NFL Lockout Injunction Reversal: Using Labor Law Against Employees

Big news in the sporting and antitrust litigation worlds — which overlap considerably — on Friday when the U.S. Court of Appeals for the Eighth Circuit (which hears all appeals in federal cases filed in the states between North Dakota, Minnesota, Arkansas, and Nebraska), reversed a preliminary injunction imposed by the U.S. District Court for the District of Minnesota prohibiting the NFL owners from imposing a “lockout” on players.

The order is posted here; when I reference Opinion and Bye Dissent below, I’m referring to that PDF. Two judges, Colloton and Benton (both appointed by George W. Bush — hold that thought) voted in favor of dissolving the injunction while the third judge, Bye (Clinton), provided a lengthy dissent.

As with all sports law news, start with Michael McCann. Here’s his Sports Illustrated column on the ruling. It’s a good summary; I’m going to get more technical and legally opinionated than he can get in an SI column. (Short version of our conclusions: we both agree that a request for en banc review is unlikely, but I’m more sanguine on the players’ odds in a petition to the U.S. Supreme Court.) ESPN has a Q&A as well. Howard Bashman has a round-up of stories here.

It’s probably best to start with the court did not do: the court did not rule on any of the antitrust allegations made by the players. The antitrust case filed by the players can continue to go forward. The court didn’t even rule on whether the players were entitled to an injunction under antitrust law; rather, the court held that labor law precluded the current players from obtaining an injunction and restricted the type of injunction the prospective players could get.

That said, it seems unlikely that either the players or the teams (not to mention their coaches, most of whom live in a precarious existence in which they change teams every two years, and so sided with the players in the case in an amicus brief) have the stomach for years of antitrust litigation during a lockout. More likely, the players and the teams intend to use these preliminary rulings on injunctions and antitrust/labor law to inform their bargaining positions. As the New York Times reports:

According to one person briefed on negotiations, the timing of the court’s opinion — issued in the morning — was “awful” and “not helpful” to the talks, unsettling them just as the sides hoped to finish discussions on the revenue split, the heart of the dispute.

The decision emboldened the hawks among both parties, the person said, inspiring some owners to want more concessions from players, and some on the players’ side to want to press their case, with the prospect that the court could allow antitrust damages.

It seems more than a little strange that both sides could feel emboldened by the order, particularly because, on the most basic level, the players lost one of their most valuable bargaining chips, i.e., the District Court order enjoining the lockout. So let’s dig a little bit deeper into what the opinion actually held and what it holds for the future, both for the NFL and for everyday employees.

There’s a lot to unpack here. We’re going to do it with a lot of laterals, like The Play.

The Players’ Antitrust Trick Play

The most obvious question is: why are we talking about antitrust at all? For purposes of antitrust law, the players are all one big union, which makes the teams all one big employer, and so the teams — at least with regard to their dealings with players — are likely a “single entity” under antitrust law. The teams thus can’t, as a legal matter, set up a “contract, combination in the form of a trust or otherwise, or, conspiracy, in restraint of trade” as prohibited by § 1 of the Sherman Act. A “single entity,” as they say, can’t agree or conspire with itself.

The players tried to get around that by busting up their own union. Right before the players–teams agreement ran out, the players ended the NFLPA’s status as their collective bargaining representative. The NFLPA then amended its bylaws to prohibit collective bargaining with the teams and filed requests with the Department of Labor and the Internal Revenue Service to be reclassified as no longer being a union.

At that point, the teams cease to be a “single entity” and turn into 32 separate entities, and that likely subjects them to antitrust scrutiny. As the Supreme Court held last year in American Needle v. National Football League, a separate case:

The NFL teams do not possess either the unitary decision-making quality or the single aggregation of economic power characteristic of independent action.   Each of the teams is a substantial, independently owned, and inde­pendently managed business.

Thus, as the players have argued, the teams can be liable for engaging in anticompetitive practices that violate § 1 of the Sherman Act, including limiting compensation for just-drafted rookie players, capping salaries for current players, and imposing restrictions on free agents like the “franchise player” and “transition player” designations.

At least that’s the players’ theory. Will it work? Maybe not: despite the American Needle case, which came to the Supreme Court on a very narrow issue — that is, if it was legally possible for the teams to be sued under antitrust laws — the Supreme Court and other federal appellate courts have been notoriously hostile to antitrust claims over the past few years. Consider AT&T v. Twombly (I discussed it briefly here; Twombly kicked off the line of cases later generally referred to as Ashcroft v. Iqbal), which dismissed — before even allowing discovery, much less trial — a fairly compelling antitrust case against the telecommunications companies. Truth is, the Supreme Court just plain doesn’t like consumers and employees.

