season? Why is there such a problem to divvy up $9 billion in revenue? Can't these millionaires and billionaires just figure it out?

For those interested in what is going on, but are confused on the tactics, The Orange and Brown Report's forum administrator, T-Dog, reached out to a law professor. For those who are unfamiliar, T-Dog is a Browns fan with many varied interests who writes under the pseudonym of, well, ‘T-Dog'.

Geoffrey Rapp has been a professor at the University of Toledo's College of Law since 2004. He is a 1998 graduate of Harvard College and a 2001 graduate of Yale Law School. Among the courses Rapp teaches, is Sports Law and he is an editor of the Sports Law Blog.

Rapp was kind enough to answer some questions proposed by The OBR's T-Dog.

Q.  Professor Rapp, the NFLPA has decertified, the owners have declared a lock out, and it looks like we've gone from negotiation, to mediation, to litigation.  The first step appears to be the NFL challenging the decertification as a "sham" - what do you think of that strategy?

A.  The owners' argument that decertification is a "sham" is an interesting one.  There's virtually no established legal precedent out there on this issue, which may be why the owners are willing to give it a try.  In other industries, unions rarely embrace decertification.  Decertification typically raises concerns in three circumstances -- where multiple unions are seeking to represent the same employees (and a rival union supports a decertification drive for the recognized union), where an employer tries to "break" the union by encouraging a decertification drive, or where an employer declines to continue to negotiate with a union after learning of decertification.  I am aware of no case in which a decertification initiated by employees -- which this one clearly is -- has been successfully challenged by the employers.  That said, presumably what the NFL legal team will argue is that the decertification is a "sham" in the sense that the players continue to be represented by a single, unified bargaining agent. That is, that the union hasn't really gone away, but has just stopped negotiating.

Q.  That would seem to preclude any sort of back channel negotiations between the decertified union and the NFL because the NFL could use any contact as evidence against the NFLPA.  Is that a fair statement?

A.  Very interesting point.  In order to answer the NFL's argument that decertification is a sham, the union seems to have to avoid engaging in bargaining with the NFL on behalf of players.  What that means is that in order to protect its argument that decertification is NOT a sham, the union can't come back to the bargaining table.  By making this argument, the owners are in a way backing players into a corner, forcing them to pursue the antitrust lawsuit.

Q.  What exactly is the status of a decertified union?

A.  A decertified union is not really a union any more.  Instead, it becomes a professional association which can facilitate cooperation among workers but not bargain with the employer.  The union loses its status under federal law as the exclusive bargaining agent for employees.  Where there is a certified union, management must negotiate over wages, hours, and working conditions with the union; where there is no certified union, management can (if it wishes) negotiate with individual employees.

Q.  It has been reported that there is a clause in the collective bargaining agreement that says the parties agree that any decertification by the NFLPA will not be considered a sham.  If that clause exists, would that make it more difficult for the NFL to argue that the court should disregard the NFLPA's decertification?

A.  A CBA provision on decertification makes that argument an extremely hard one to envision the owners winning.  The clause itself -- Article LVII Section 3b, prohibits the owners from making the argument that decertification was a sham in response to an antitrust lawsuit filed by players.  However, the clause right before that, Section 3a, prohibits the players from bringing an antitrust suit unless the union either didn't exist at the expiration of the CBA, or for a six month period afterwards.  So one possibility is that the union did in fact decertify before the expiration of the CBA, thanks the extensions the parties agreed to during the last week of negotiations.  But even if the players can't point to section 3b to stop the owners' claim about decertification being a sham, the court might still conclude that the decertification was not a sham.  That is, if 3b applies, the owners are dead in the water, but even if it doesn't, they still have to convince the court the decertification was a sham.

Q.  Did the owners create a problem for themselves by acting in bad faith on their TV deal in terms of winning the "sham" argument on decertification?  What I mean is, are the owners now vulnerable to an argument that they don't have clean hands?  Or are the two issues - the NFL's bad faith on the TV deal and the argument that the NFLPA's decertification is a sham - completely separate issues?

