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Tag:lockout
Posted on: November 26, 2011 6:54 pm
 

What's in the deal and how it got done

NEW YORK -- After weeks of stubbornness, posturing, white-knuckle negotiating tactics and finally lawsuits, the NBA labor dispute finally came down to something that had been sorely lacking.

Compromise.

Imagine that.

Instead of losing an entire season and immersing the sport in a debilitating legal battle that would've squandered all its momentum, the NBA is back with a deal that neither side loves, but both sides can live with. In other words, the best kind of deal -- one that both sides walk away from a little disappointed. Based on conversations with officials from both sides, here are the broad strokes of the agreement, with emphasis on elements that had been unresolved when the National Basketball Players Association rejected the owners' latest offer, dissolved and filed antitrust lawsuits that soon will be withdrawn:

* BRI: The players will receive between 49-51 percent of basketball-related income based on the extent of revenue growth. But whereas under the owners' prior proposals, the players felt it would've been nearly impossible to achieve the 51 percent ceiling, sources said they'll have a realistic chance of hitting it by the fifth or sixth year of the deal with robust revenue growth. The players will receive 60.5 percent of incremental revenues beyond projections each season, up to 51 percent in aggregate. Previously, the owners were offering only 57 percent of marginal revenues up to a total of 51.

* Mid-level exception: For non-tax-paying teams, they're four-year deals starting at $5 million in the first two years, with the starting point increasing by 3 percent in subsequent years. Owners had been pushing for alternating 3- and 4-year deals for non-taxpayers. For tax-payers, the so-called "mini" mid-level will be for three years starting at $3 million in the first two years, with the starting point increasing 3 percent in subsequent years. This is an enhancement of the owners' previous offer of a two-year "mini" mid-level starting at $2.5 million.

* Room exception: Teams under the cap get an additional two-year exception starting at $2.5 million (same as previous offer).

* Luxury tax rates: The same dollar-for-dollar as in the previous CBA for the first two years. Starting in Year 3, the rates increase to $1.50 for the first $5 million over; $1.75 for $5-$10 million over; $2.50 for $10-$15 million over; $3.25 for $15-$25 million over; and an additional 50 cents for each additional $5 million (same as previous proposal).

* Repeater Tax: A dollar-for-dollar additional tax for teams that are above the tax line for a fourth time in five years (same as previous proposal). Owners at one time had been pushing for a $1.50 repeater rate, while the players wanted 50 cents. Voila, compromise.

* Sign-and-trades: Available to all teams in the first two years of the agreement. Starting in Year 3, teams that are close to the tax line would only be able to acquire a free agent via a sign-and-trade transaction to the extent that it put the team no more than $4 million over the tax. The maximum length of such contracts will be four years with 4.5 percent annual increases. Previously, the owners had been seeking to eliminate sign-and-trades for all tax teams or teams that would exceed the tax after the transaction. This was a key issue for the players, and the more player-friendly definition of a tax-paying team also applies to use of the mid-level exception. So, if a team is $500,000 under the tax, it could use $4.5 million of the full mid-level. If a team already is over the tax, it would be restricted to the "mini" mid-level.

* Extend-and-trades: With the so-called Carmelo Anthony rule, owners were trying to take away a player's ability to force a trade to a team and sign an extension. The compromise is that teams can acquire player via an extend-and-trade but can only offer a three-year deal (including whatever is left on the player's contract) with 4.5 percent increases.

* Qualifying offers: The players feel they made significant gains here for restricted free agents. Qualifying offers will be guaranteed with the potential to be significantly enhanced based on performance. So for example, a first-round pick between picks 10-30 would be eligible to receive a qualifying offer as high as the ninth pick's if he's a starter for half the regular season games or 2,000 minutes. Second-round picks and undrafted players could be eligible for QO’s as high as the 21st pick based on the same criteria. Similarly, picks 1-14 could have their qualifying offers reduced if they don't meet the criteria. It's a nice compromise that provides opportunities for players who perform and gives owners protection against having to overpay players who don't.

* Escrow: Withholding from player paychecks to account for a potential overage in their BRI share is capped at 10 percent. Owners dropped their demand for an escrow carryover from season to season.

* New player benefits pool: One percent of BRI will be used for annuities and welfare benefits (such as health, life and disability insurance, long-term care and education expenses for themselves and their children). In the unlikely event that 10 percent doesn't cover the players' BRI overage, up to 1 percent of the pool could be used to account for that.

* Contract lengths: All the same as in the previous proposal. Bird free agents can get five-year deals with their own teams, with other deals being capped at four years. Each team can designate one player eligible for a five-year extension of his rookie contract with his own team. A team can have only one player so designated on the roster at a time. The owners had been pushing for four- and three-year contract lengths until recently.

