|Brown v. Pro Football, Inc. (95-388), 518 U.S. 231 (1996)|
[ Breyer ]
[ Stevens ]
ANTONY BROWN, et al., PETITIONERS v. PRO
FOOTBALL, INC., dba WASHINGTON REDSKINS, et al.
on writ of certiorari to the united states court of appeals for the district of columbia circuit
The basic premise underlying the Sherman Act is the assumption that free competition among business entities will produce the best price levels. National Soc. of Professional Engineers v. United States, 435 U.S. 679, 695 (1978). Collusion among competitors, it is believed, may produce prices that harm consumers. United States v. Socony Vacuum Oil Co., 310 U.S. 150, 226, n. 59
(1940). Similarly, the Court has held, a market wide agreement among employers setting wages at levels that would not prevail in a free market may violate the Sherman Act. Anderson v. Shipowners Assn. of Pacific Coast, 272 U.S. 359 (1926).
The jury's verdict in this case has determined that the market wide agreement among these employers fixed the salaries of the replacement players at a dramatically lower level than would obtain in a free market. While the special characteristics of this industry may provide a justification for the agreement under the rule of reason, see National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U.S. 85, 100-104 (1984), at this stage of the proceeding our analysis of the exemption issue must accept the premise that the agreement is unlawful unless it is exempt.
The basic premise underlying our national labor policy is that unregulated competition among employees and applicants for employment produces wage levels that are lower than they should be. [n.1] Whether or not the premise is true in fact, it is surely the basis for the statutes that encourage and protect the collective bargaining process, including the express statutory exemptions from the antitrust laws that Congress enacted in order to protect union activities. [n.2] Those statutes were enacted to enable collective action by union members to achieve wage levels that are higher than would be available in a free market. See Trainmen v. Chicago R. & I. R. Co., 353 U.S. 30, 40 (1957).
The statutory labor exemption protects the right of workers to act collectively to seek better wages, but does not "exempt concerted action or agreements between unions and nonlabor parties." Connell Constr. Co. v. Plumbers, 421 U.S. 616, 621-622 (1975). It is the judicially crafted, nonstatutory labor exemption that serves to accommodate the conflicting policies of the antitrust and labor statutes in the context of action between employers and unions. Ibid.
The limited judicial exemption complements its statutory counterpart by ensuring that unions which engage in collective bargaining to enhance employees' wages may enjoy the benefits of the resulting agreements. The purpose of the labor laws would be frustrated if it were illegal for employers to enter into industry wide agreements providing supracompetitive wages for employees. For that reason, we have explained that "a proper accommodation between the congressional policy favoring collective bargaining under the NLRA and the congressional policy favoring free competition in business markets requires that some union employer agreements be accorded a limited nonstatutory exemption from antitrust sanctions." Id., at 622.
Consistent with basic labor law policies, I agree with the Court that the judicially crafted labor exemption must also cover some collective action that employers take in response to a collective bargaining agent's demands for higher wages. Immunizing such action from antitrust scrutiny may facilitate collective bargaining over labor demands. So, too, may immunizing concerted employer action designed to maintain the integrity of the multi employer bargaining unit, such as lockouts that are imposed in response to "a union strike tactic which threatens the destruction of the employers' interest in bargaining on a group basis." NLRB v. Truck Drivers, 353 U.S. 87, 93 (1957).
In my view, however, neither the policies underlying the two separate statutory schemes, nor the narrower focus on the purpose of the nonstatutory exemption, provides a justification for exempting from antitrust scrutiny collective action initiated by employers to depress wages below the level that would be produced in a free market. Nor do those policies support a rule that would allow employers to suppress wages by implementing noncompetitive agreements among themselves on matters that have not previously been the subject of either an agreement with labor or even a demand by labor for inclusion in the bargaining process. That, however, is what is at stake in this litigation.
