Monday, June 29, 2009
Supreme Court to hear antitrust case
WASHINGTON -- In taking a case involving the National Football League's exclusive licensing deal for sports merchandise, the Supreme Court could go beyond caps and give leagues more leeway in areas such as team relocation, legal scholars said Monday.
"A broad ruling in favor of the NFL could rewrite almost all of sports antitrust law," said Gabe Feldman, associate law professor and director of the Sports Law Program at Tulane University in New Orleans.
The court will hear an appeal from American Needle Inc., of Buffalo Grove, Ill., which filed an antitrust challenge to an agreement the NFL struck with Reebok International Ltd.
American Needle had been one of many firms that manufactured NFL headwear until the league granted an exclusive contract to Reebok in 2001.
The NFL won the case in the federal appeals court in Chicago. But it also asked the Supreme Court to hear the case in a quest for a more sweeping decision that could put an end to what the league considers costly, frivolous antitrust lawsuits.
The court decided to take the case against the advice of the U.S. Solicitor General's office.
The central question is whether the league is essentially a "single entity" that can act collectively, as the NFL argues, or 32 distinct businesses that must be careful about running afoul of antitrust laws.
Matt Mitten, a law professor and director of the National Sports Law Institute at Marquette University in Milwaukee, called the court's decision to take the case significant.
"This will be the first time the Supreme Court will consider the merits of the single entity defense," he said, adding that a favorable court decision could give the league "a lot more room not to have to fear suits" on issues such as relocation and ownership requirements.
In a statement, NFL spokesman Greg Aiello said the league looked forward to explaining why the court should extend, on a national basis, favorable appeals court rulings on how antitrust laws apply "to the unique structure of a sports league."
American Needle did not respond to telephone messages Monday.
Other than Major League Baseball, which has an antitrust exemption dating to a 1922 Supreme Court decision, the other sports leagues have an intense interest in the case. The National Basketball Association and the National Hockey League both asked the court to rule in favor of the NFL.
"We look forward to the Supreme Court finally resolving what has become an oft-litigated, contentious issue in litigation involving professional sports leagues," said NHL deputy commissioner Bill Daly in a statement.
The NBA declined to comment.
Daniel C. Glazer, a lawyer at the New York-based law firm Patterson Belknap Webb & Tyler, said an NFL victory on the single entity issue would represent a significant change.
"Certain business activities of the NFL would not be subject to antitrust review by the government, and thus be exempt from potential government intervention and oversight," said Glazer, who has expertise in intellectual property and sports.
Stephen Ross, director of the Penn State Institute for Sports Law, Policy and Research, said he found the court's decision to take the case "deeply disturbing."
"This case did not need to be heard by the court unless it had a broad plan from withdrawing the pro-consumer protections of the antitrust laws to sports fans," said Ross, a former lawyer for the Federal Trade Commission and the Justice Department's antitrust division.
But Mitten, the Marquette professor, said he wouldn't make any assumptions about what the court would do based on its acceptance of the case.
Reebok was acquired by Adidas AG in 2006 in a $3.8 billion deal that helped the German company expand in the United States.
The case will be argued late this year or early in 2010.
The case is American Needle v. National Football League, 08-661.
A favorable court decision for the NFL could give it "a lot more room not to have to fear suits" on issues such as relocation and ownership requirements, according to a Marquette law professor.