* Annual increases: 7.5 percent for Bird players, 4.5 percent for others. This is up from 6.5 percent and 3.5 percent, respectively, in the owners' prior proposal.

* Minimum salaries and rookie scale: Frozen for the first two years and then will begin growing consistent with BRI growth. Previously, owners were seeking to cut both by 12 percent -- another win for the players.

* Maximum salaries: Same formula as in the previous CBA, with this exception in the players' favor: Star players who outperform their rookie contracts will be eligible to extend with their teams at 30 percent of the cap -- up from 25 percent. A player would be eligible by satisfying any of the following criteria: 1) winning MVP; 2) being named first-, second- or third-team all-NBA twice; or being voted as an All-Star starter twice. The Bulls' Derrick Rose, for example, would be eligible.

* Player options: Same as in the previous CBA. Owners had been seeking to eliminate player options for players who make more than the league average.

* Stretch and amnesty provisions: Same as in the prior proposal.

* The luxury tax cliff: Same as most recent proposal. Owners have agreed that a tax-paying team will only lose half the tax money it otherwise would've received by remaining under the tax.

* Minimum team payroll: It's set at 85 percent of the cap in the first two years, and 90 percent thereafter. The cap ($58 million) and tax ($70 million) levels can be no lower than last season's levels in the first two years.

* Deal length: 10 years, with each side able to opt out after Year 6. (Same as previous proposal.)
Posted on: November 25, 2011 11:51 am
Edited on: November 25, 2011 7:11 pm
 

Looking for a deal on Black Friday

NEW YORK -- Negotiators for the NBA owners and players were meeting Black Friday for litigation settlement talks in the hopes of laying the groundwork for a collective bargaining agreement to save the 2011-12 season.

The starting point in the negotiations essentially is where the bargaining talks left off Nov. 10, when the players were left with an ultimatum from the league to accept the framework of a 50-50 revenue split or face a far worse offer. Instead of sending the proposal to the union membership for a vote, the National Basketball Players Association dissolved Nov. 14 and launched multiple antitrust lawsuits against the league's owners.

UPDATE: With those dynamics in mind, the talks take the form of a legal settlement as opposed to a collective bargaining resolution -- with many of the same participants still involved but some new faces, too. The players' lead attorney in the antitrust action, David Boies, has teamed with former NBPA lead outside counsel Jim Quinn in an effort to push the deal across the finish line. But neither Boies nor Quinn was present at Friday's negotiations. Kessler, stripped of his role as lead negotiator for the players, also was not present.

Representing the players Friday were former union officials Billy Hunter and Derek Fisher; executive committee member Maurice Evans; general counsel Ron Klempner; economist Kevin Murphy; and one of Quinn's law partners. For the league, it was commissioner David Stern; deputy commissioner Adam Silver; Spurs owner Peter Holt, the chairman of the labor relations committee; general counsel Rick Buchanan; and deputy general counsel Dan Rube.

So the so-called litigation settlement talks had very much the same dynamics as the bargaining talks that broke off Nov. 10, leading to the players' decision to dissolve the union and launch antitrust lawsuits against the owners on Nov. 14. This, with one exception: there were strong indications that Quinn, one of the key figures in ending he 1998-99 lockout, had laid important groundwork during secret discussions he brokered earlier in the week. Stern and other league officials were seen Tuesday at the same location where Friday's talks were taking place. 

Multiple people connected to the talks have told CBSSports.com that the discussions could move quickly towards a deal after the momentum gained in the past week from back-channel talks spearheaded by Quinn. But one person in frequent contact with ownership cautioned that it may take the entire weekend to find common ground, adding that there "could be some anxiety" in the room Friday.

On the 148th day of the lockout, but the first since the labor impasse was transformed into a court battle, there seemed to be little effort to hide the appearance that the faces and issues hadn't changed. A key difference was the absence of Kessler, though the tempestuous attorney was still "very much involved" behind the scenes, according to a source.

The players are hopeful that the owners will be willing to offer substantial movement on a handful of system-related issues around which the talks crumbled two weeks ago, resulting in the unprecedented disclaimer of the NBPA and threatening that the season would be swallowed up by lengthy, costly and unpredictable antitrust litigation. To account for some of those concessions, which would result in a more flexible and opportunistic free-agent market than the owners last proposed, it is possible that the split of revenues could inch upward above 50 percent for the players -- with the remaining difference accounted for by an escrow system capped at 10 percent as teams and players adjust to a reset of player salaries and more restrictive system than the one that existed under the CBA that expired July 1.

The most difficult issues to resolve will be the availability of the mid-level exception for luxury tax-paying teams; sign-and-trade transactions for tax payers; and the definition of a tax payer. Coming out of the collapsed bargaining talks, these were the items that bothered the players the most in terms of restricting player movement -- especially the notion that a team would be considered a tax payer prior to use of an exception that pushed it over the tax line, as opposed to afterward.

