Sports Law Outline 1) The Role of the Commissioner a) Pete Rose v.

Bart Giamatti Rose bet on games and the Commissioner banned him from baseball for life. Major League Baseball is a unique organization with extraordinary power invested in the Commissioner. i) The Commissioner can investigate any act not in the best interests of baseball and determine what punitive action is appropriate and take it. ii) Supervise Officials, Establish schedules, negotiate TV deals, Direct labor management issues powers of the commissioner. b) The Legal scope of the Commissioners authority i) Yankees v. Johnson Mays walked off the field during a Red Sox game, the Sox sold Mays to the Yankees then the President of the AL suspended Mays he was later overturned by the court (before Commissioners) ii) Milwaukee v. Landis The Commissioner creates a free agent. The court says he has unlimited discretion as an arbiter to secure observance of the provisions of agreements and rules and prevent conduct detrimental to BB. iii) Finley v. Kuhn The Commissioner stoped the As from selling the contracts of three of its MVPs court allowed him to do this with the best interests of baseball clause. (1) The commissioner is hired by the owners and has broad sweeping powers (2) The Commissioner can act on any matter that involves the integrity of or public confidence in baseball. Integrity and public perception of baseball are to be determined by the Commissioner. 2) Reserve System & Restraint of Trade a) Sherman anti-trust act 15 USC 1,2 i) Trusts illegal Every contract or conspiracy in restraint of trade or commerce among the States is illegal. ii) Monopolizing illegal Every person who shall monopolize or conspire to monopolize any part of the trade or commerce among States is illegal. b) Reserve system Each team is entitled to exclusive rights with certain players i) Other teams respect and do not tamper with the other teams players ii) There is only one standard form contract and the team retained an option to renew the contract for a season under the same provisions except salary. iii) Draft teams select in reverse order of finish from the minors. MLB. c) Flood v. Kuhn Congress had no intention of including the business of baseball within the scope of the federal antitrust laws. Four reasons for not overturning. i) Congressional awareness of court rulings coupled with inaction. ii) Baseball was left alone to develop the reserve system outside antitrust law. iii) Reluctance to overrule retroactively iv) Any needed remedy has to come from legislative action. (1) Only baseball is exempt from antitrust law no other sports. (2) Professional baseball is a business engaged in interstate commerce. d) Piazza v. MLB Baseballs exemption from anti-trust law is limited to the reserve system and not the game generally. (moving franchises) i) Case settled out of court.

e) The Curt Flood Act of 1998 Major league players are under antitrust laws. i) The act does not change the application of antitrust law in any other context or with respect to any other person or entity. ii) Baseball Umpires or other individuals employed in the business of organized baseball are not covered under this act and are exempted from antitrust. iii) The minor league still enjoys its reserve clause antitrust exemption. The amateur and first year player draft are also exempt from antitrust. iv) Franchise expansion, location or relocation, franchise ownership issues including transfers are still under an exemption to antitrust law. v) Only Major league players have standing to sue under this law. 3) Antitrust and the Players Market a) Brown v. Pro Football (Redskins) The exchange of a service for money is commerce and the antitrust act applies to restraints involving the sale of services. i) Per se rule courts can condemn forms of conduct the judge disapproves of for social, political, or economic reasons. These organizations can be overruled even though they offer consumers lower prices and greater quality. ii) Rule of reason test an agreement is unlawful if the anticompetitive injury it causes outweighs the pro-competitive benefits it generates. b) Smith v. Pro Football The per se rule will be invoked when the challenged action is a naked restraint of trade with no purpose except stifling of competition. i) rule of reason - A restraint must be evaluated to determine whether it is significantly anticompetitive in purpose or effect ii) If the restraint has legitimate business purposes and promotes competition those must be balanced against the anticompetitive evils. iii) A restraint is unreasonable if it has the net effect of substantially impeding competition. The inquiry must be confined to a consideration of the restraints impact on competitive conditions. c) (dissent) A natural monopoly results from economies of scale, a relationship between the size of the market and the size of the most efficient firm, such that it can continually expand its capacity at less cost than a new firm. i) A player draft is a natural for league sports. Competitive equality among component teams is an inherent requirement for meaningful sports. ii) A player draft artificially holds down player salaries. The draft operates to restrain the team from dealing with other players. iii) It is necessary to have a draft that reaches the maximum number of potential players who are absolutely necessary to preserve competitive balance. d) Brown v. Pro Football (part II) The fixed salarys anticompetitive evils cannot be balanced against its pro-competitive virtues and the fixed salary restraint can be upheld only if the latter outweigh the former. e) Mackey v. NFL (Part I) The NFL is like a joint venture in that each member club has a stake in the success of the other teams. i) The NFL has a strong and unique interest in maintaining competitive balance among its teams. f) Fraser v. MLS Striking down a combination that does not threaten present competition could be justified, in the hope of obtaining more competition in the future, only in already concentrated markets.

