High Court OKs Wage-Fixing by Industry Groups

In a victory for Hollywood studios, owners of professional sports clubs and other employers who unite to bargain with employees, the Supreme Court ruled Thursday that these industry groups can try to fix wages without fear of being sued under antitrust laws.

The 8-1 decision says that workers can seek protection under labor laws or antitrust laws--but not both.

Though the case arose from a dispute involving professional football players, the ruling will affect more than 2.3 million employees who are covered by “multi-employer” contracts in industries ranging from entertainment to trucking and construction.

While the ruling tilts the law in favor of employers, some experts in labor-management relations said they doubt that it will have broad impact. Workers always remain free to strike, they said, or to disband their union entirely if the bargaining process is hurting them more then helping them.

“It doesn’t really change the rules,” New York attorney Howard Ganz said of the decision. “I think the view has been that if the collective-bargaining process is going to work, you can’t threaten the other side with antitrust suits.”

But a union lawyer condemned the decision as unfair.

“This is judicial activism at its worst,” said Joseph Yablonski, a Washington labor lawyer who won a $30-million antitrust judgment on behalf of pro football’s relatively low-paid practice-squad players.

Thursday’s ruling throws out that decision.

“I have 235 very large, very angry guys I need to contact,” Yablonski said.

The attorney who argued the Supreme Court case on behalf of the NFL players was Whitewater prosecutor and former U.S. Solicitor General Kenneth W. Starr.

The decision (Brown vs. Pro Football Inc., 95-388) settles a conflict between the nation’s labor and antitrust laws.

Normally if several companies in an industry conspire to fix wage rates, they could be charged with violating antitrust law.

But since the 1930s federal labor laws have encouraged collective action by workers and employers. Judges have understood that collective bargaining is shielded from antitrust suits, even when it involves several companies adopting a joint approach with union workers.

But what happens if bargaining breaks down and the employers unilaterally impose a wage deal?

The Supreme Court settled that recurring question by siding squarely with the employers.

The “joint imposition of terms by employers” is allowed and is protected from antitrust liability, Justice Stephen G. Breyer wrote for the court. “As a matter of logic, it would be difficult, if not impossible, to require groups of employers and employees to bargain together but at the same time to forbid them to make among themselves . . . any competition-restricting agreements potentially necessary to make the process work.”

The case began in 1987 when negotiations between the National Football League and the players’ union broke down and the NFL imposed a $1,000-per-week salary on all “development squad players”--those who fail to make the team but still practice with the regulars.

Yablonski filed a suit accusing the NFL of illegally conspiring to fix the players’ wages. A jury here agreed and awarded them $10 million in damages. Under the antitrust laws, that amount was tripled to $30 million.

Major league baseball was declared exempt from antitrust laws in 1922, but other professional sports do not share that exemption.

The pro football players disbanded their union for a time, which left the owners vulnerable to being sued if they conspired to block players from winning better contracts as free agents.

James W. Quinn, an attorney who has represented pro hockey and football players, said the ruling was disappointing but predicted that it will not have much effect.

“The players retain the option to decertify,” he said.

In the entertainment industry, as well as in pro sports, union contracts generally set minimum wage rates and work rules while leaving highly talented employees the right to negotiate better deals.

Lawyers for the Screen Actors Guild, the Writers Guild of America, the Directors Guild of America and the American Federation of Television and Radio Artists filed a joint brief siding with the football players. They predicted that Hollywood employers will conspire to hold down salaries if they are freed from the antitrust laws.

“The entertainment industry, like the sports industry, is the province of employer conglomerates,” said attorney David Alter. “Employers will obviously be tempted to restrain competition through collusion in the talent market if they can do so with antitrust immunity.”

Alter predicted that if entertainment industry employers are allowed to conspire to fix wages, employees could be left with a choice of either striking or disbanding their unions.

Justice John Paul Stevens dissented from the high court’s ruling, complaining that this “newly minted exemption” for wage-fixing employers “conflicts with the basic purpose of both the antitrust laws and the national labor policy.”

In other action, the court shielded the federal government from paying damages if it discriminates against a disabled person. The 7-2 decision (Lane vs. Pena, 95-365) says that Congress did not strip the government of its traditional immunity.