Blog Entry

Decertification: The Nuclear Option

Posted on: November 4, 2011 11:23 am
Edited on: November 4, 2011 1:51 pm
 
By Matt Moore 

With reports surfacing Thursday night of a possible coup being attempted on the part of outraged players with regards to concessions granted by NBPA leadership in negotiations with the NBA on a new CBA, the talk is now shifting to the courts. Players are threatening an "involuntary decertification," in which 30 percent of union membership signs a petition to bring a vote to the union with regards to decertification. From there a simple majority would be needed to decertify the union. That opens the way for the players to bring individual antitrust suits, which could potentially damage the owners and even end the lockout. 

But what does any of this mean?

To find out, we spoke with David Scupp of Constantine Cannon LLP, an antitrust firm based on the East Coast. Let's try and get to the bottom of what any of this means.

What is decertification?

In an effort to protect employees, the National Labor Relations Act put into law a compulsion for employers to collectively bargain with unions. Under the terms of collective bargaining, Scupp says that in time businesses were protected from antitrust laws as long as both sides were involved in collective bargaining, which must be done through a union recognized by the NLRB. 

"A rule emerged in the 1980's which says antitrust laws are out of bounds except when there is no longer a CBA between union and management," Scupp says. "The only way around that is to decertify the union. That's the result that came out in the 1990's."

So as long as the NBPA exists, the owners are protected from antitrust litigation. Thus, decertification. 

Decertification can be committed to in separate ways. Disclaim of interest is a faster process that involves union leadership essentially scuttling their own ship. However, it is less likely to hold up in court. What the 50 players (and their agents) are seeking is an involuntary decertification, which requires the 30 percent petition, the majority vote, and recognition from the National Labor Relations Board. In doing so, the action would dissolve the union, ending protections for the owners against antitrust suits and paving the way for players to pursue suit against the owners. It is believed that this option represents the only true way to gain leverage against the owners. 

In short, Scupp says, "the law gives the right for the players to be and not be a union." 

What are the legal challenges to decertification?

Before we get into antitrust considerations,  it's important to consider that the league has already challenged any move from the NBPA to decertify or disclaim interest. The league filed suit against the NBPA attempting to protect itself from any suit resulting from decertification on the grounds that the NBPA has not bargained in good faith and that any decertification on the part of the players is not legitimate. This is where the term "sham decertification" comes from. This same consideration was brought up but not settled, Scupp says, during the NFL lockout and subsequent court battle with the NFLPA. 

"The argument says that the union is decertifying, but it's not a good faith decertification," Scupp says. "It shouldn't be a lightswitch that can be turned on and off. That argument needs to be tested. It wasn't one of the issues that was resolved in the NFL case. The league is arguing that if the players' union decertifies, it would be a sham and the court should not entertain a suit."

The biggest problem with this particular suit, Scupp says, is that it's attempting to block something that hasn't occurred yet. Scupp says that the court is essentially tasked with reading intent towards the NBA's decision to decertify, which it has yet to do. How do you evaluate the intent of a party regarding an action they have not taken yet? That's the challenge to the NBA's suit, as outlined by the NBPA in their reply memorandum

Should the union elect to decertify involuntarily, as is being proposed by the players, the sham argument becomes more difficult to prove. The sham argument proposes that the union's decertification is merely being used as a tactic towards negotiation. Having the players (at least on surface) detonate their own union without consultation or approval from NBPA leadership would be pretty difficult to challenge as a sham.  

So the union decertifies, what happens then? 

Why would you give up the protections afforded you by the National Labor Relations Act to collectively bargain by decertifying your own union, essentially putting you out on your own against the power of the NBA?

Because it allows you to sue for antitrust. And it is here we enter the wild, and the one last, desperate hope of the players gaining leverage or an outright victory over the union.

Players would file suit against individual owners claiming that the lockout itself is an antitrust violation, Scupp says. "It's a group boycott, outside the context of collective bargaining, an anti-competitive element, would be their argument," according to Scupp. 

 The league acts in collusion regarding all matters of the CBA, according to the plan of attack for the players. 

"The salary cap, draft rules, etc., if those practices are part of the CBA," Scupp says, "if you're going to restrict free agent movement, and all your teams are going to act together, that's a violation of antitrust, according to the argument." 

We're used to hearing about open markets with regards to antitrust. The NBA is the only real "market" that exists in the United States for professional basketball since the ABA-NBA merger. But Scupp says that the suit would be focused more on the elements and practices of the NBA that may constitute an antitrust violation.

"There are certain violations which are what are called per se violations," Scupp says," that are so anti-competitive, you don't have to prove what the market is. If it is not a per se violation, they go with a rule-of-reason analysis. The players would have to prove what the global market is. That's a very good question, what the market is."

Does the professional basketball market include minor leagues like the barely-in-existence current ABA? Does it include Europe? Does it include exhibition games to the degree it can be argued players can make a living off that option? 