A.  Both sides have an obligation to bargain in good faith.  It seems like the decertification issue is distinct from the issue of bargaining.  However, to the extent the owners are asserting bad faith on the union's part in the negotiations, the fact that the owners had earlier been found to have acted in bad faith may justify the union's actions.

Q.  I thought the NFL did a very effective public relations job of getting their message out to fans as the negotiations broke down.  But in the intermediate term, won't it be the players arguing in court that they are prepared to play without a contract and the lockout should end?

A.  Absolutely.  The players are arguing that the lockout should end and that teams should negotiate individual contracts with each player.  By refusing to do, players will argue, the teams are engaging in an illegal combination or conspiracy in restraint of trade, which violates federal antitrust law.  The players are in effect arguing for individual contract negotiation -- not just on the salary term, left open to individual negotiation for free agent players under the CBA, but for all terms of individual employment relationships.

Q.  But, in the longer term, doesn't the players' legal position have a problem in terms of fan support?  They will be attacking policies that most NFL fans really like - policies that result in parity and fair competition between the large and small NFL markets.  Don't the players risk becoming the bad guys if they succeed in getting rid of the draft, all restrictions on free agency, and the NFL's salary cap?

A.  I can't really speculate about what fans will think some months down the line.  My guess is, as long as there is NFL football this fall, fans will forgive both parties their stubbornness during negotiations.  But the bottom line is that lawsuits aren't decided by what fans want, but instead based on how a judge reads the law.  If the players win their lawsuit -- which I think is likely -- then the owners at the end of the day may look like the side that went too far.  To be sure, restraints like the salary cap promote parity, but if NFL teams operate as competitive business entities, there might be other ways, like offering teams up for public stock ownership, for even small market teams to generate the financial resources to stay competitive on the field.

When we start talking about fan support, there are certainly some areas in which fans think player unions go too far.  When unions seek to protect players who commit immoral or illegal acts, or when the unions fight aggressive performance enhancing drug testing, fans aren't likely to support the unions. But this breakdown is really about money.  The question is, will fans side with millionaire players or billionaire owners?  I think that the fans will eventually understand that the players, who have such short careers, deserve the share of revenues they negotiated for in the last CBA, not the share the owners are trying to leave them with today.

Q.  In what areas is the NFL vulnerable to a legal attack by individual players on the way they presently operate?

A.  The players can't challenge the NFL's joint marketing or TV deals.  But they certainly can challenge those rules that affect compensation, hiring, drafting, etc., of employees.  Any fair reading of the antitrust laws, to me, indicates that most of these restraints are unlawful in the absence of the protection provided by a CBA.  The only collaboration permitted among competing businesses -- which the teams clearly are -- would be collaboration that enhances economic competition.  With respect to hiring players, free agency, salary caps and the like, there is no good argument that the league's business practices do that.  If players could freely negotiate their salaries, you would certainly see top players paid more than they are, and all players would enjoy freedom to negotiate more guaranteed money and also greater freedom of mobility.

Q.  If the NFL goes back into operation under the terms they operated under last year - there would be no salary cap, because there was no salary cap for the 2010 season.  Does that give the owners some protection from the antitrust allegations in the players' lawsuit?

A.  The salary cap is just one of the issues the players can challenge in an antitrust claim.  If the league tries now to impose a salary cap, players can challenge that.  If instead the league does not impose a salary cap, other restrictions, like franchise status, free agency, and the draft, still remain open to a challenge by players.

Q.  I have read that a case called American Needle means that each NFL team is legally a separate business.  Is that true?  What does that case actually say?

A.  This Supreme Court case from last year established without doubt that the NFL consists of separate economic actors.  Under federal antitrust law, only combinations by separate economic entities can be attacked.  So if the NFL were just a single entity, it could set up whatever restraints it wants and not worry about the antitrust laws.  Since the Supreme Court rejected that argument -- one that the league has tried to assert in every antitrust claim it has faced -- the league now has to argue that its restraints are "reasonable."  That's a tough sell, since "reasonableness" requires that the restraints promote economic, not on-field competition.