In light of the accommodation that has been struck between antitrust and labor law policy, it would be most ironic to extend an exemption crafted to protect collective action by employees to protect employers acting jointly to deny employees the opportunity to negotiate their salaries individually in a competitive market. Perhaps aware of the irony, the Court chooses to analyze this case as though it represented a typical impasse in an unexceptional multiemployer bargaining process. In so doing, it glosses over three unique features of the case that are critical to the inquiry into whether the policies of the labor laws require extension of the nonstatutory labor exemption to this atypical case.
First, in this market, unlike any other area of labor law implicated in the cases cited by the Court, player salaries are individually negotiated. The practice of individually negotiating player salaries prevailed even prior to collective bargaining. [n.3] The players did not challenge the prevailing practice because, unlike employees in most industries, they want their compensation to be determined by the forces of the free market rather than by the process of collective bargaining. Thus, although the majority professes an inability to understand anything special about professional sports that should affect the framework of labor negotiations, ante at 16-17, in this business it is the employers, not the employees, who seek to impose a noncompetitive uniform wage on a segment of the market and to put an end to competitive wage negotiations.
Second, respondents concede that the employers imposed the wage restraint to force owners to comply with league wide rules that limit the number of players that may serve on a team, not to facilitate a stalled bargaining process, or to revisit any issue previously subjected to bargaining. Brief for Respondents 4. The employers could have confronted the culprits directly by stepping up enforcement of roster limits. They instead chose to address the problem by unilaterally forbidding players from individually competing in the labor market.
Third, although the majority asserts that the "club owners had bargained with the players' union over a wage issue until they reached impasse," ante at 1, that hardly constitutes a complete description of what transpired. When the employers' representative advised the union that they proposed to pay the players a uniform wage determined by the owners, the union promptly and unequivocally responded that their proposal was inconsistent with the "principle" of individual salary negotiation that had been accepted in the past and that predated collective bargaining. [n.4] The so called "bargaining" that followed amounted to nothing more than the employers' notice to the union that they had decided to implement a decision to replace individual salary negotiations with a uniform wage level for a specific group of players. [n.5]
Given these features of the case, I do not see why the employers should be entitled to a judicially crafted exemption from antitrust liability. We have explained that the "[t]he nonstatutory exemption has its source in the strong labor policy favoring the association of employees to eliminate competition over wages and working conditions." Connell Constr. Co., 421 U. S., at 622. I know of no similarly strong labor policy that favors the association of employers to eliminate a competitive method of negotiating wages that predates collective bargaining and that labor would prefer to preserve.
Even if some collective action by employers may justify an exemption because it is necessary to maintain the "integrity of the multiemployer bargaining unit," NLRB v. Brown, 380 U.S. 278, 289 (1965), no such justification exists here. The employers imposed a fixed wage even though there was no dispute over the pre-existing principle that player salaries should be individually negotiated. They sought only to prevent certain owners from evading roster limits and thereby gaining an unfair advantage. Because "the employer's interest is a competitive interest rather than an interest in regulating its own labor relations," Mine Workers v. Pennington, 381 U.S. 657, 667 (1965), there would seem to be no more reason to exempt this concerted, anticompetitive employer action from the antitrust laws than the action held unlawful in Radovich v. National Football League, 352 U.S. 445 (1957).
The point of identifying the unique features of this case is not, as the Court suggests, to make the case that professional football players, alone among workers, should be entitled to enforce the antitrust laws against anti competitive collective employer action. Ante, at 17. Other employees, no less than well paid athletes, are entitled to the protections of the antitrust laws when their employers unite to undertake anticompetitive action that causes them direct harm and alters the state of employer employee relations that existed prior to unionization. Here that alteration occurred because the wage terms that the employers unilaterally imposed directly conflict with a pre-existing principle of agreement between the bargaining parties. In other contexts, the alteration may take other similarly anticompetitive and unjustifiable forms.