"Is it a worldwide market for basketball and if so does the NBA have market power?" Scupp asks. "Is the NBA a market inside itself? I don't know, but it's a very good question. If the lawsuit ever progressed to that point, would be important."

Scupp says that other questions that would come into play are what percentage of the market does the NBA control, and are there barriers to that market for the players? It gets trickier the further this process goes. 

What happens if the players win an antitrust suit?

The owners go down like Michael Spinks. Scupp says that a possible result would be the court enjoinging the lockout, effectively ending it. The players wouldn't be bound by it, and would start receving checks again. This could actually be enacted while the suit is taking place, putting even more pressure on the owners. For that to occur, the NBPA would need to prove irreparable harm stemming from the lockout, which involves combating a likely claim from the NBA that Europe and other employment options undermine the idea of irreparable harm.

Should the court enact an injunction, the league would no doubt appeal. The question of whether the injunction would hold during such an appeal is up for debate. The original judge in the NFL case in Minnesota held that the injunction would hold during an appeal and the lockout would be withdrawn, but the Minnesota district court ruled to suspend the injunction during the appeals process, opening up the lockout once more. While Scupp says a ruling on such an injunction would come quickly, that would still take a month or more, time neither side has if they wanted to save a season.

But the monetary result is the real hammer for filing the suit. 

"At the end of the day, if the players could win an antitrust suit, you get treble (triple) damages, the payout at the end would be very significant." 

Furthermore, if it looked like the players were going to win such a suit, the league would likely cave and grant the players huge concessions or keep elements the same in the next CBA. It would represent a dramatic win over the owners. 

So the decertify-and-antitrust-suit option has to be the best choice for the players, right?

Not at all, according to multiple experts, including Scupp.  

Provided they manage to get the required votes for a decertification, and that decertification holds up in court, and the players file suit, and the court hears that suit, and the players win, what's the timeline on that? Years, Scupp says. Years.

"The question is whether the players can sustain through that period," Scupp says. "I'm sure a lot of players can, but I'm also sure a lot of players can't." 

Consider who is linked to the 50-player initiative. At least seven All-Stars and probably more were reportedly on the calls. Those players have the means to survive such a monetary drought. Dwyane Wade isn't going under in three years. But the majority of the NBPA is made up of role players and end-of-bench guys, along with rookies and young players who don't have those means.

Additionally, losing the league for multiple years would likely simply mean the end of the NBA. It's unfathomable to think about, but that's the reality. Even once a case is decided and damages set by a court, the appeals process would take further years. Scupps says that the only way this is a feasible option for the players should they pursue this route, considering the money lost in one or more lost seasons, is if an injunction is placed on the lockout, and that is far from certain. This isn't a quick process, it's a painfully slow one, and one that would bleed the league to a flatline on the national spotlight.

Which is why Scupp says decertification and subsequent lawsuits only work as a negotiating tactic, not as a viable strategy towards conflict resolution.  

"An antitrust suit would take years to resovle and neither side takes that."

If the suit is merely being filed as a negotiating tactic, wouldn't the court want to avoid participating in such a process? Scupp says it's likely that the court would urge both sides to settle the dispute at the negotiating table, rather than using the courts as a means to an end.

So what's the end game here? What happens next?

The players are playing a dangerous game of chicken right now. Basically, they have no weapons to aim at the league in this negotiation and feel they're backed into a corner with no acceptable solution in sight. So they've pulled out the antitrust hand grenade and are daring to pull the pin. If the players go down, they're taking the owners with them. 

The problem is that the likely result of this is a lost season, something that the owners have been hinting at and Billy Hunter has explicitly said some owners are pursuing anyway. It's threatening the NBA with something it's already made clear it's ok with. How do you get someone to back off by punishing them with something they're fine with?

The only chance the NBPA has here of victory or even a marginal survival is that the prospect of leaving the process up to the courts takes it out of the NBA's hands. The owners no longer control the field, despite the many obstacles in the way of such suits. That kind of wild card might be enough to shake the moderates to align with those owners who do want a deal and a season, wrestling control from the hard-line owners who so far have carried the day.

Decertification and antitrust litigation is the nuclear option. Once it starts, stopping it becomes harder and harder. The case won't even be brought to court until after the entire 2011-2012 NBA season would be cancelled, and the process could and would probably take up to another full year to reach an initial resolution, prior to the appeal process. The players would be ending professional basketball in this country to protect themselves from the owners' efforts which have been draconian and brutal.

Saturday will be day 128 of the NBA lockout. If it is not the last, the future of the NBA looks dark for all involved.