Q.  My impression is that despite all the rancor, the two sides really need each other.  Isn't a collective bargaining agreement what makes many of the business practices of the NFL legal?

A.  It is because sports leagues so clearly restrain trade in athlete labor that having a union as a partner is so vital.  What sports law professors and some case law refer to as the "non-statutory labor exemption" from antitrust (or the "Jewel Tea" exemption, after an early case recognizing it) protects from antitrust scrutiny player restraints that are the product of collective bargaining.  Without a union and a CBA, most restraints on freedom of contract in athlete hiring would be struck down.  Clearly, the NFL business model for the last four decades requires a CBA and the union as a partner.  I'm not as sure that the players think they need the league.  Imagine if the players set up their own professional league, using private financing.  Would fans turn out for a new pro league featuring all of their favorite players, even if the team names were different?  Maybe so.  I don't think it will get that far, but, if the league loses its antitrust claims and doesn't want to give in to player demands, that's where players would be left.

Q. The NFL lost an important early battle involving the TV contract that they negotiated, which would have paid the owners (or maybe more accurately would have loaned the owners) about $4 billion in 2011 even if there was no football played. There would appear to be two problems with the NFL's TV deal: 1) the NFL negotiated it specifically to give them a cash infusion during the lock out; and 2) if the amount of money going to the players is based on a percentage of revenues, that $4 billion dollar loan probably wasn't something the broadcast companies were throwing in for free. That had to reduce the amount of money the NFL earned, and thereby reduce the amount that would go to the players. What did you think of the court ruling on the TV money?

A. The CBA required the NFL to act in good faith to maximize revenues for both the NFL and players. By signing these "lockout insurance" contracts, the NFL protected itself but left players in the lurch. The judge found that the NFL failed to act in good faith. I can't really fault that ruling. The league attempted to protect itself, clearly at the expense of the players.

Q. Judge Doty is perceived as being a good judge for the players. All he had to say, the last time the same parties were in his court, was that he going to rule and someone was going to be unhappy - and the owners settled immediately to avoid having him make a decision. Are the players justifiably confident bringing their case to Judge Doty?

A. Knowing the amount of attention paid to this litigation, my guess is that any judge deciding the case will try to apply the law. Judge Doty may have sided with players in the past, but different claims will present different issues, and there's no guarantee players will win every argument in his courtroom.

Q. Judge Doty is 82 years old - could part of the NFL's strategy be to try to delay the progress of the players' case until he retired?

A. I'd like to think the NFL isn't this short-sighted. Another judge, applying the same law, could just as easily reach similarly player-friendly results.

Q. Many commentators seem to see one of two things happening: 1) the players and owners settle; or 2) there is no football. But, history suggests a different result here. In the early 1990s, the NFL played several years with a decertified union and no collective bargaining agreement. That ended when Judge Doty announced he was ready to rule and the parties settled. How likely is it that a similar scenario would play out this time around?

A. Most observers didn't expect things to go this far, because the NFL is such a profitable entity and not playing football would leave too much money on the table. I think there is little doubt that there will be some football next year. Even if they give in to the players, owners will still be making money, and as they get advice from their lawyers, my guess is they will realize it's time to make peace.

Q. Looking at the scenario that the owners appear to be pursuing - they win the right to continue the lockout despite the decertification of the NFLPA. What do you see at the likely resolution of the dispute if that happens?

A. Although I think that's an unlikely prospect, I suppose we could see NFL football involving replacement players and those players willing to cross the "picket line" and rejoin NFL franchises. We've probably all seen the movie "The Replacements," but I expect that the product the NFL would be able to offer without its star players isn't likely to attract significant fan support. The owners might try it, in order to get some money from TV broadcasting, but it wouldn't be a sustainable business strategy.

Q. Flip it around, the players win the decertification issue. Does the owners' lockout have to end?

A. Realistically, yes. The owners can lock the players out indefinitely, but if they are found to have violated the antitrust laws, they will owe the players those salaries plus treble damages. If I were an owner, and I were trying to decide whether to pay players X and have them on the field or pay them three times X and not have them on the field, I'd want to make a deal.

