sought damages for the difference between the amount he would have received in a free market and the amount he actually received.
This court found that the NFL draft was a per se violation of the Sherman and Clayton Acts
and alternatively that the draft was a violation if tested under the rule of reason.
An estimate of the contract that Smith would have been able to sign in a free market was then made.
The estimate was based on the conclusion that the plaintiff would have been able to negotiate a three-year contract which would have guaranteed payment regardless of injury. The size of the hypothetical contract was established by using the annualized payments of $ 54,000 to Pat Fischer, who played a similar position to Smith and was signed in the same year by the Redskins in what was then the closest thing to a free market.
Fischer was a veteran player with the St. Louis Cardinals who was a "free agent", that is, he was eligible to sign with any team. The Cardinals would be compensated for his loss by the team signing him in an amount ultimately determined by the Commissioner of the NFL.
When Fischer was signed by the Redskins, the Commissioner refused the Cardinals' request to award the plaintiff to them as compensation, thus establishing what the Court of Appeals called a "very rough index of the two players' comparability."
Thus, this court concluded that Smith would have signed a three-year contract, guaranteed regardless of injury, for $ 162,000.
The amount of compensation Smith actually received was made up of two parts. First, there was the $ 50,000 total value of the contract he signed. Second, there was the $ 19,800 paid to Smith in the year following his injury. This was 90% of his prior year's salary, representing what he would have received had he played a second year under the "option" year of his contract. Thus, the total compensation Smith received was $ 69,800.
This court found Smith's damages to be the difference between what he would have received in a free market minus what he actually received, $ 92,200, and awarded treble damages of $ 276,600.
Both sides appealed this court's decision. The plaintiff argued that the amount of damages was too low and advanced a variety of alternative theories for calculating the amount he would have received in a free market. The defendants argued that the finding of antitrust liability was incorrect and that the damage award was excessive. The Court of Appeals found that the draft was not a per se violation of the antitrust laws
but that it was a violation of the rule of reason.
The Court of Appeals overturned this court's determination of damages and remanded for recomputation of damages.
The court said, "there was simply no evidence to support the Judge's finding that Smith, absent the draft, would have been able to negotiate a contract containing a guarantee of three years' full salary, regardless of injury."
However, the court found that the comparison to Pat Fischer was not clearly erroneous
Further, the court approved inclusion of the $ 19,800 in the total actual compensation paid to Smith given the existing factual situation.
On remand, this court must determine the contract terms Smith would have been able to obtain had there been no draft. Smith advances a new theory of how he would have had a multi-year contract that was payable regardless of injury; he repeats his earlier assertions that contracts signed by glamour rookies during the 1965-1966 bidding war are an indication of his free market value, and that if Pat Fischer is used again that the court decide that Fischer's contract was reduced by the value of the draft choices awarded to the Cardinals; and he argues that the $ 19,800 payment should no longer be included in the total compensation he received from the Redskins. Parts II, III, and IV of this opinion address these three arguments.
II. Smith's New Theory of Multi-Year Injury Protection
The plaintiff has advanced a novel theory that had he agreed to a multi-year contract, he would have inadvertently been guaranteed payment for the entire length of the contract, regardless of injury. He recognizes that the Court of Appeals found that he could not have negotiated for multi-year injury protection,
but argues that because of the wording of the Standard Player Contract, had he signed a multi-year contract he would have automatically been guaranteed payment for every year of the agreement.
The plaintiff's theory is based on the wording of the form contract and two district court cases which have considered its meaning. The Standard Player Contract is a four-page printed contract with a small number of blank spaces that are filled in by the parties. For present purposes, portions of three paragraphs are important:
1. The term of this contract shall be from the date of execution hereof until the first day of May following the close of the football season commencing in the calendar year 19__, subject, however, to termination, extension, or renewal as specified herein.