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BROWN v. PRO FOOTBALL

June 4, 1991

ANTONY BROWN, et al., Plaintiffs,
v.
PRO FOOTBALL, INC., d/b/a WASHINGTON REDSKINS, et al., Defendants.


Lamberth


The opinion of the court was delivered by: ROYCE C. LAMBERTH

MEMORANDUM OPINION

(Striking Nonstatutory Labor Exemption Defense)

 This case comes before the court on plaintiffs' motion to strike defendants' nonstatutory labor exemption defense or for partial summary judgment ("Plaintiffs' Motion to Strike"), defendants' motion for summary judgment as to the nonstatutory labor exemption ("Defendants' Motion for Summary Judgment"), and the parties' respective oppositions and replies. After consideration of all the filings, arguments, and authorities presented by both parties in their filings and at oral argument, the court will grant Plaintiffs' Motion to Strike and will deny Defendants' Motion for Summary Judgment.

 I. FACTS

 Plaintiffs in this action are professional football players who played on developmental squads of the twenty-eight National Football League teams during the 1989 regular and post-seasons. By court order, plaintiffs have been certified as a class for purposes of the present case. *fn1" Defendants are each of the twenty-eight teams which comprise the National Football League and the National Football League ("NFL"), itself.

 On February 23, 1989, the NFL's Long Range Planning/Finance Committee discussed the framework for establishing developmental squads of up to six players for each of the NFL teams. Plaintiffs' Statement of Material Facts Not in Genuine Dispute and Supporting Exhibits ("Plaintiffs' Exhibits") at 4. The developmental squad was a new concept which, under the terms of 1989 Resolution G-2 ("Resolution G-2"), would permit each NFL team to sign rookie and first year free agents to services contracts for the 1989 NFL season. See 1989 Resolution G-2 at Plaintiffs' Exhibits at 5. At its annual meeting on March 22, 1989, the NFL, inter alia, voted to adopt Resolution G-2 and to amend the NFL Constitution and Bylaws accordingly. Under the terms of Resolution G-2 the NFL teams would be able to sign developmental squad players beginning September 5, 1989. Id.

 The present case and the motions currently before the court involve the compensation terms of Resolution G-2, which provided that developmental squad players would be paid a fixed salary instead of being permitted to negotiate their own salaries. While Resolution G-2 established that developmental squad players would receive one fixed weekly salary, the amount to be paid was left blank. On April 7, 1989, Jack M. Donlan, Executive Director of the NFL Management Council sent a letter and a copy of Resolution G-2 to Eugene Upshaw, representative of the NFL Players Association ("NFLPA"). The letter informed Upshaw of the NFL's adoption of Resolution G-2 and suggested an April meeting "to negotiate the terms and conditions applicable to developmental squad players." Plaintiffs' Exhibits at 6. On April 29, 1989, James A. Conway, Assistant Executive Director and General Counsel of the NFL Management Council wrote a letter to Richard E. Berthelson, of the NFLPA, summarizing a telephone conversation between the two in which they briefly discussed developmental squads and requesting a face-to-face meeting in early May to discuss salary and benefit terms for developmental squad players. Id. at 7.

 
Article XXII, Salaries, shall not apply, In lieu thereof, establish special services contract providing for salaries of $ 1,000 per week, prorated on a daily basis.

 Id. at 9. On May 30, 1989, Upshaw faxed a letter to Donlan indicating the NFLPA's position that developmental squad players must have the right to negotiate their own salaries. Id. at 10. The fax also suggested a discussion of Resolution G-2 when the parties were to meet the following week. Id. On June 16, 1989, Donlan sent a letter to various members of one of the NFL committees summarizing the results of a meeting between the NFL and the NFLPA. Id. at 12. The letter indicated that the NFLPA would not agree to the plan to pay developmental squad players a fixed salary and insisted that those players be given the right to negotiate their own salaries. Id. In the letter, Donlan concluded that "for implementation purposes, the [developmental squad] issue is clearly at an impasse." Id.

 On June 30, 1989, Donlan sent Upshaw a letter suggesting a meeting during the second week in July. Id. at 15. Attached to the letter was a draft developmental squad contract. Id. On June 30, 1989, Donlan also wrote a file memorandum indicating that it was his understanding that the NFLPA would never accept a contract for the developmental squad players in which they were not permitted to negotiate their own salaries. Id. at 16. On July 6, 1989, Upshaw sent Donlan a letter which stated the NFLPA's position that "all players, including developmental, should have the right to negotiate salary terms, and that no fixed wage for any group of players is acceptable to the NFLPA." Id. at 18. In this letter, Upshaw also indicated that the NFLPA rejected the conditions suggested for developmental squad players which the NFL presented to the NFLPA and which included a fixed salary of $ 1,000 per week. Id.

 On August 14, 1989, Conway sent a final version of the draft Developmental Player Contract to Upshaw with a letter attached indicating that the NFL was "available for negotiations on this and other issues anytime." Id. at 22. On September 5, 1989, the day NFL teams began signing developmental squad players, NFL Commissioner Pete Rozelle circulated a memorandum to all NFL teams reminding them that "weekly compensation to be paid to Developmental Squad Players is $ 1,000. Individually negotiated terms above or below $ 1,000 are not permitted." Id. at 28. The memorandum indicated that any other form of compensation or benefit, such as per diem and housing arrangements, was impermissible. Id. On October 17, 1989, Upshaw sent a letter to Donlan in response to one received from Donlan. In this letter, Upshaw stated the NFLPA view that the developmental squad salary cap "violates the law." Id. at 31. Plaintiffs, through the NFLPA, filed the present suit on May 9, 1990.

