Supreme Court justices skeptical of NFL’s effort to quash antitrust suit

The Supreme Court justices signaled Wednesday that they are not inclined to shield the NFL and other pro sports leagues from federal antitrust laws.

At issue is whether the NFL can be sued for giving a single company -- Reebok International Ltd. -- an exclusive license to market hats, T-shirts and other apparel carrying logos of the league’s 32 teams.

The case of American Needle Inc. vs. the NFL is being closely watched because of what it could mean for players, coaches and fans if the owners had the freedom to operate as a single business.

The NFL is seeking a high court ruling that the league is a “single entity” and, therefore, shielded from antitrust claims. A single company cannot be accused of conspiring with itself.

If the high court were to deem the league a single entity, the NFL players and coaches worry that the owners would conspire to restrict their salaries. Currently, players can sell their services as free agents and seek more money from competing teams.

But the NFL’s single entity argument ran into skepticism from most of the justices.

Gregg Levy, the NFL’s lawyer, said the league operates as a single business. “No NFL team can produce a product on its own,” he said, and the selling of hats and T-shirts is intended to promote the league.

“The purpose is to make money,” scoffed Justice Antonin Scalia. “I don’t think they care whether the sale of the helmet or the T-shirt promotes the game. They sell it to make money.”

When Levy insisted that the NFL acts as a single business, Justice Sonia Sotomayor interrupted. “You are seeking through this ruling what you haven’t gotten from Congress: an absolute bar to an antitrust claim,” she said. “Once you fix prices to make money, that is a Sherman Act violation,” she said, referring to the landmark antitrust law.

Most of the justices seemed to doubt that American Needle, a small Chicago-area hat maker that lost its license to sell stocking caps with NFL logos, will ultimately win its antitrust suit against the NFL.

But most of them also seemed to think the company should be permitted to try. To win its suit, the company would have to prove that consumers were hurt by the NFL’s exclusive marketing deal.

Justice Stephen G. Breyer, one of the court’s antitrust experts, said the NFL was entitled to say it operated as a joint venture. On that basis, it could set rules, such as for the scheduling of games and for competition on the field.

But even so, its business decisions could be challenged if they unfairly restrained competition and hurt consumers.

American Needle says consumers were paying unfair, monopoly prices because of the exclusive licensing deal with Reebok.

Breyer asked: “Why shouldn’t they have their shot” at proving their case in court?

Last year, the U.S. 7th Circuit Court of Appeals in Chicago ruled for the NFL and threw out the suit brought by American Needle.

A Justice Department lawyer also urged the justices Wednesday to send the case back to Chicago and to permit American Needle to try to prove its antitrust claim.

david.savage@latimes.com