League opens case for broad antitrust protection in Supreme Court

WASHINGTON -- The Supreme Court on Wednesday didn't seem interested in immediately granting the NFL the broad antitrust law protection the league is seeking.

Justices seemed skeptical of arguments that the NFL should be considered one business, not 32 separate teams working together, when it comes to selling league-branded items. The lower courts had thrown out an antitrust lawsuit brought against the league by one of its former hat makers.

American Needle, Inc. appealed the dismissal to the Supreme Court. But the NFL also appealed, hoping to receive broader protection from antitrust lawsuits.

Major League Baseball is the only professional sports league with broad antitrust protection. The National Basketball Association, the National Hockey League, the NCAA, NASCAR, professional tennis and Major League Soccer are supporting the NFL in hopes the court will expand broad antitrust exemption to other sports.

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If the court rules broadly for the NFL, it could shield professional sports leagues from antitrust claims in several areas, including player salaries, location of teams, video-game rights and television broadcasting rights.

"You are seeking through this ruling what you haven't gotten from Congress: an absolute bar to an antitrust claim," Justice Sonia Sotomayor told NFL lawyers.

NFL lawyer Gregg H. Levy said the league is making a narrower argument, as "long as the NFL clubs are members of a unit; if they compete as a unit in the entertainment marketplace ... they should be deemed a single entity" and not subject to antitrust law.

"The question is: Should they be permitted to join their centers of economic power into one when they promote and sell their T-shirts, sweatshirts, et cetera?" Justice Stephen Breyer said.

American Needle had been one of many companies that made NFL headgear until the league awarded an exclusive contract to Reebok International Ltd. in 2001.

American Needle sued the league and Reebok in 2004, claiming the deal violated antitrust law. Lower courts threw out the suit, holding that nothing in antitrust law prohibits NFL teams from cooperating on apparel licensing so the league can compete against other forms of entertainment.

American Needle wants the lawsuit restored in the lower courts, but the NFL wants the Supreme Court to uphold the lower court's decision that it can be considered a single entity and apply it around the nation.

American Needle's lawyer, Glen D. Nager, under prompting from Justice Ruth Bader Ginsburg, told the court that the company believes that everything that "these 32 separately owned and controlled teams joined together to do by in concert, by agreement, by consent" should be subject to antitrust investigation.

"You want the Patriots to sell T-shirts in competition with the Saints or whoever," said Breyer, who said he knows baseball better. Breyer argued that it's unlikely that NFL teams could compete with each other in selling apparel, because when it comes to baseball, "I don't know a Red Sox fan who would wear a Yankees sweater even if you gave it away."

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Nager argued that to a 3-year-old child, team allegiance wouldn't matter. "They have very small allowances," Breyer said to laughter.

Several justices wondered whether the antitrust investigation could stretch to the rules of the game and scheduling, "things that it just seems odd to subject," to antitrust investigation, Chief Justice John Roberts said.

Levy argued that the licensing and selling of NFL apparel is something the league does to promote the sport as a whole, something with which Justice Antonin Scalia disagreed.

"The purpose is to make money," Scalia said. "I don't think that they care whether the sale of the helmet or the T-shirt promotes the game. They sell it to make money from the sale."

The purpose of the licensing is to improve and promote the attractiveness of the game product, to get more people interested in watching the games on television and to get more people interested in buying tickets to the game, Levy replied.

"Well, I suppose that that issue could be tried," Scalia said.

Jeffrey Kessler, a lawyer for the NFL Players Association and several other professional sports unions, said afterward that NFL teams believe they should be allowed to "fix the prices of labor, that they could impose restrictions that would prevent good teams from getting better, or take any other conduct without the antitrust laws coming into play."

Levy disagreed. "This case doesn't have anything to do with union agreement issues," he said.

The case is American Needle v. NFL, 08-661.

Copyright 2010 by The Associated Press

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