Although exemptions should be construed narrowly, and judicially crafted exemptions more narrowly still, the Court provides a sweeping justification for the exemption that it creates today. The consequence is a newly minted exemption that, as I shall explain, the Court crafts only by ignoring the reasoning of one of our prior decisions in favor of the views of the dissenting Justice in that case. Of course, the Court actually holds only that this new exemption applies in cases such as the present in which the parties to the bargaining process are affected by the challenged anticompetitive conduct. Ante, at 18. But that welcome limitation on its opinion fails to make the Court's explanation of its result in this case any more persuasive.
The Court explains that the nonstatutory labor exemption serves to ensure that "antitrust courts" will not end up substituting their views of labor policy for those of either the Labor Board or the bargaining parties. Ante, at 4. The Court concludes, therefore, that almost any concerted action by employers that touches on a mandatory subject of collective bargaining, no matter how obviously offensive to the policies underlying the Nation's antitrust statutes, should be immune from scrutiny so long as a collective bargaining process is in place. It notes that a contrary conclusion would require "antitrust courts, insulated from the bargaining process, to investigate an employer group's subjective motive," a task that it believes too "amorphous" to be permissible. Ante, at 15.
The argument that "antitrust courts" should be kept out of the collective bargaining process has a venerable lineage. See Duplex Printing Press Co. v. Deering, 254 U.S. 443, 483-488 (1921) (Brandeis, J., joined by Holmes and Clarke, JJ., dissenting). Our prior precedents subscribing to its basic point, however, do not justify the conclusion that employees have no recourse other than the Labor Board when employers collectively undertake anticompetitive action. In fact, they contradict it.
We have previously considered the scope of the nonstatutory labor exemption only in cases involving challenges to anticompetitive agreements between unions and employers brought by other employers not parties to those agreements. Ante, at 11. Even then, we have concluded that the exemption does not always apply. See Mine Workers v. Pennington, 381 U. S., at 663.
As Pennington explained, the mere fact that an antitrust challenge touches on an issue, such as wages, that is subject to mandatory bargaining does not suffice to trigger the judicially fashioned exemption. Id., at 664. Moreover, we concluded that the exemption should not obtain in Pennington itself only after we examined the motives of one of the parties to the bargaining process. Id., at 667.
The Court's only attempt to square its decision with Pennington occurs at the close of its opinion. It concludes that the exemption applies because the employers' action "grew out of, and was directly related to, the lawful operation of the bargaining process," "[i]t involved a matter that the parties were required to negotiate collectively," and that "concerned only the parties to the collective bargaining relationship." Ante, at 18.
As to the first two qualifiers, the same could be said of Pennington. Indeed, the same was said and rejected in Pennington. "This is not to say that an agreement resulting from union employer negotiations is automatically exempt from Sherman Act scrutiny simply because the negotiations involve a compulsory subject of bargaining, regardless of the subject or the form and content of the agreement." 381 U. S., at 664-665.
The final qualifier does distinguish Pennington, but only partially so. To determine whether the exemption applied in Pennington, we undertook a detailed examination into whether the policies of labor law so strongly supported the agreement struck by the bargaining parties that it should be immune from antitrust scrutiny. We concluded that because the agreement affected employers not parties to the bargaining process, labor law policies could not be understood to require the exemption.
Here, however, the Court does not undertake a review of labor law policy to determine whether it would support an exemption for the unilateral imposition of anticompetitive wage terms by employers on a union. The Court appears to conclude instead that the exemption should apply merely because the employers' action was implemented during a lawful negotiating process concerning a mandatory subject of bargaining. Thus, the Court's analysis would seem to constitute both an unprecedented expansion of a heretofore limited exemption, and an unexplained repudiation of the reasoning in a prior, nonconstitutional decision that Congress itself has not seen fit to override.
The Court nevertheless contends that the "rationale" of our prior cases supports its approach. Ante, at 11. As support for that contention, it relies heavily on the views espoused in Justice Goldberg's separate opinion in Meat Cutters v. Jewel Tea Co., 381 U.S. 676 (1965). At five critical junctures in its opinion, see ante, at 4-5, 10, 15, the Court invokes that separate concurrence to explain why, for purposes of applying the nonstatutory labor exemption, labor law policy admits of no distinction between collective employer action taken in response to labor demands, and collective employer action of the kind we consider here.
