Tag:antitrust
Posted on: November 17, 2011 7:20 pm
 

GMs served with papers in players' suit

A procedural but interesting wrinkle in the players' antitrust lawsuit in Minnesota emergered Thursday. In addition to filing the complaint in district court, the plaintiffs' attorneys served papers via first-class mail on all 30 NBA general managers, according to court documents in the case.

The certificate of service was amended in the court records Thursday to add the Miami Heat. When the lawsuit was filed Tuesday, the Heat were left off the list of team general managers served with the complaint. For unknown reasons, the attorneys served the papers on Heat executive and salary cap expert Andy Ellisburg, rather than team president and Hall of Famer Pat Riley.

Also, the Knicks' copy of the lawsuit may get lost in the mail. It was sent to Donnie Walsh, who is no longer the Knicks' team president.

Sending the complaint to team general managers does not mean they're liable in the lawsuit. It's simply a procedural step, and also one of many ways that attorneys can and do annoy defendants in civil lawsuits. It is not known if the same procedure was followed in the separate antitrust lawsuit filed in California Tuesday because the government's online database had not finished loading for that case.

In other developments Thursday, commissioner David Stern updated the full Board of Governors via conference call on the state of the collapsed collective bargaining talks and the litigation. In addition to the antitrust lawsuits filed against the NBA in California and Minnesota, the league has a pending case in the Southern District of New York in which it is asking a federal judge to rule that the lockout cannot come under antitrust attack by virtue of the players dissolving the National Basketball Players Association.

Stern explained the meaning of the two antitrust lawsuits, but it is likely that a strategy session discussing how to proceed won't happen until owners on the labor relations committee meet or have a call themselves, according to two people familiar with the league's procedures.



Posted on: November 16, 2011 3:50 pm
 

NBA responds to players' disclaimer

NEW YORK -- Lawyers for the NBA and players now suing the league for antitrust claims exchanged updated arguments in their pending federal case in New York in the hours after the National Basketball Players Association dissolved as a union Monday.

Under order from U.S. District Judge Paul Gardephe, the NBA furnished a letter Monday offering further proof that its request for declaratory judgment that the lockout was legal was based on adequate facts. The letter was due Monday, and thus included up-to-the-minute arguments in the aftermath of the players' union disclaiming interest to pave the way for antitrust lawsuits, two of which were filed Tuesday.

The players' response was ordered by Nov. 23, but players' attorney Jeffrey Kessler responded Tuesday.

Unsurprisingly, the league argued that the NBPA's decision to disclaim and take up its case with the NBA in federal court under antitrust law further supported the NBA's contention when it filed the lawsuit Aug. 2 that the players were going to do that all along.

"On more than two dozen occasions ... the union has threatened to abandon collective bargaining and commence antitrust litigation to challenge the lockout," league attorneys wrote. "And the  complaint alleges that the union's threats of antitrust litigation are having a direct, immediate and harmful effect on the parties' ability to negotiate a new collective bargaining agreement."

League attorneys sought declaratory judgment from the U.S. District Court for the Southern District of New York that the lockout could not be challenged under antitrust law, asserting that the NBPA's harboring of that threat was hindering negotiations and that a new CBA would be more easily reached if the court pre-emptively removed the threat. In a motion to dismiss, attorneys for the NBPA argued that the court lacked jurisdiction because there was no "ripe controversy" -- since at the time the NBA sued, the union had yet to decertify or seriously consider it. Kessler reiterated those arguments Tuesday.

 "It was only at that moment that the NBPA decided to disclaim its interest in being the collective bargaining representative of the players -- a decision that was uncertain until it was made," Kessler wrote.

Whether or not the NBA's lockout can be legally challenged under antitrust law is only half the story, but it's a very important half. Lawsuits filed in California and Minnesota Tuesday also seek damages -- a step that seemingly would be affected by the New York court's ruling on whether the lockout was legal in the first place. It's all complicated -- far more complicated, costly and risky to both sides than it would've been for the parties to sit in a room and finish a collective bargaining agreement that was, by any measure, 95 percent done when the talks broke down.

"I still can't believe that any of the lawyers on either of the sides is confident enough ... that they're willing to blow up the season, spend hundreds of thousands -- if not more -- on legal fees, and risk either treble damages or billions in player salaries," said Gabe Feldman, director of the Sports Law Center at Tulane University.

