Supreme Court to Rule on Antitrust Issues in Sports : Employment: Salary caps for teams have drawn attention. But the entertainment and construction industries also could be affected.


The Supreme Court intervened Friday in a recurring dispute involving professional sports and the entertainment industry, announcing that it would rule on whether employers can be sued for collusion under antitrust laws when they unilaterally set wages and work rules.

The issue has gained national attention as professional sports teams have tried to set a "salary cap" for a team or to limit bargaining by "free agents."

But lawyers say the matter goes far beyond sports and could tip the balance of power between management and labor in many other areas in which workers bargain with several companies, including construction and the entertainment industry.

The case, to be heard in spring, involves a conflict between two venerable federal laws. The antitrust laws, dating from 1890, make it illegal for companies to conspire together. But labor laws, dating from 1935, encourage workers and employers to get together and bargain collectively.

For decades, it has been understood that employers, whether Hollywood studios or construction contractors, can adopt a common approach for dealing with union workers without being accused of collusion.

But can these same employers go around the union when bargaining fails and set unilateral rules without being subject to antitrust laws?

Major league baseball won a special exemption from the antitrust laws in a still-controversial 1922 ruling by the Supreme Court.

However, the owners of teams in other sports, as well as Hollywood studios and construction contractors, were still assumed to be subject to the antitrust laws. If they ignored collective bargaining and conspired to set unilateral rules for their employees, they could face a crippling antitrust verdict.

Two years ago, for example, a jury in Washington handed down a $30-million verdict against the National Football League because its owners had unilaterally imposed a $1,000-per-week salary on its "taxi squad" players.

These players, six per team who play in practice but do not suit up for games, had previously won contracts paying as much as $5,000 a week. But in 1989, the NFL owners decreed that their salaries would be $1,000.


In March, however, NFL owners won a reprieve from the U.S. appeals court here. In a 2-1 ruling, the court said companies are immune from antitrust laws once they begin a "relationship" involving collective bargaining.

The National Basketball Assn. had won a similarly sweeping victory before a court in New York.

In both instances, the judges established an either-or policy. Either workers can rely on labor law or the antitrust laws, but not both, they said.

The Justice Department joined the professional players in their appeal.

If companies can both bypass their unions and ignore the antitrust laws, they are being given a green light to conspire together and impose unfair wages on workers, Clinton administration attorneys told the court.

The case is Brown vs. Pro Football Inc., 95-388.

A brief filed on behalf of the Screen Actors Guild, American Federation of Television and Radio Artists, Directors Guild of America and Writers Guild of America said the lower court rulings, unless reversed, "will have devastating effects on labor relations throughout the entertainment industry."

Like in professional sports, "the entertainment industry . . . is the province of employer conglomerates," they said. Employees and their unions deal with a handful of major studios, television networks and recording companies.

"Employers will obviously be tempted to restrain competition through collusion in the talent market, if they can do so with antitrust immunity," the brief says.

Major league baseball and hockey players also urged the justices to overturn the lower court rulings and to preserve the anticollusion laws when bargaining fails. If the high court disagrees, employees could be faced with the need to disband their union as a means of blocking collusion by employers.

Meanwhile, the justices also said they will rule on whether drunkenness can be used as an excuse in a murder case. Montana courts recently overturned a man's conviction for shooting and killing two companions because jurors were not allowed to consider the fact that he was totally intoxicated at the time.

In their appeal, state prosecutors said this approach will encourage defendants to use drunkenness as an excuse. The court said it will hear the appeal in the case (Montana vs. Egelhoff, 95-566).

Rulings in both cases can be expected before the end of June.

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