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This could be a stressful week for New Orleans Saints quarterback Drew Brees. His team–one of only five in the National Football League never to win a Super Bowl–is coming off a three-game losing skid and is facing a playoff game on January 16. But game film is not the only thing Brees will be watching this week, as the Supreme Court will hear oral arguments in the case of American Needle v. NFL on January 13. And while some quarterbacks might not be able to string a coherent sentence together, Brees eloquently outlined the underlying legal issues of the case in a recent opinion piece featured in the Washington Post.
American Needle, Inc., is a manufacturer of sports hats, uniforms, and other apparel based in the Chicago area. Until 2000, the NFL licensed American Needle (among many others) the right to sell apparel bearing the trademark-protected insignia of NFL teams. But then the NFL decided not to renew these licenses, opting instead to give Reebok an exclusive, ten-year license to market all NFL apparel. So in 2004 American Needle filed an antitrust case against the NFL, all of its teams, NFL Properties, and Reebok.
The case was brought under the Sherman Act, which outlaws “every contract, combination in the form of trust or otherwise, or conspiracy” that seeks to restrain commercial activity among the states. However, to prove a violation of Section 1 of the Act (15 U.S.C. 1), the plaintiff must show collective action of “separate entities.” If the defendant(s) are considered a single entity, however, the Act does not apply, as one cannot “conspire” or “combine” with itself. The lower courts both agreed that the NFL and its 32 member teams comprised a “single entity” and dismissed American Needle’s case. American Needle applied for review by the Supreme Court, but it seemed destined to fail. That is, until the NFL stepped in and also argued in favor of review. Technically, the question presented is whether the NFL, the NFL Properties, and the 32 member teams acted as a “single entity” when granting Reebok the exclusive headwear license. Of course, the NFL’s unusual maneuver is an attempt to expand the lower courts’ rulings beyond mere apparel licensing.
What’s essentially at stake for American Needle is the right to compete. So why is Brees so interested? I mean, the dude’s an NFL quarterback. Those guys are supposed to leave hot actresses for really hot Brazilian supermodels, not worry about potential shifts in American jurisprudence. But there’s much more at stake here than which company owns the license to sell hats. In fact, some commentators have said the case “could easily turn out to be the most important sports law decision ever.”
If the NFL were considered a “single entity” for all legal purposes, then it would be immune to any violation of the Sherman Act. This would allow teams to collude without ramification and runs counter to the realities of professional sports and the spirit of antitrust law. For example, there would be no “free agency,” a right the NFL Players Association worked years to achieve. Without players having the right to sell their services as free agents, team owners could once again act together to control players and keep salaries low. And this ruling would not necessarily be limited to the NFL. Take the NBA for example: LeBron James, arguably its most popular player, will see his contract with the Cleveland Cavaliers expire after the 2009-10 season. James’ upcoming free agency has been one of the most talked about issues in sports for years. But if the NBA were considered a “single entity,” James would receive a league-slotted salary without the opportunity at free agency.
The idea that the NFL and its 32 member teams represent one single entity is ridiculous. If the Court affirms the 7th Circuit, it should only do so in the limited question presented in that case. In other words, the NFL should only be considered a “single entity” for the purposes of licensing protected images for sale on consumer goods to fans. Extending the ruling to broader contexts–and other leagues–could have disastrous consequences.
– Jesse Bland
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