Posted on: November 15, 2011 8:24 pm
Edited on: November 15, 2011 11:45 pm
 

Players sue NBA for antitrust violations

NEW YORK -- NBA players sued the league alleging antitrust violations Tuesday, in part using commissioner David Stern's own words against him in making their case that the lockout is illegal.

With two antitrust actions -- one in California naming superstars Carmelo Anthony and Kevin Durant among five plaintiffs, and another in Minnesota naming four plaintiffs -- the players are seeking summary judgment and treble damages totaling three times the players' lost wages due to what lead attorney David Boies referred to as an illegal group boycott.

"There's one reason and one reason only that the season is in jeopardy," Boies told reporters at the Harlem headquarters of the former players' union, which was dissolved Monday and reformed as a trade association to pave the way for the lawsuits. "And that is because the owners have locked out the players and have maintained that lockout for several months. ... The players are willing to start playing tomorrow if (the owners) end the boycott."

The California case, filed Tuesday night in the Northern District, named plaintiffs who represent a wide array of players: Anthony, Durant and Chauncey Billups (high-paid stars); Leon Powe (a mid-level veteran); and Kawhi Leonard (a rookie). The plaintiffs in a similar case filed in Minnesota are Caron Butler, Ben Gordon, Anthony Tolliver and Derrick Williams.

Boies said there could be other lawsuits, and at some point, they could be combined.

It is possible, Boies said, that the players could get a summary judgment before the NBA cancels the entire season -- essentially a two-month timeframe. By that point, with the clock starting on potential damages Tuesday -- which was supposed to have been the first pay day of the season for the majority of players -- treble damages could amount to $2.4 billion.

"We would hope that it's not necessary to go to trial and get huge damages to bring them to a point where they are prepared to abide by the law," Boies said.

A statement released by the league office Tuesday night, spokesman Tim Frank said: "We haven't seen Mr. Boies' complaint yet, but it's a shame that the players have chosen to litigate instead of negotiate. They warned us from the early days of these negotiations that they would sue us if we didn't satisfy them at the bargaining table, and they appear to have followed through on their threats."

Earlier, Boies seemed to have anticipated this response, noting that the NBA's lawsuit in the Southern District of New York -- in which the league sought a declaratory judgment pre-emptively shooting down an eventual dissolution of the union -- came first.

"The litigation was started by the owners," Boies said. "... This case was started months ago when the NBA brought it there."

The crux of the players' argument is that, absent a union relationship to shield them from antitrust law, the 30 NBA owners are engaging in a group boycott that eliminates a market and competition for players' services and are in breach of contract and violation of antitrust law. The players are seeking to be compensated for three times their lost wages as permitted by law, plus legal fees and any other relieft the court deems necessary and appropriate.

One of the many issues to be resolved is where the lawsuits ultimately will be heard. The NBA almost certainly will file a motion seeking that the players' complaints be moved to the Southern District, which is in the more employer-friendly 2nd U.S. Circuit Court of Appeals. The Northern District in California is in the more employee-friendly 9th Circuit, while the Minnesota case was filed in the district residing in the 8th Circuit, where the NFL players ultimately fell short in their quest for a permanent injunction lifting the lockout.

The NBA players are not seeking a permanent injunction; rather, Boies said they are pursuing the more expeditious and fact-based summary judgment, which could save months of legal wrangling.

UPDATE: Boies asserted that the plaintiffs have the right to choose which appropriate court has jurisdiction over their lawsuit, and that the NBA's lawsuit in New York was premature -- since the NBA players had never before in their history of union representation since the 1950s disclaimed interest or decertified until Monday. In contrast to the NBA's argument that dissolution of the union and an antitrust action were the players' goals all along, the lawsuit laid out that the players participated in bargaining with the league for more than four years after they were first allegedly threatened with massive rollbacks of salaries and competition for their services. Boies said the players had continued to bargain for months while locked out, offering a series of economic concessions totaling hundreds of millions of dollars until they finally reached the owners' desired 50-50 split in the final days of negotiations.

Unlike the NFL Players' Association's failed disclaimer of interest and antitrust action, in which the players' case was harmed by the lack of certainty over whether the collective bargaining process had ended, Boies said there was no disputing that bargaining talks had concluded in the NBA -- and that Stern himself had ended them by presenting a series of ultimatums and "take-it-or-leave-it" offers that the players could not accept.