4) Labor Exemption from Antitrust Law labor unions organizes and coordinates the efforts of employees in dealing collectively with their employer. a) Norris-LaGuardia Act of 1932 federal courts could not enjoin strikes, pickets, and other forms of employee self help. Economic pressure by unions enjoys blanket immunity from antitrust liability. i) Employer self-help through tactics such as lockouts and strike insurance is similarly protected. b) Mackey v. NFL (Part II) The basis of the non-statutory exemption is the policy favoring collective bargaining and its benefits extend to both parties. i) The policy gives pre-eminence over the antitrust laws where the restraint on trade primarily affects only the parties to the collective bargaining relationship ii) The policy is implicated only where the agreement being exempted concerns a mandatory subject of collective bargaining. (1) The mandatory subjects of collective bargaining are wages, hours, and working conditions iii) Antitrust laws are overridden only where the agreement is the product of bona fide arms length bargaining. c) Leon Wood case federal legislation explicitly prevents employees, whether in or out of a bargaining unit (union) from seeking a better deal where that deal is inconsistent with the terms of a collective agreement. i) National labor policy attaches prime importance to freedom of contract between the parties to a collective agreement. (1) To the extent the term of the K was unjustifiably discriminatory to rookie players the proper legal action was to charge the union with unfair representation of new employees under the NLRA. d) Brown v. Pro Football (Part III) After an impasse, labor law permits employers to unilaterally implement changes in preexisting conditions, but only so far as the new terms meet carefully circumscribed conditions i) The new terms must be reasonably comprehended within the employers preimpasse proposals. ii) The collective bargaining proceeding must be free from unfair labor practices such as an employers failure to bargain in good faith. iii) Labor law permits employers, after an impasse, to engage in joint behavior, including joint lockouts and replacement hiring. iv) Labor law limits employers to four options at impasse (1) Maintain the status quo (2) Implement their last offer (3) Lock out their workers and either shut down or hire temporary replacements (4) Negotiate separate interim agreements with the union. e) (dissent) A market wide agreement among employers setting wages at levels that would not prevail in a free market may violate the Sherman Act. i) The judicial exemption ensures unions which engage in collective bargaining will enhance employees wages and enjoy the benefits of the agreements. ii) The non-statutory exemption has its source in the strong labor policy favoring the association of employees to eliminate competition over wages and working conditions.