The players at this point have three options:

  1. Giving up on the injunction, and just moving forward with the antitrust case;
  2. Appealing the Eighth Circuit’s injunction opinion either to the full Eighth Circuit sitting en banc (the current opinion was just a three-judge panel); or,
  3. Appealing to the Supreme Court (which they can do even after an en banc appeal, though it takes longer, and if the Supreme Court accepts the case, though certiorari isn’t assured).

I don’t see why they wouldn’t do #2 or #3. My hunch is that they’ll skip straight to #3: the Eighth Circuit is the most Republican Circuit in the nation, with 9 of its 11 active judges appointed by Republican Presidents (7 by George W. Bush), and so they’re arguably the most hostile Circuit towards unions, employees and consumers. With the Supreme Court, the players at least have a chance.

So let’s figure out what happened in the opinion.

The Ghost of the Lochner Era Returns To Use Labor Laws Against Employees

To understand the Eighth Circuit’s opinion, and what’s so wrong with it, you need to know some legal history. From 1914 and continuing into the New Deal — known to historians as The Progressive Era and to legal historians the Lochner era — Congress passed a series of laws designed to protect organized labor against repeated efforts by courts to order injunctions preventing strikes and other activities by labor unions. Each time Congress would pass a law precluding courts from entering injunctions against unions — like the Clayton Act — the courts would come back around and find a way to ignore it and continue entering injunctions against striking employees.

Congress eventually fixed the problem of courts entering injunctions against striking unions with the Norris-LaGuardia Act. It starts with 29 U.S.C. § 101, which says “[n]o court of the United States . . . shall have jurisdiction to issue any . . . temporary or permanent injunction in a case involving or growing out of a labor dispute, except in strict conformity with the provisions of this chapter.” The operative word, “labor dispute,” is defined broadly by 29 U.S.C. § 113(c), as a means of extending the protection against injunctions beyond merely employees or union members, to:

any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment, regardless of whether or not the disputants stand in the proximate relation of employer and employee.

See Bye Dissent, pp. 35–40. There’s no doubt that the Norris-LaGuardia Act was meant to protect workers, not employers. Prior to the latest opinion, even the Eighth Circuit routinely entered injunctions against employers where necessary. See, e.g.N.I.S. Corp. v. Swindle, 724 F.2d 707 (8th Cir.1984).

The two Republican judges ignored that history and precedent and, in a move that resurrects the Lochner era, held that the Act applies for the benefit of employers, too, and this case involves a “labor dispute,” despite the termination of the NFLPA’s union powers, and because:

Whatever the effect of the union’s disclaimer on the League’s immunity from antitrust liability, the labor dispute did not suddenly disappear just because the Players electedto pursue the dispute through antitrust litigation rather than collective bargaining

I’ve bolded that sentence because that’s why the players think the opinion might be good for them. The Court appeared to tip its hand, ever so slightly, to say that it might believe the teams are still exposed to antitrust liability.

I don’t make much of that; Courts routinely say things like “whatever the effect” and “regardless” and “we are not called upon to decide” and the like. It’s just a way for the Court to explain what it’s not ruling on. Then again, the players do have some cause to celebrate — the Eighth Circuit didn’t blow up their antitrust claim entirely — but let’s not forget what the Court is doing: taking away the only weapon the players can immediately use, the injunction.

The Eighth Circuit Sticks It To Employees

Once the Eighth Circuit found the Norris-LaGuardia Act protected employers, too, that still didn’t mean the injunction on the lockout was a problem. The Act permits some injunctions, but only in limited circumstances. One limitation of 29 U.S.C. § 104 is its prohibition, in subsection (a), on injunctions issued “to prohibit any person or persons participating or interested in [a labor dispute] … from doing, whether singly or in concert, any of the following acts: … ceasing or refusing to perform any work or to remain in any relation of employment.”

It’s quite obvious that sentence was meant to prevent courts from enjoining strikes by employees. Three other circuit courts, the First, Seventh, and Ninth, already held long ago that such was the case, and so 29 U.S.C. § 104(a) couldn’t be use to prevent injunctions issued against employers.