It should be remembered that Jewel Tea concerned only the question whether an agreement between employers and a union may be exempt, and that even then the Court did not accept the broad antitrust exemption that Justice Goldberg advocated. Instead, Justice White, the author of Pennington, writing for Chief Justice Warren and Justice Brennan, explained that even in disputes over the lawfulness of agreements about terms that are subject to mandatory bargaining, courts must examine the bargaining process to determine whether antitrust scrutiny should obtain. Jewel Tea, 381 U. S., at 688-697. "The crucial determinant is not the form of the agreement--e. g., prices or wages-- but its relative impact on the product market and the interests of union members." Id., at 690, n. 5 (emphasis added). Moreover, the three dissenters, Justices Douglas, Clark, and Black, concluded that the union was entitled to no immunity at all. Id., at 735-738.
It should also be remembered that Justice Goldberg used his separate opinion in Jewel Tea to explain his reasons for dissenting from the Court's opinion in Pennington. He explained that the Court's approach in Pennington was unjustifiable precisely because it permitted "antitrust courts" to reexamine the bargaining
process. The Court fails to explain its apparent substitution in this case of Justice Goldberg's understanding of the exemption, an understanding previously endorsed by only two other Justices, for the one adopted by the Court in Pennington.
The Court's silence is all the more remarkable in light of the patent factual distinctions between Jewel Tea and the present case. It is not at all clear that Justice Goldberg himself understood his expansive rationale to require application of the exemption in circumstances such as those before us here. Indeed, the main theme of his opinion was that the antitrust laws should not be used to circumscribe bargaining over union demands. Meat Cutters v. Jewel Tea, 381 U. S., at 723-725. Moreover, Justice Goldberg proved himself to be a most unreliable advocate for the sweeping position that the Court attributes to him.
Not long after leaving the Court, Justice Goldberg served as counsel for Curt Flood, a professional baseball player who contended that major league baseball's reserve clause violated the antitrust laws. Flood v. Kuhn, 407 U.S. 258 (1972). Although the Flood case primarily concerned whether professional baseball should be exempt from antitrust law altogether, see Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200 (1922); Toolson v. New York Yankees, Inc., 346 U.S. 356 (1953), the labor law dimensions of the case did not go unnoticed.
The article that first advanced the expansive view of the nonstatutory labor exemption that the Court appears now to endorse was written shortly after this Court granted certiorari in Flood, see Jacobs & Winter, Antitrust Principles and Collective Bargaining by Athletes: Of Superstars in Peonage, 81 Yale L. J. 1 (1971), and the parties to the case addressed the very questions now before us. Aware of both this commentary, and, of course, his own prior opinion in Jewel Tea, Justice Goldberg explained in his brief to this Court why baseball's reserve clause should not be protected from antitrust review by the nonstatutory labor exemption.
"This Court has held that even a labor organization, the principal intended beneficiary of the so called labor exemption, may not escape antitrust liability when it acts, not unilaterally and in the sole interests of its own members, but in concert with employers `to prescribe labor standards outside the bargaining unit,' And this is so even when the issue is so central to bargaining as wages. Mine Workers v. Pennington, 381 U. S. at 668. Compare Meat Cutters v. Jewel Tea Co., 381 U.S. 676. See Ramsey v. Mine Workers, 401 U.S. 302, 307 (1971). . . .
"The separate opinion on which respondents focus did express the view that `collective bargaining activity on mandatory subjects of bargaining' is exempt from antitrust regulation, without regard to whether the union conduct involved is `unilateral.' Meat Cutters v. Jewel Tea Co., 381 U. S. at 732 (concurring opinion). But the author of that opinion agreed with the majority that agreements between unions and nonlabor groups on hard core restraints like `price fixing and market allocation' were not exempt. 381 U. S. at 733. And there is no support in any of the opinions filed in Meat Cutters for Baseball's essential, if tacit, contention that unilateral, hard core anticompetitive activity by employers acting alone--the present case--is somehow exempt from antitrust regulation." Reply Brief for Petitioner in Flood v. Kuhn, O. T. 1971, No. 71-32, pp. 13-14.