 II. LEGAL STANDARDS

 Plaintiffs have moved to strike defendants' nonstatutory labor exemption defense. Under Rule 12(f) of the Federal Rules of Civil Procedure, the court "may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Plaintiffs have moved, in the alternative, for partial summary judgment on the nonstatutory labor exemption defense. Because the court has considered matters outside the pleadings, the court will consider plaintiffs' motion under Rule 56(c), which indicates that summary judgment is appropriate when examination of the record as a whole reveals "no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." In examining the record, the court must view all inferences in the light most favorable to the nonmoving party. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In order to determine whether to grant plaintiffs' motion for partial summary judgment, the court must address the nonstatutory labor exemption and its place within the collective bargaining process in the context of the present case.

 III. ANALYSIS

 A. Background

 The purpose of collective bargaining is to enable employers and unions to resolve disputes among themselves without having to resort to the courts. One court has noted that the:

 
labor arena is one with well established rules which are intended to foster negotiated settlements rather than intervention by the courts. The League and the Players have accepted this "level playing field" as the basis for their often tempestuous relationship, and we believe that there is substantial justification for requiring the parties to continue to fight on it, so that bargaining and the exertion of economic force may be used to bring about legitimate compromise.

 Powell v. National Football League, 888 F.2d 559, 567 (8th Cir. 1989), cert. denied 111 S. Ct. 711 (1991).

 The NFLPA is a labor organization under the terms of 29 U.S.C. § 152(5) and has exclusive bargaining rights for all NFL players. See 29 U.S.C. § 159 (a) (1973). This exclusive bargaining right extends to developmental squad players insofar as they are potential NFL players: "not only present but potential future players for a professional sports league are parties to the bargaining relationship." Zimmerman v. National Football League, 632 F. Supp. 398, 405 (D.D.C. 1986), citing Wood v. National Basketball Association, 602 F. Supp. 525 (S.D.N.Y. 1984). Potential NFL players, such as the developmental squad players in the present case, are part of the collective bargaining relationship between the NFL and the NFLPA for purposes of the nonstatutory labor exemption. Zimmerman v. National Football League, 632 F. Supp. at 405. *fn2"

 In 1977, the NFL and the NFLPA entered into a collective bargaining agreement. After the 1977 Collective Bargaining Agreement expired, the parties adopted the 1982 collective bargaining agreement, which itself expired in August 1987. Currently there is no collective bargaining agreement in effect. After a collective bargaining agreement expires, both the union and the employer have a continuing obligation to bargain. National Labor Relations Act, 29 U.S.C. § 158(a)(5) & (d) (1982); see NLRB v. Katz, 369 U.S. 736, 742-43 (1962). Employers are obligated to maintain the status quo as to wages and working conditions created by a previous collective bargaining agreement before the parties reach "impasse" in negotiations. Powell v. National Football League, 888 F.2d at 565 (citations omitted).

 During the life of a collective bargaining agreement, the nonstatutory labor exemption shields both employers and labor unions from antitrust liability for restraints which involve mandatory subjects of collective bargaining *fn3" found in the collective bargaining agreement. If not included in a collective bargaining agreement such restraints would subject the employer to liability under the antitrust laws. Powell v. National Football League, 888 F.2d at 562; Mackey v. National Football League, 543 F.2d 606, 612 (8th Cir. 1976); Scooper Dooper, Inc. v. Kraftco Corp., 494 F.2d 840, 847 n.14 (3rd Cir. 1974) ("to preserve the integrity of the negotiating process, employers who bargain in good faith must be entitled to claim the antitrust exemption"). The "availability of the nonstatutory exemption for a particular agreement turns upon whether the relevant federal labor policy is deserving of preeminence over federal antitrust policy under the circumstances of the particular case." Mackey v. National Football League, 543 F.2d at 613.

 The nonstatutory labor exemption is a narrow exception to antitrust liability. The purpose of that exemption is to effect an "accommodation between the congressional policy favoring collective bargaining under the National Labor Relations Act and the congressional policy favoring free competition in business markets . . . ." Connell Construction Co. v. Plumbers & Steamfitters Local Union No. 100, 421 U.S. 616, 621-22 (1975). This accommodation "requires that some union-employer agreements be accorded a limited nonstatutory exemption from antitrust liability." Id. (emphasis added).

 While the nonstatutory labor exemption normally applies to protect employers from antitrust liability where a collective bargaining agreement exists, some courts have extended that exemption beyond expiration of a collective bargaining agreement. The Court of Appeals for the District of Columbia Circuit has stated that "provisions of [an] expired collective-bargaining agreement that relate to mandatory subjects [of collective bargaining] are said to survive the agreement's expiration." Southwestern Steel & Supply, Inc. v. NLRB, 806 F.2d 1111, 1113 (D.C. Cir. 1986). Wages being one of the mandatory subjects of collective bargaining, an "expired collective bargaining agreement continues to define the status quo as to wages and working conditions and the employer is required to maintain the status quo until the parties negotiate to a new agreement or bargain in good faith to impasse." NLRB v. Cauthorne, 691 F.2d 1023, 1025 (D.C. Cir. 1982) (citations and internal punctuation marks omitted). The Supreme Court has stated that the purpose of extending the terms of a collective bargaining agreement beyond expiration is ...


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