5) Collective Bargaining each union established collective allegiances and engaged in direct negotiations with the owners under the umbrella of the NLRA. a) Baseball Clubs v. Players Assoc. The law of K does not prevent parties from agreeing to successive renewals of the terms of their bargain provided the K expresses that intention with explicit clarity. i) Free agency would encourage clubs with the largest monetary resources to engage free agents thus unsettling the competitive balance between clubs. b) Duty to bargain in good faith = meet at reasonable times and confer in good faith (not engaging in surface bargaining) with respect to wages, hours, and other terms and conditions of employment. i) An obligation of the employer (and on occasion the union) to supply all relevant information that is needed by the bargaining representative for the proper performance of its duties. ii) The obligation to refrain from unilateral changes in employment conditions whether to the employees benefit or detriment, at least until impasse has been reached in bargaining. c) Silverman v. MLB Player relations (Part I) An employer is required to disclose its financial condition only when the employer claims an inability to pay, however phrased, during the course of bargaining. i) Individual expressions of opinion cannot serve to bind the entire bargaining unit in the absence of authority to speak for the group. d) Silverman v. MLB Player relations (Part II) In the sports context the constituent parts of reserve/free agency systems are mandatory subjects of bargaining. i) Matters such as salary caps, minimum individual salaries, fringe benefits, minimum aggregate team salaries, guaranteed revenue-sharing, and first refusal provisions are all mandatory subjects of bargaining. ii) There are two types or arbitration interest and rights (1) Interest arbitration concerns disputes over terms of new or renewal K. (2) Rights arbitration for disputes over the interpretation or application of a K. (3) Interest arbitration not about existing terms and conditions of employment and therefore is a non-mandatory topic of bargaining. (4) Salary arbitration is a current term of employment and is the collectively bargained wage in the partys agreement. (mandatory) iii) The protections of the NLRA extend to non-monetary bargaining topics that are terms and conditions of employment. iv) The NLRA is the only one that can declare an impasse. e) NFL Management Council and NFLPA If the impact on employee rights of the discriminatory conduct is comparatively slight, an antiunion motivation must be proved to sustain the charge if the employer has come forward with evidence of legitimate and substantial business justifications for the conduct. i) The right to strike includes the right to full and complete reinstatement upon unconditional application to return. f) Kansas City Royals v. MLB Players Assn Review of the merits of an arbitration panels award is limited. The award must be sustained so long as it draws its essence from the collective bargaining agreement.

g) Union and the individual player a player in a K dispute with his club must rely on the private arbitration mechanism and on his player associations administration of the process. i) A breach of the statutory duty of fair representation occurs only when a unions conduct toward a member of the collective bargaining unit is arbitrary, discriminatory, or in bad faith. h) Peterson v. Kennedy & NFLPA A union must serve the interests of all members without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct. i) Courts should accord substantial deference to a unions decision. Mere negligent conduct does not constitute a breach of the unions duty. ii) A union acts arbitrarily when it simply ignores a meritorious grievance or handles it in a perfunctory manner. Arbitrary = without rational basis or is egregious unfair and unrelated to legitimate union interests. iii) The union must fail to perform a procedural or ministerial act and that act must not require an exercise of judgment. (1) Unions are not liable for good faith, non-discriminatory errors of judgment made in the processing of grievances. (2) It is for the union to decide whether and in what manner a particular grievance should be pursued. 6) Agent Representation The collective agreement plays the ultimate governing role a) The most prominent agents are lawyers who must know the collective agreement for the sport. It exercises considerable influence on the player K. b) Alvin Moore & Atlanta Braves There are 3 reasons for the league president to disapprove a special covenant (Baseball) i) If the covenant does not actually or potentially provide additional benefits to the Player ii) If the covenant violates an applicable law or is prohibited by a League rule not inconsistent with the collective agreement. iii) If the covenant purports to bind some third party whom the Club and Player have no authority to bind. (1) Individual Player-Club negotiations are conducted within the framework of the attendant rules, agreements, and regulations that govern the sport. (2) Variations in any of the provisions might give a Player additional benefit beyond the Clubs power to make. c) Raymond Bourque & Boston Bruins There are a series of considerations to be reviewed for purposes of salary arbitration (Hockey) i) The overall performance including official statistics prepared by the League both offensive and defensive of the player in previous seasons. ii) The number of games played by the player in the League and/or with the Club iii) The length of service of the player in the League and/or with the Club iv) The players overall contribution to the competitive success or failure of his Club in previous seasons. v) Any special qualities of leadership or public appeal not inconsistent with the fulfillment of his responsibilities as a playing member of his team.

d)

e)

f)

g)

h)