Moreover, Justice Goldberg explained that the extension of antitrust immunity to unilateral, anticompetitive employer action would be particularly inappropriate because baseball's reserve clause predated collective bargaining.
"This case is in fact much clearer than Pennington, Meat Cutters, or Ramsey, for petitioner does not challenge the fruits of collective bargaining activity. He seeks relief from a scheme--the reserve system-- which Baseball admits has been in existence for nearly a century, and which the trial court expressly found was `created and imposed by the club owners long before the arrival of collective bargaining.' " Id., at 14.
I would add only that this case is in fact much clearer than Flood, for there the owners sought only to preserve a restraint on competition to which the union had not agreed, while here they seek to create one.
Adoption of Justice Goldberg's views would mean, of course, that in some instances "antitrust courts" would have to displace the authority of the Labor Board. The labor laws do not exist, however, to ensure the perpetuation of the Board's authority. That is why we have not previously adopted the Court's position. That is also why in other contexts we have not thought the mere existence of a collective bargaining agreement sufficient to immunize employers from background laws that are similar to the Sherman Act. See Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985). [n.6]
Congress is free to act to exempt the anticompetitive employer conduct that we review today. In the absence of such action, I do not believe it is for us to stretch the limited exemption that we have fashioned to facilitate the express statutory exemption created for labor's benefit so that unions must strike in order to restore a prior practice of individually negotiating salaries. I therefore agree with the position that the District Court adopted below.
"Because the developmental squad salary provisions were a new concept and not a change in terms of the expired collective bargaining agreement, the policy behind continuing the nonstatutory labor exemption for the terms of a collective bargaining agreement after expiration (to foster an atmosphere conducive to the negotiation of a new collective bargaining agreement) does not apply. To hold that the nonstatutory labor exemption extends to shield the NFL from antitrust liability for imposing restraints never before agreed to by the union would not only infringe on the union's freedom to contract, H. K. Porter Co. v. NLRB, 397 U. S. at 108 . . . (one of fundamental policies of NLRA is freedom of contract), but would also contradict the very purpose of the antitrust exemption by not promoting execution of a collective bargaining agreement with terms mutually acceptable to employer and labor union alike. Labor unions would be unlikely to sign collective bargaining agreements with employers if they believed that they would be forced to accept terms to which they never agreed." 782 F. Supp. 125, 139 (D.C. 1991) (footnote omitted).
Accordingly, I respectfully dissent.
1 "The inequality of bargaining power between employees who do not possess full freedom of association or actual liberty of contract, and employers who are organized in the corporate or other forms of ownership association substantially burdens and affects the flow of commerce, and tends to aggravate recurrent business depressions, by depressing wage rates and the purchasing power of wage earners in industry and by preventing the stabilization of competitive wage rates and working conditions within and between industries." 29U. S . C. §151; R. Posner & F. Easterbrook, Antitrust 31 (2d ed. 1981) ("The main purpose of labor unions is to raise wages by suppressing competition among workers . . ."); see also Meat Cutters v. Jewel Tea Co., 381 U.S. 676, 723 (1965) (opinion of Goldberg, J.) ("The very purpose and effect of a labor union is to limit the power of an employer to use competition among workingmen to drive down wage rates and enforce substandard conditions of employment").