But while league negotiators were not expected to fully move toward the players on all the outstanding system issues, there has been "positive movement" from the owners in recent days "to get a deal done," according to the person in contact with ownership. The biggest factor in the potential for a deal by the end of the weekend is not the players' lawsuits, but something much more predictable and relentless: the calendar.

Both sides understand that a season tipoff on Christmas, which would deliver a 66-game regular season with the NBA Finals pushed back only one week, would require an agreement by Monday at the latest. Even that would be pushing it; the league will need about 30 days to finalize the deal and hold an abbreviated free-agent period, training camps and preseason games.

As necessitated by the union's disclaimer, any legal settlement wouldn't be able to take the form of a CBA until the union reformed and was recognized by the owners.
Posted on: November 23, 2011 3:04 pm
Edited on: November 23, 2011 6:52 pm
 

Talks resume; is there time?

NEW YORK -- It began with sources indicating that back-channel discussions were under way last week, then took the next logical step when the identity of the third-party intermediary facilitating the resumption in talks was revealed.

Now, negotiations to save the NBA season are back on in earnest, with the focus on ending the lockout with enough time to begin the 2011-12 season by Christmas, as CBSSports.com reported Nov. 18.

Talks resumed Tuesday and are expected to continue Friday after a break for the Thanksgiving holiday, two people with knowledge of the discussions said. Yahoo Sports first reported the formal resumption of negotiations, and the New York Times reported that a Christmas Day tipoff would result in a 66-game season that would end in late April with the NBA Finals pushed back about one week.

With the nearly five-month lockout now a legal matter, the talks are taking place in the form of a litigation settlement. Is there time? Sources familiar with the negotiations maintain that if both sides are serious about finishing the negotiations that fell apart Nov. 14, when the union dissolved and the players began pursuing antitrust damages, a deal could come together relatively quickly.

Billy Hunter, director of the National Basketball Players Association, mentioned Tuesday at the players' Thanksgiving turkey giveaway in Harlem that he expected a settlement conference to take place under the supervision of a federal magistrate in Minnesota -- where the players' antitrust claims have been consolidated -- and that it could happen as early as next week. So if lawyers and negotiators could arrive at some semblance of an agreement by the end of the weekend, it's conceivable that the settlement could be finalized by early next week -- leaving time to open the season by Christmas, with not a minute to spare.

The league would require about a 30-day window to finalize the deal and hold an abbreviated free-agent period, preseason schedule and training camps before play could begin.

Both the league office and the office of the former players' association were in lockdown mode Wednesday, a sure sign of the serious nature of the discussions. Commissioner David Stern hasn't spoken publicly in eight days, and the NBA had no comment on the negotiations except to say that the league "remains in favor of a negotiated resolution," a league spokesman said.

Time will be especially of the essence since the settlement couldn't take the form of a collective bargaining agreement until the players voted by simple majority to reform the union and the owners agreed to recognize the union as the players' bargaining agent. The deal would then go to the players and owners for a ratification vote. All of this would have to be done with extraordinary speed.

As we well know, expedience has not been a hallmark of these negotiations. But the time to deal, sacrifice and show all your cards is now if either side wants to have a season instead of costly, lengthy antitrust litigation with a very uncertain outcome for both sides. And the remaining issues to be agreed upon -- principally restrictions on sign-and-trades and mid-level signings that the league is trying to place on high-spending teams -- are relatively minor compared to the big-ticket item of a 50-50 split of revenues that owners and players already have negotiated.

When the players rejected the owners' latest ultimatum on Nov. 14, they also were concerned about accelerated tax rates the league was proposing for teams that stay above the luxury tax line for multiple years and the interpretation for when a team is considered to be above the tax threshold for the purposes of using exceptions.

As a matter of protocol -- and legality -- former union president Derek Fisher is not participating in the talks. Fisher would only rejoin the picture if and when the union were reformed to approve a possible settlement. So with the talks in the hands of the lawyers, the question of what the starting point is in the negotiations becomes an important one.

When last the two sides bargained, they had basically agreed on a 50-50 split of revenues and had about a half-dozen system-related issues that separated them. The first question is whether or not each side's economic position changes when the negotiations resume. Hard-liners on both sides say the positions should harden, due to the economic losses that have been incurred and the threat of expensive litigation. But Jay Himes, a longtime antitrust attorney and partner at Labaton Sucharow, said the most expeditious result would come if the two sides simply picked up where they left off.

"I don't think anybody will dramatically reassess their position and say, 'Oh, wow, suddenly the calculus has changed considerably," Himes said. "... You can say, 'Well, now it's an antitrust lawsuit, give the players an extra 15 percent because they went out and got themselves a star litigator,' as they did. It sounds good, I suppose, for public consumption, but the science is not nearly that precise when you get in the negotiating room."