vi) The overall performance in the previous seasons of any players who is alleged to be comparable to the player whose salary is in dispute vii) The compensation of any player comparable to the player. (1) Account for the disparate nature of respective agreements by adjusting to the extent reasonable to attempt to compare fairly. Zinn v. Parrish Agents are obligated to act in there clients professional interest by providing advice on tax and business matters, by seeking endorsement Ks, and by making efforts to obtain gainful off-season employment. i) Each obligation is subject to an implied promise to make good faith efforts to obtain what was sought. ii) Attorney agents are held to the higher standard of fiduciary duty to client. Brown v. Woolf The tort of constructive fraud is characterized as i) Acts from which an unconscionable advantage may be derived ii) A breach of confidence coupled with an unjust enrichment which shocks the conscience iii) A breach of duty, including mistake, duress or undue influence, which the law declares fraudulent because of a tendency to deceive, injure the public interest or violate the public or private confidence. iv) The making of a false statement, by a dominant party in a confidential or fiduciary relationship, or by one who holds himself out as an expert, upon which plaintiff relies to his detriment. Detroit Lions & Billy Sims v. Jerry Argovitz The agent has a duty to call a competing team and receive a final offer in order to present both offers to the client so that he can make an intelligent and knowing decision. i) Generally an agent is not liable for losses occurring as a result of following his principals instructions however he is liable when the agent places himself in a position adverse to that of his principal. NCAA Rule 12.3 Use of Agents i) A collage player will lose his eligibility to play all collage sports if he agrees orally or in writing to be represented by an agent. ii) 12.3.1.2 Benefits from Prospective Agents If a player or his relatives or friends accepts transportation or other benefits from an agent he will lose his eligibility to play all collage sports (1) The receipt of such expenses constitutes compensation based on athletics skill and is an extra benefit not available to the student body in general. iii) 12.3.2 Legal Counsel advice from a lawyer concerning a proposed pro K is not contracting for an agent and is allowable. (1) The lawyer may not have any direct contact with the team on behalf of the student that is considered being represented by an agent. Norby Walters & Lloyd Bloom v. Brent Fullwood a court should not enforce rights that arise under an illegal K. i) An agreement may be unenforceable as contrary to public policy if it is contrary to the social judgment on the subject implemented by statute. ii) The legislature has spoken by expressing a concern for the integrity of sporting events and particularly for the status of amateur athletics.

i)

j)

k)

l)

iii) Courts cannot enforce Ks the which would provoke conduct established as wrongful by independent commitments undertaken by either party. California athlete agents act Requires agents to register before soliciting or conducting business within the state. i) Before making contact with any family member of the athlete the agent must disclose in writing that they are registered with the state. ii) Requires every agent contract to be in writing with a description of the types of services to be performed and a schedule of fees charged. iii) Prohibits an agent from owning or having any financial interest in any entity that is involved in the same sport as the athlete (1) If giving the athlete investment advice must provide full disclosure of all investments or ownership interests in any business. (2) No agent can pay a school to speak to its players (a) If the agent and athlete enter into a pro K they must notify the school. (b) The athlete has 15 days to rescind the K. Collins v. NBPA & Grantham A player agent must sign a Standard Player Agent Contract which (Basketball) i) Limits player agent fees by prohibiting any fee or commission on any K which entitles the player to the minimum salary. ii) Contain a code of conduct which prohibits an agent from offering money or anything of value to a player, family member, or coach for the purpose of inducing the player to use the agents services. (1) The agent cannot engage in conduct that appears to be a conflict of interest (2) Engage in any unlawful conduct or conduct that reflects adversely on his fitness to serve in a fiduciary capacity as a player agent. iii) Agents must be certified by the union and pay a fee. (1) The union must unilaterally develop the regulatory system for the benefit of its members. (2) There can be no combination with a non-labor group or persons not a party to a labor dispute. iv) Any dispute between agents and the union regarding the representation of union workers is a labor dispute outside the purview of the antitrust laws. Barry Rona & MLB Players Assoc Any institutional policy that penalizes a lawyer for providing zealous representation within the limits of the code of professional responsibility transgresses public policy. i) Lawyers can only be judged in terms of the ethics of their behavior, by the standards set forth in the Code. ii) It is the Codes position that lawyers do not act unethically merely because they represent individuals or institutions that are found to have engaged in wrongful activities. (1) Players cannot be agents because it is a conflict of interest. U.S. v. Norby Walters The NCAA is a private body and its rules are not directly enforceable in court. i) Cheaters depress the price, causing the monopolist to lose money.