2 "The basic sources of organized labor's exemption from federal antitrust laws are §§6 and 20 of the Clayton Act, 38 Stat. 731 and 738, 15 U.S.C. § 17 and 29 U.S.C. § 52 and the Norris LaGuardia Act, 47 Stat. 70, 71, and 73, 29 U.S.C. §§ 104 105, and 113. These statutes declare that labor unions are not combinations or conspiracies in restraint of trade, and exempt specific union activities, including secondary picketing and boycotts, from the operation of the antitrust laws. See United States v. Hutcheson, 312 U.S. 219 (1941). They do not exempt concerted action or agreements between unions and nonlabor parties. Mine Workers v. Pennington, 381 U.S. 657, 662 (1965)." Connell Constr. Co. v. Plumbers, 421 U.S. 616, 621-622 (1975).
3 As the District Court explained, "[t]he present case does not involve any change in preexisting wage terms of either an active or expired collective bargaining agreement. In fact, creation of the developmental squads added a novel category of players to each NFL club. These players were not treated under the salary terms applicable to regular NFL players. Under the 1982 Collective Bargaining Agreement, the NFL players were expressly given the right to negotiate the salary terms of their contracts. 1982 Collective Bargaining Agreement at Article XXII, Plaintiffs' Exhibits at 1. By contrast, the developmental squad contracts indicates that the prospective developmental squad players had no right to negotiate their own salary terms but instead were to receive a fixed non negotiable salary of $1,000 per week. Plaintiffs' Exhibits at 8, 9, 15 & 28." 782 F. Supp. 125, 138 (D.C. 1991).
4 In a memorandum summarizing his meeting with the union representative, the owners representative stated, in part:
"Gene [Upshaw] indicated he fully understood the developmental squad but could not agree to any arrangement that eliminated the right of any player to negotiate his individual salary. Upshaw said that no matter what salary level we proposed to pay developmental players, whether it was our $1,000 weekly or a higher number, the union would not `in principle' permit two classes of players to exist, one with individual bargaining rights and one without." App. 19-20.
5 The unique features of this case presumably explain why the National Labor Relations Board can endorse the position of the players in this case without fearing the adverse impact on the bargaining process in the hypothetical cases that concern the Court. Brief for United States 27, n. 10.
6 In Teamsters v. Oliver, 358 U.S. 283 (1959), we held that a state antitrust law could not be used to challenge an employer union agreement. Justice White's opinion in Jewel Tea explains, however, that Oliver held only that "[a]s the agreement did not embody a ` "remote and indirect approach to the subject of wages' . . . but a direct frontal attack upon a problem thought to threaten the maintenance of the basic wage structure established by the collective bargaining contract,' [358 U. S.], at 294, the paramount federal policy of encouraging collective bargaining proscribed application of the state law." Meat Cutters v. Jewel Tea Co., 381 U. S., at 690, n. 5.
Moreover, in the petition for certiorari in Flood, Justice Goldberg explained that Oliver was not controlling.
"Petitioner has not addressed the contention advanced by respondents at trial but not reached by the courts below, that the reserve system is a matter for collective bargaining and hence exempt from state and federal antitrust laws under Teamsters Union v. Oliver, 358 U.S. 283 (1959), and Meat Cutters v. Jewel Tea Co., 381 U.S. 676 (1965). Neither of these decisions holds that an employer conspiracy to restrain trade is exempted from antitrust regulation where an employee group has been implicated in the scheme. No Justice participating in Meat Cutters dissented form the proposition that hard core `anticompetitive commercial restraint[s]' like `price fixing and market allocation'--and petitioner would add group boycotts--were subject to antitrust regulation even where bargained about. 381 U.S. 732-33 (concurring opinion). As this Court unanimously warned in 1949, `Benefits to organized labor cannot be utilized as a cat's paw to pull employer's chestnuts out of antitrust fires.' United States v. Women's Sportswear Mfr's Ass'n, 336 U.S. 460, 464 (1949). See also Allen Bradley Co. v. Local No. 3, 325 U.S. 747 (1945). Similar arguments by football were rejected by this Court in Radovich v. National Football League, 353 U.S. 445 (1957), as `without merit,' and the reserve systems of other sports are now regulated by state and federal antitrust laws." Pet. for Cert. in Flood v. Kuhn, O. T. 1971, No. 71-32, p. 21, n. 9.