"They had an opportunity to start playing with enormous concessions from the players," Boies said. "That wasn’t enough for them. If the fans want basketball, there’s only one group of people that they can get it from, OK? And that’s the owners, because the players are prepared to play right now."

The NBA undoubtedly will argue that it was the players who ended bargaining when their union disclaimed, and that the disclaimer is a sham, or a negotiating tactic as opposed to a legitimate dissolution.

The lawsuits came one day after the players rejected the league's latest ultimatum to accept their bargaining proposal or be forced to negotiate from a far worse one. The National Basketball Players Association at that point disclaimed interest in representing the players any longer in collective bargaining with the league after failing to reach an agreement during the 4 1-2 month lockout that was imposed by owners July 1.

In the California case, Boies, his partner, Jonathan Schiller, and players' attorney Jeffrey Kessler laid out a meticulous case that the collective bargaining process had been ended by the owners and that the players had no choice but to dissolve the union and pursue their case via antitrust law. They laid out a series of concessions the players made in an effort to reach a deal, including a "massive reduction in compensation" and "severe system changes that would destroy competition for players."

The lawsuit quoted Stern's own demands when he issued two ultimatums to the union during the final week of talks, threatening the players both times to accept the offer (with a 50-50 revenue split and various restrictions on trades and player salaries) or be furnished a worse offer in which the players' salaries would have been derived from 47 percent of revenues in a system that included a hard team salary cap and rollbacks of existing contracts -- all deal points the two sides had long since negotiated past and abandoned.

Asked if Stern made a mistake issuing the ultimatums that ended the talks, Boies said, "If you're in a poker game and you bluff, and the bluff works, you're a hero. Somebody calls your bluff, you lose. I think the owners overplayed their hand."

In the California lawsuit, the players' attorneys alleged that the owners' bargaining strategy was hatched during a meeting between league and union negotiators in June 2007. In that meeting, the lawsuit alleged, "Stern demanded that the players agree to a reduction in the players' BRI percentage from 57 percent to 50 percent," plus a more restrictive cap system. Stern and deputy commissioner Adam Silver told Hunter, according to the lawsuit, that if the players did not accept their terms, the NBA was "prepared to lock out the players for two years to get everything." Stern and Silver assured Hunter in the meeting that "the deal would get worse after the lockout," the lawsuit alleged.

The threats of getting a worse deal after the lockout if the players didn't accept the owners' terms were repeated in a letter to the union dated April 25, 2011, according to the lawsuit -- which then laid out the contentious, sometimes bizarre, and almost indisputably one-sided negotiation that transpired over the next few months.

"I will give the devil their due," Boies said. "They did a terrific job of taking a very hard line and pushing the players to make concession after concession after concession. Greed is not only a terrible thing, it's a dangerous thing. By overplaying their hand, by pushing the players beyond any line of reason, I think they caused this."

Boies said it was in neither side's best interests for the action to proceed to trial, which could take years and multiply the threat of damages against NBA owners. Even in their current capacity as members of a trade association, the players could have a settlement negotiated on their behalf among the attorneys for both sides. The settlement could then take the form of a collective bargaining agreement, but only after the majority of players agreed to reform the union and the owners agreed to recognize it.

Another option would be for a federal judge to require both sides to participate in mediation under the auspices of a federal magistrate; attendance would be required, though the results wouldn't be binding.

"There's lots of ways to get started, but it takes two to tango," said Boies, who once sued Microsoft in an antitrust case and represented Al Gore in his failed 2000 presidential bid based on a disputed vote count in Florida.

"If you've got somebody on the other side who is saying, 'It's my way or the highway, it's take it or leave it, this is our last and final offer and you will not see negotiation,' you can't resolve this," Boies said. "That, I will predict, that will stop, OK? There will come a time when the league faces the reality of the exposure that they face under the antitrust laws, the exposure that they face because of fan dissatisfaction with their unilateral lockout, the exposure they face by having other people in the business of professional basketball. And they will believe it is in their best interests to resolve this case.

"I can't tell you when that will happen," Boies said. "But I will tell you that it will happen, because those forces are too strong for anybody to resist indefinitely."





 
 
 
 
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