ii) The NCAA is a cartel, having power in the market for athletes and depressing there income by restricting payments to the value of tuition, room, and board, while receiving services of substantially greater worth. (1) The NCAA uses it monopoly power to obtain athletes services for less than the competitive market price. 7) NCAA & Eligibility only an amateur student athlete is eligible for intercollegiate participation in a particular sport. a) Colorado Seminary v. NCAA The NCAAs eligibility regulations can only be invalidated if they bear no rational relationship to the NCAAs legit. objectives i) Which are maintaining intercollegiate athletics as an integral part of the educational program and ii) The athlete as an integral part of the student body. (1) The NCAA Const. requires that any aid received be administered by the student-athletes educational institution. (2) Play during the periods while not in school cannot be considered as coincidental to or in conjunction with obtaining an education. b) Wiley v. NCAA The rule must bear a rational relation to the NCAAs policy objective of preserving collage amateurism. i) (dissent) The regulations seem to prevent one member institution from using its access to economic resources to obtain an advantage over other member institutions in the fielding of athletic teams. c) Rule 12.5.2 prohibits student-athletes from having their name or picture on any product that is being sold, even if the student gets no money from it. i) Member schools can use their student-athletes name, pictures, and images in various ways that help support and finance the schools educational activities. d) Shelton v. NCAA A student who has signed a K, regardless of its enforceability, is ineligible to participate in intercollegiate athletics in that sport. i) The rule must rationally further some legitimate purpose. ii) The application of the rule may produce unreasonable results in situations. iii) The rules enforcement provisions might not be the best means for achieving the desired goal but it is not judicial business to tell a voluntary athletic association how best to formulate or enforce its rules. (1) The courts function is only to determine whether the NCAA has selected a method of protecting amateurism which is reasonably related to that goal. 8) NCAA & Antitrust All collages with major athletic programs are members of the NCAA and they have all agreed to abide by the NCAAs rules and not to play against any school the Association declares ineligible. a) NCAA v. Univ. of Oklahoma & Georgia An agreement among competitors on the way they compete with another are ordinarily condemned as a matter of law under an illegal per se approach. i) Some activities can only be carried out jointly like league sports. ii) Restrictions on price and output are examples of restraints of trade the anti-trust act was intended to prohibit. iii) Price and output must be responsive to consumer preference

b)

c)

d)

e)

(1) Under the rule of reason there is a heavy burden of establishing an affirmative defense which competitively justifies the apparent deviation from the operations of a free market. Byron Wizzer White (dissent) (football player) Other, non-commercial goals play a central role in collage sports programs. i) The fact that a restraint operates on nonprofit educational institutions as distinguished from business entities is as relevant in determining whether it violates anti-trust law as is the fact that a restraint affects a profession rather than a business. ii) Non-economic goals may require a particular practice, which could properly be viewed as a violation of anti-trust, in another context be treated differently. Rule 12.2.4.2 Draft list An athlete will lose amateur status when he asks to be placed on the draft list in a pro sport regardless of whether he gets drafted or not. i) Exception An enrolled student-athlete in basketball may enter the draft once during his collegiate career provided he is not drafted and declares his intentions to resume intercollegiate participation within 30 days of the draft. ii) An athlete may request information about professional market value without affecting his amateur status. The player, his family, or school may enter into negotiations with a pro team without loss of amateur status. Banks v. NCAA An NCAA member institution may not waive or change the rules at its discretion. Only the NCAA can waive or change one of its rules. i) Any school that sought to waive or change the rules would forfeit its ability to participate in NCAA sanctioned events. ii) The NCAAs regulatory controls are a justifiable means of fostering competition among the amateur athletic teams and are pro-competitive because they enhance public interest in intercollegiate athletics. (1) In order to preserve collage football as a product athletes must not be paid, must be required to attend class, and the like. (2) In order for the NCAA Rules to be considered a restraint of trade in violation of anti-trust laws the no-draft and no-agent rules must be terms of employment that diminish competition in the college football market. iii) The operation of the NCAA eligibility and recruiting requirements prohibits member colleges from engaging in price competition for players. (1) All NCAA member colleges require student-athletes to carry a minimum number of semester credits and maintain a minimum GPA equivalent to the academic program the non-athletic students follow. (dissent) If the no-draft rule were scuttled, colleges that promised their athletes the opportunity to test the waters in the NFL draft before their eligibility expired, and return if it did not work out, would be more attractive to athletes. i) The no-draft rule operates to the players detriment and the colleges benefit ii) In the college football labor market players exchange their labor for in-kind benefits, not cash and all of these things are terms of employment. iii) The purposes of the antitrust laws are served when employers are prevented from tampering with the employment market because antitrust law seeks to preserve the free market opportunities for buyers and sellers of employment.