But not to the Republicans in the Eighth Circuit. You see, 29 U.S.C. § 104(a) begins with “person,” which to them means “corporation,” which means “employers,” and a lockout is nothing more than “refusing to perform any work or to remain in any relation of employment.”

Of course, the NFL teams are not in any “performing any work” or “in any relation of employment” — they’re the employers, not the employees — but that didn’t matter.

Thus, the court concluded:

For these reasons, we conclude that § 4(a) of the Norris-LaGuardia Act deprives a federal court of power to issue an injunction prohibiting a party to a labor dispute from implementing a lockout of its employees.

Opinion, p. 32. And that’s the big conclusion: just as § 4(a) of the Norris-LaGuardia Act precludes courts from enjoining strikes, it precludes them from enjoining lockouts.

That’s a truly terrible ruling. It means that any employer — not just the NFL, but every employer in the Eighth Circuit — can lockout employees, even in violation of other federal laws (e.g., antitrust), to pressure the employees into accepting worse terms.

A company can lockout employees and not pay them their wages due, in violation of Wage and Hour laws, and a court can’t order them to pay until the end of the lawsuit. A company can lockout employees and discontinue their insurance coverage, in violation of ERISA, and a court can’t order them to pay until the end of the lawsuit.

It sounds ridiculous and unfair because it is: the Eighth Circuit opinion is outrageous and unsupportable.


Playing The Odds At The Supreme Court

Like I wrote above, I bet the players try straight for the Supreme Court. As McCann says, though, “The Court typically does not review an interlocutory order unless it is necessary to resolve a split in authority among the federal circuits or is a novel question of law of great importance.” He doesn’t see either; I see both, and, if the Supreme Court takes the players’ appeal, I bet they’ll win.

First, as noted above, the question is of great importance: the Eighth Circuit drew a broad brush in explaining the scope of its ruling. It is indeed big news, even outside the NFL and sports in general, that no one in the Eighth Circuit can get an injunction against an employer that has started a lockout. There is similarly a split in opinions among the Circuits: the First, Seventh and Ninth Circuits don’t think the Norris-LaGuardia Act’s anti-injunction provisions can be applied to employers. Bye Dissent, pp. 43–46.

That’s how the players will get in the doors to the Supreme Court. Here’s how they might win.

Sure, the Supreme Court has a 5–4 majority of Republicans, but some of the Supreme Court Republicans recognize (sometimes) that you can’t just start reading statutes however you want: the legislative purpose matters. Consider how all the Justices except Scalia and Thomas decided Kasten v. Saint-Gobain Performance Plastics Corp. earlier this year:

The Act protects employees who have “filed any complaint,” 29 U. S. C. §215(a)(3), and interpretation of this phrase “depends upon reading the whole statutory text, considering the purpose and context of the statute, and consulting any precedents or authori­ties that inform the analysis,” Dolan v. Postal Service, 546 U. S. 481, 486 (2006).  This analysis leads us  to conclude that the language of the provision, considered in isolation, may be open to competing interpretations.  But consider­ing the provision in conjunction with the purpose andcontext leads us to conclude that only one interpretation is permissible.

That “one interpretation” was that employees who provided oral, rather than written, complaints were still protected under the anti-retaliation statutes of the Fair Labor Standards Act.

Application of the Norris-LaGuardia Act to the NFL lockout presents a similar problem: sure, if you try to interpret the words in a vacuum, then an antitrust lawsuit filed after a union is dissolved can be a “labor dispute” and an employer-initiated lockout can be “refusing to perform any work or to remain in any relation of employment.” But when the purpose and context of the Norris-LaGuardia Act is considered — like it was in Judge Bye’s thorough and persuasive dissent, particularly at pp. 48–58 — then it’s obvious that Congress did not intend for the Act to be used as a means by which employers in violation of federal antitrust law could nonetheless combine together to extract concessions from their employees.

More than just an extension of sports entertainment, the case presents a sad commentary on anti-worker, anti-competitive state of American law: even wealthy celebrities can’t get a fair shake in court when employment or antitrust law is involved.

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  • Sports also saw an interesting change in workers’ compensation law in Florida recently with the “Extraterritorial Reciprocity” statute. It essentially bars employees from filing workers comp claims in other states when their partially employed in another state. They found that about 90% o Florida NFL players were filing their workers comp claims in California and not Florida (most likely for the liberal aspect of workers comp laws in Calif.)