Q. Assume the players force the NFL to continue to operate without a CBA. What risks to the owners face from the litigation brought by the players?

A. There are two sets of risks. The first is that the owners would lose. That would mean big money. The other risk is that the litigation itself would require the owners to make public many of the details of the league's business practices and financial circumstances it has fought in the negotiations to keep secret. The players will be able to put the commissioner -- and the owners -- on the stand and ask whatever questions the judge finds relevant. Since it seems the owners have information they don't want to share, that could be embarrassing and undermine the owners' public position.

Q. Federal antitrust laws have a "triple damages" provision. How worried should the owners be about having any damages tripled?

A. I think they should be very worried. Six billion dollars is a lot of money, but eighteen billion starts to sound even more serious.

Q. When the "Plan B" free agents sued, they won a fairly substantial jury verdict. How does that case fit in with the litigation the players are bringing against the NFL now?

A. The Plan B free agents convinced a jury that the NFL's system in place at the time was more restrictive than it needed to be. That is precisely the argument that all players will make about the salary cap, franchise players, and the like, and it should give the NFL pause about the likelihood of success they will have in court.

Q. When Curt Flood sued major league baseball, he lost. The Supreme Court held that an older case gave baseball an antitrust exemption and if Congress wanted to change that ruling, they could revoke the exemption. Is there any chance that that exemption could be extended to the NFL? If not, why not?

A. I don't think that's likely. There's some debate right now about the vitality of the Curt Flood decision among legal scholars and federal judges. Today's Supreme Court -- which often looks to the original intent of legislation -- might not affirm Flood itself. But even if Flood is a binding precedent, the courts have repeatedly declined to extend baseball's so-called exemption to other professional sports. These days all sports are protected from antitrust claims primarily by the non-statutory labor exemption, which requires negotiation with a union and a CBA.

Q. Major League Baseball had collusion litigation in the late 80s, and the owners got hammered for their gentlemen's agreements to not sign free agents. Do the NFL owners face a similar problem, or was that situation unique to baseball?

A. Because of baseball's exemption from antitrust laws, these collusion cases were brought by way of labor law grievances. The players argued that the collusion among baseball owners violated collective bargaining agreements. Since the NFL does not enjoy an antitrust exemption like baseball is said to, the players in football have a more powerful argument under the antitrust laws. Plus, since the CBA is gone, the grievance process won't be available to NFL players for future collusion.

Q. Let's say the NFL and the players wake up tomorrow and say to themselves, "what the heck have done!". And they want to settle. What would they need to do?

A. Now that the union has decertified, it would have to recertify in order to sign a new CBA. My guess is the paperwork to do that is already at the NFLPA's lawyers' offices, so that if -- in my view, WHEN -- the owners really blink, they will be ready to return to the bargaining table.

Q. The parties didn't reach an agreement, and they are not both going to "win". In your view, which side if over playing its hand, players or owners?

A. The owners here have, in my view, miscalculated wildly. They seem to be blinded by greed. The question is, what kind of return is a team owner entitled to? The union has produced studies -- which the NFL thinks are based on suspicious data -- showing that even if owners claim to be losing money in a given year, they enjoy tremendous returns from the appreciation in the value of the teams they own. The owners also enjoy publicity and getting to feel like "big cheeses," something that they probably don't get from the other business ventures they've used to acquire the money to buy teams in the first place. Did anyone, for instance, care about Dan Snyder when he ran a business putting flyers up on bulletin boards in college dorms? But now he gets to sit in the owner's box in Washington with the President of the United States. I'm sure the players will be willing to give the owners something in exchange for a deal, but the owners' initial demands, unsupported by disclosure of financial information, were unreasonable. The fact that the owners reportedly came off their initial $1 billion demand by close to 90% suggests to me the owners know that they're better off with the players even under the terms of the last CBA.

Thank you Professor for giving us your insights on these complicated issues, I hope we can do this again as progress is made and new issues and questions arise.


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