iv) A plaintiff must demonstrate the challenged practice causing him harm also harms consumers by reducing output or raising prices. (1) Concerted action among consumers that lowers prices harms competition as much as concerted action among producers that raises prices. (2) College football is a vast commercial venture that yields substantial profits for colleges and an athletes participation is labor. 9) Title IX a general statutory prohibition of sex-based exclusion from participation, denial of benefits, or discrimination under educational programs. a) The test for compliance is a comparison of the availability, quality and kinds of benefits, opportunities and treatment afforded members of both sexes. i) The compared program components must be equivalent or equal in effect and identical benefits, opportunities or treatment is not required, provided the overall effect of any differences is negligible. b) Unequal allocation of resources and its three prong test A school is in compliance with the law if any of the following is met. i) The intercollegiate levels of participation opportunities for male and female students are substantially proportionate to their enrollments. ii) The institution must show a continuing practice of program expansion that is responsive to the developing interest and abilities of the underrepresented sex. iii) The institution must demonstrate the interests and abilities of members of the underrepresented sex have been fully and effectively accommodated by the present program. c) Cohen v. Brown University the third prong demands full and effective accommodation of the underrepresented sex. i) The institution must ensure participatory opportunities to the extent there is sufficient interest and ability among members of the excluded sex to sustain a viable team. ii) The fact that the overrepresented gender is less than fully accommodated will not excuse a shortfall in the provision of opportunities for the girls. iii) The third benchmarks purpose determine if a student has been excluded from participation in or denied the benefits of an athletic program based on sex. (1) It requires an assessment of whether there is unmet need in the underrepresented gender that rises to a level sufficient to warrant a new team or the upgrading of an existing team. d) Kelley v. Uni of Illinois If the percentage of student-athletes of a sex is proportional to the percentage of students of that sex in the general student population the athletic interests of that sex are presumed accommodated. i) Schools must have some means of establishing that despite offering single-sex teams, they have provided equal athletic opportunities for both sexes. ii) Title IXs stated objective is to prohibit educational institutions from discriminating on the basis of sex. e) Cohen v. Brown (Part II) Title IX is an anti-discrimination statute and permits affirmative action and an inference that a significant gender-based statistical disparity may indicate the existence of discrimination. i) Race and gender conscious remedies are both appropriate and constitutionally permissible under a federal anti-discrimination regime.

ii) Title IX operates to ensure that the gender-segregated allocation of athletics opportunities does not disadvantage either gender. iii) Prong three requires evidence of interest in athletics and permits the use of statistical evidence in assessing the level of interest in sports. (1) Institutions determine interest and abilities by nondiscriminatory methods of their choosing provided (a) The process take into account the nationally increasing levels of womens interests and abilities (b) The methods are responsive to the expressed interests of students capable of intercollegiate competition (girls). (i) Club and intramural sports, sports at feeder schools, community and regional sports programs, and phys ed classes. iv) A gender-conscious remedial scheme is constitutionally permissible if it directly protects the interests of the disproportionately burdened gender. (1) Prong three is implicated where a gender based disparity with respect to athletic opportunities has been shown to exist. v) An academic institution may operate separate teams for members of each sex where selection of such teams is based upon competitive skill or the activity is a contact sport. (1) The regulation is not meant to promote athletics on college campuses and a school is not required to sponsor an athletic program of any size. (2) To fully accommodate the interests and abilities of the underrepresented sex is an extraordinarily high requirement. (3) The mere fact that there are some female students interested in a sport does not ipso facto require the school to provide a varsity team. vi) Unmet interest of the underrepresented sex must be completely accommodated before any of the interest of the overrepresented gender can be accommodated. (1) The test requires proportionate participation opportunities for both sexes (prong 1) unless one sex is simply not interested in participating (prong 3) f) Neal v. Cal State Schools should take into account the nationally increasing levels of womens interests and abilities and avoid disadvantaging members of an underrepresented sex. i) Its central aspect is to encourage women to participate in sports. ii) Title IX envisions continuing progress toward the goal of equal opportunity for all athletes and recognizes that, where society has conditioned women to expect less than their fair share of the athletic opportunities womens interest in participating in sports will not rise to a par with men overnight.