The U.S. Supreme Court ruled in favor of plaintiff American Needle and a more expansive view of the scope of antitrust law today with what may well turn out to be a landmark opinion in the much anticipated case of American Needle, Inc. v. National Football League.

The decision rejects the lower courts’ broad grant of immunity to joint ventures from the conspiracy prohibition of § 1 of the Sherman Antitrust Act.

American Needle, the plaintiff-petitioner and a manufacturer of NFL-licensed headwear, claimed that the NFL acted anticompetitively by granting Reebok the exclusive license for certain NFL paraphernalia.  The trial court granted summary judgment to the NFL, and the U.S. Court of Appeals for the Seventh Circuit affirmed.  Both lower courts held that, in licensing individual team and NFL trademarks, the NFL was operating as a single entity under antitrust law – as opposed to multiple, collectively acting ball clubs – and thus was immune from the conspiracy prohibition of § 1 of the Sherman Act. 

The Supreme Court held unanimously that the NFL clubs are not immune from the conspiracy prohibition of the Sherman Act – at the very least with respect to licensing their intellectual property.  The Court’s language also indicates that the Court likely would hold the NFL clubs subject to the conspiracy prohibition with respect to the full panoply of the NFL’s operations.

The Court rejected the NFL’s position that, because everything the NFL does promotes NFL professional football, the NFL is really an integrated single entity immune from the conspiracy prohibition.  The Court also rejected the middle-of-the-road rule suggested by the Department of Justice’s Antitrust Division, which would not apply the conspiracy prohibition if “the teams and the league . . . have effectively merged the relevant aspects of their operations.” 

Most importantly, the Court took the opportunity to restate and clarify the principles governing when to apply the Sherman Act’s conspiracy prohibition.  Thus, American Needle will govern the application of antitrust law in all industries, not just professional sports, as evidenced by the submission of an amicus brief by Visa and MasterCard in the payments industry.  (Visa and MasterCard are public corporations owned by separate legal entities, including banks that were members of Visa and MasterCard when Visa and MasterCard were organized as joint ventures.) click here for more »

If the recent oral argument in American Needle, Inc. v. National Football League is any guide, the U.S. Supreme Court might just thread the needle and decide that case on a narrower, more middle-ground, basis than the Seventh Circuit decision, which raised the specter of freeing all professional sports leagues from antitrust scrutiny.

The Supreme Court heard oral argument on January 13, 2010, in the much anticipated case, which may well result in a watershed opinion in antitrust law as applied to sports leagues and joint ventures generally.

American Needle, the plaintiff-petitioner and a manufacturer of NFL-licensed headwear, claims that the NFL acted anticompetitively by granting Reebok the exclusive license for certain NFL paraphernalia.  The trial court granted summary judgment to the NFL, and the U.S. Court of Appeals for the Seventh Circuit affirmed.  Both lower courts held that, in licensing individual team and NFL trademarks, the NFL is a single entity under antitrust law – as opposed to multiple, collectively acting teams – and thus not subject to the anticonspiracy prohibition of § 1 of the Sherman Act.  For more detail about the case, click here for this blog’s prior discussion.

The Supreme Court’s treatment of the NFL’s claim to be a single entity will determine the extent to which the NFL’s actions are immunized from § 1 of the Sherman Act.  (While the NFL would remain subject to the antimonopoly provisions of § 2, § 1 claims are typically easier to prove.)

At one extreme, the Court could hold that, because everything the NFL does promotes NFL professional football, the NFL is really an integrated single entity immune from the anticonspiracy prohibition.  In this scenario, the NFL could fix prices for everything:  players’ and coaches’ salaries; tickets; hats; jerseys; T-shirts; etc.  At the other extreme, the Court could hold that, because the NFL is comprised of multiple ball clubs, everything it does is subject to the anticonspiracy prohibition.  For example—in a hypothetical posed by Justice Kennedy, the likely swing vote—the antitrust laws could be used to challenge game rules providing greater protection to quarterbacks because the rules would disfavor teams with better running games.

The justices’ questioning of the lawyers indicated that the Court will likely reject both extremes. click here for more »

The chairman of the House Judiciary Committee, Rep. John Conyers (D.-Mich.), has announced that on January 20, the Committee’s Subcommittee on Courts and Competition Policy will hold a hearing on the Supreme Court’s pending decision in American Needle, Inc. v. National Football League. 

The notice of the hearing can be found here:

http://judiciary.house.gov/hearings/hear_100120.html

In the case below, the Seventh Circuit held that the NFL was a single entity for antitrust purposes – not a group of 32 separate companies that could conspire together. 

            That decision can be found here: 

http://www.ca7.uscourts.gov/tmp/T40LC5H9.pdf

            The Court granted certiorari last June and heard arguments on January 13.  The Subcommittee has not as yet released a witness list for the hearing.

It may be a Hail Mary pass, but New Orleans Saints quarterback Drew Brees has thrown a long bomb to the Supreme Court with a Washington Post op-ed that warns the Supremes that their decision in the upcoming case of American Needle, Inc. v. National Football League, could end up sacking both professional athletes and antitrust enforcement.

At issue in the American Needle case is the extent to which the NFL – and by implication all professional sports leagues – should be considered a single entity immune from antirust claims of conspiracy.  The Supreme Court is slated to hear oral arguments in the case on Wednesday.

In his op-ed, Brees expresses concern that the Seventh Circuit’s decision in American Needle – if affirmed or extended – could enable football teams to agree to abolish free agency and otherwise eliminate all competition from their multibillion dollar business without fear of antitrust scrutiny.

In a previous post, this blog examined the far-reaching implications the American Needle case could have for antitrust regulation of all professional sports leagues in the U.S.

Sports leagues and other joint ventures may score an antitrust victory in the Supreme Court this term that makes the Baseball Antitrust Exemption look strictly minor league.

The Supreme Court will hear the case of American Needle, Inc. v. National Football League, which concerns the NFL’s practice of licensing NFL and team logos and other intellectual property exclusively through the NFL’s wholly-owned subsidiary, NFL Properties LLC.

At issue is the extent to which joint ventures, like the NFL, can be considered “single entities” under antitrust law—as opposed to multiple, collectively-acting ball clubs—and thus not held subject to the anticonspiracy prohibitions of § 1 of the Sherman Act.  American Needle thus has the potential to be a watershed case in antitrust analysis of sports leagues and other joint ventures. click here for more »