Additional resources: 
Huffington Post lockout primer.  
Sports Illustrated FAQ.
NBA vs. NBPA legal documents, via Brian Cuban on Twitter. 
Comments

Since: Nov 2, 2006
Posted on: November 4, 2011 2:43 pm
 

Decertification: The Nuclear Option

I've been reading Sportsline for a long time and I would have to say that this is one of the more insightful, interesting, and well laid out articles in a long, long time (assuming the legal acuracy is correct).  There were two parts; however, that seemed missing.  First, if decertification really runs its course, what about the real victims, the employees that were let go from the teams and really needed their jobs?  Can they receive residual damages too?  It seems if the owners are ultimately found guilty of anti-trust tactics, then the real victims should cash in, as well.  The other point I was wondering about is the idea that if the union decertifies, and there is no union, can the owners then go out and hire replacements?

Any input in these areas would be most appreciated.  I have always been a huge sports fan and a die-hard supporter of the Lakers (even as a yourng child).  But for me, the greed is becoming unbearable.  I am very close to saying goodbye to the NBA for life.  I wish there was a way to align the entire nation (or world, for that matter) into this same thinking, but I realize it can't be done.  Very similar to the frustration I have with Congress and the deep rooted desire to rid it of ALL incumbnents.  Such is life.



Since: Sep 5, 2006
Posted on: November 4, 2011 1:50 pm
 

Decertification: The Nuclear Option

Four problems with NBPA decertification, in my opinion:
1. They waited too long. This should have been done months ago if it was going to be done. The NFLPA actually decertified before they were even locked out.
2. Speaking of the NFL, their decertification didn't work. They caught one favorable ruling which they promptly lost on appeal. The NBA will do everything they can to get this heard in the 8th (at least I believe it was the 8th), just like the NFL owners did. Why would the same judges rule differently for the NBPA? 
3. The NLRB, according to what I read, won't allow the NBPA to decertify.
4. The NFL decertification was window dressing. No one on either side - especially the owners - ever wanted to miss a single game. There are NBA owners that want to miss the entire season. The NBPA would actually be assisting the hard-line owners, because this will absolutely void the season. It might even take a chunk out of next season.

We had better hope reason prevails tomorrow, or the NBA will be going away for a long, long time. You can't un-ring the decert bell. If the union dissolves, talks immediately stop for good. Every contract in the league will be voided. The owners have made that clear. I think it would drag on for 18 - 24 months and would result in the permanent collapse of several teams. And when the league did get back to business (if they even do), it would be bedlam. No one would have a contract. The entire league would be free agents.



Since: Nov 21, 2006
Posted on: November 4, 2011 1:45 pm
 

Decertification: The Nuclear Option

Blow it up and start over. The NBA is not engaging to the average fan and it's because it is an inferior product (thank you David Stern for turning it into the Superstar League). I think injecting some passion, and drive and taking out some egos and entitlement is exactly what is needed. 



Since: Jun 13, 2007
Posted on: November 4, 2011 1:30 pm
 

Decertification: The Nuclear Option

The nuclear option of union decertification should be exercised.  We have read many stories about what could happen if decertificationoccurs, but such a plan has not made it to the courts.  The closest challenge that a sports league acts as a monopoly was when the USFL filed suit against the NFL and we remember what happened there.  The USFL won the battle (NFL acts as monopoly) and lost the war (awarded $3.00).
This threat needs to be settled law.  The results would finally answer the questions that come up during any protracted CBA negotiations:
  1. Is a sports league a monopoly?
  2. Is each team a separate business?
  3. Is decertification a negotiation tactic, i.e., a sham,  or is it an involuntary response to ownership not negotiating in good faith?
  4. What records does each side have to give to the other during negotiations?  Does this include financial statements, tax returns, and infrastructure costs?
  5. Do the leagues and players enjoy special privileges from tax breaks that would force them to comply to issues under federal law?
I think both sides are greedy, but the owners have the players over a barrel.  Ownership probably has more money to run this through the courts for years and who knows when this would actually go to trial?  The hardliners on both sides could withstand the years of litigation; however, the smaller market teams would probably need financial help and the middle income players may have to take real jobs.  The superstar players are not helping their cause by traveling overseas to play because it weakens their position that the NBA is a monopoly.
I wish they would cancel the 2011-2012 season so they could see how much they need each other.



Since: Aug 16, 2006
Posted on: November 4, 2011 1:13 pm
 

Decertification: The Nuclear Option

If the players are willing to take the chance of ending the NBA by going thru with this decertification all out of spite and principle then screw all of them, I'm switching sides to the owners.



Since: Nov 4, 2011
Posted on: November 4, 2011 12:57 pm
 

Decertification: The Nuclear Option

I love my basketball, especially now that the Knicks seem relevant again, but I'm for the players, do what you must, this isn't just for now but for future players as well. The owners are playing hardball because they can't control themselves from overspending(I mean who would've paid Joe Johnson that kind of money except for the Hawks, they paid him anyway). Sometimes you have to get crazy before people take you seriously. The owners need to negotiate, not dictate, what do you do when your back's against the wall?


The views expressed in this blog are solely those of the author and do not reflect the views of CBS Sports or CBSSports.com