Antitrust Law - Nonstatutory Labor Exemption - Second Circuit Exempts NFL Eligibility Rules from Antitrust Scrutiny
ANTITRUST LAW--NONSTATUTORY LABOR EXEMPTION--SECOND CIRCUIT EXEMPTS NFL ELIGIBILITY RULES FROM ANTITRUST SCRUTINY.--Clarett v. National Football League, 369 F.3d 124 (2d Cir. 2004).
Ratification of the Sherman Act initiated a trying period for the Supreme Court, which has since struggled with the intersection of labor law and antitrust law. (1) The conflict between the two areas of law is inherent: antitrust law promotes competition while labor law endorses activities that restrict it. (2) In certain circumstances, the Court has crowned labor law the champion of this contest (3) by immunizing certain union-employer agreements from antitrust scrutiny (4) through application of the "nonstatutory labor exemption," (5) which promotes the ability of "the association of employees to eliminate competition" with regard to some conditions of employment. (6) In Mackey v. National Football League, (7) the Eighth Circuit set forth a three-prong test for assessing the applicability of the exemption, which several other circuits have since adopted. (8) Recently, in Clarett v. National Football League, (9) the Second Circuit departed from this trend by registering its dissatisfaction with the Mackey standard (10) and ultimately applying a more open-ended standard of its own making. This new standard wisely allows for more flexibility in nonstatutory exemption analysis, particularly because it avoids a paramount weakness of the Mackey framework: namely, the Eighth Circuit's formulation making determinative the bona fide arm's-length negotiations requirement.
Following a strikingly successful freshman season, Maurice Clarett found his college football career cut short by his suspension from play the following year. (11) His options to play football limited, Clarett opted to seek eligibility for the 2004 National Football League (NFL) draft. (12) NFL rules require that "at least three full college seasons [after] high school graduation" (13) pass before a player may seek eligibility for the draft. (14) Clarett, whose December 2001 high school graduation rendered him ineligible, (15) challenged this restriction under the Sherman Act. (16) He contended that the rules constituted a "group boycott" (17) and an illegal restraint on trade, through which NFL teams agreed to exclude an otherwise able class of players from competing in the market for NFL player services. (18)
Prior to examining the merits of Clarett's antitrust claim, the district court considered the NFL's contention that the nonstatutory labor exemption should immunize its rules from antitrust scrutiny. (19) The court employed the three-prong Mackey test, under which the exemption is appropriate only when "the agreement sought to be exempted concerns a mandatory subject of collective bargaining"; "the restraint on trade primarily affects only the parties to the collective bargaining relationship"; and "the agreement ... is the product of bona fide arm's-length bargaining." (20) The court found that the NFL's rules failed all three prongs. First, because the rules did not refer to wages, hours, or conditions of employment, but instead made "a class of potential players unemployable," the court held that they did not address a mandatory subject of collective bargaining. (21) Second, the court found that the rules impermissibly affected persons, such as Clarett, who were excluded from the bargaining units. (22) Finally, the court found insufficient the NFL's evidence demonstrating that the eligibility rule was a subject of bona fide arm's-length bargaining because the players' union waived the right to bargain over the eligibility rules specifically, (23) and therefore the rules could not have arisen during the collective bargaining process. (24) Thus deeming the nonstatutory exemption inapplicable, (25) the court subsequently found that Clarett had standing to assert an antitrust claim (26) and held that the challenged restriction was an antitrust violation. …