And neither is the risk assessment for either side. While the players may feel emboldened temporarily by the prospect of a potential $6 billion damages judgment against the owners if the season were lost, Himes cautioned that leverage can shift "from day-to-day and from decision-to-decision." And while he believes the players "on the merits, have a better shot" at ultimately winning in court, Himes said losing the entire season would be the "worst-case scenario" for them.

"From the players' point of view, at some point the season just dies, and that's really bad for them because most of them don't have good sources of outside income," Himes said. "And if the image of the NBA does suffer from a prolonged lockout, the opportunities for endorsements aren't as attractive because the advertisers don't want to pay for a tarnished brand. So that's a real disaster for the players. I'm sure they would not like to see the season killed."

Himes, co-chairman of Labaton's antitrust group and former antitrust bureau chief in the New York attorney general's office, pointed out another complicating factor for the owners that has flared up to varying degrees throughout the 2 1-2 years of bargaining talks: dissension among high-revenue and low-revenue teams. According to a person with knowledge of ownership activities, the owners recently held another internal discussion about how more money will be diverted to help struggling teams in small markets. Even at this late date, with another month of games and quite possibly the entire season in jeopardy, the owners still were not able to reach agreement among themselves on revenue sharing, the person said.

"That laundry is not necessarily being aired at the moment, but I'm sure that it's affecting the negotiating position of the teams when they leave the players and go back into their own conference room and start talking about where the money is coming from and going to," Himes said.

More than anything, the greatest and most relentless driving force behind this renewed push to get a deal is something neither side can control: the calendar. If the players can count on roughly the same schedule the NFL players got via the same U.S. District Court in Minnesota, they're looking at more than three months before an appeal would even be heard by the 8th U.S. Circuit Court of Appeals. By then, Christmas games would be a distant memory, and the entire season would be toast.

Thus, the time is now to salvage it. 

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."





Posted on: November 15, 2011 4:08 pm
 

Decert plans continue; multiple lawsuits?

NEW YORK -- As lawyers representing NBA players who plan to sue the league for antitrust claims weighed their legal options Tuesday, other attorneys involved in the decertification movement still were planning to file players' petitions seeking to dissolve the union on their own, a person involved in the process told CBSSports.com.

While the letter of disclaimer sent by former union executive director Billy Hunter to David Stern Monday effectively dissolved the union and paved the way for an antitrust action against the league, agents representing some 200 players who already have signed decertification cards believe it will help the players' cause to submit them to the National Labor Relations Board. The agents believe that a statement from far more than the 30 percent of players required to initiate a vote ousting the union leadership will help the union's argument in federal court that the disclaimer of interest was a last resort and not a negotiating tactic or a "sham."

"The players gave up everything they could possibly give, and they still couldn't get a deal done," the person involved in decertification said.

In addition, the filing of decertification petitions would be proof that Hunter had no choice but to disclaim interest in order to get an expedited remedy for players. If he hadn't, the players were going to vote him out anyway -- which would've resulted in a more lengthy legal process since the players would've had to wait 45-60 for the NLRB to authorize an election. For the players to move forward with their decert case, the NBPA's unfair labor practices charge against the league -- filed in May and amended in July, when the NBPA was still a union -- would have to be withdrawn.

Meanwhile, one of the options the players' antitrust attorneys are considering is whether to file multiple lawsuits against the NBA. The main class action would be on behalf of players under contract, and logically would not include a player whose last name begins with the letter "A." Plaintiffs are listed alphabetically, and the name with the most impact would be that of future Hall of Famer Kobe Bryant -- although Bryant's level of interest in being listed as the lead plaintiff is unknown. Bryant, in the final few years of his career, has deliberately taken a secondary role in the labor talks, preferring instead to allow players who would be most affected by the outcome to take the lead.

A second potential lawsuit would be specifically on behalf of the league's rookies and free agents, none of whom is under contract. The legal reasoning flows from the majority opinion by the 8th U.S. Circuit Court of Appeals in the NFL Players Association's antitrust lawsuit against the NFL. The panel made a distinction in its opinion about rookies and free agents that some antitrust lawyers have interpreted as a sign that courts would be more likely to determine that the NBA's lockout is illegal within the narrow scope of players who are not under contract. In the NFLPA's case, the 8th Circuit strongly implied that employees not under contract could not be locked out, but did leave room for those players to be included in the lockout once they were given a chance to market their services and negotiate contracts with teams.

The players' goal in the antitrust action is to get a summary judgment in federal court -- either in the Southern District of New York, where the NBA already has established the venue with a pre-emptive lawsuit against the NBPA, or a court in a more friendly appeals circuit -- that would include treble damages (three times the players' monetary losses). If such a judgment could be achieved in 60 days, as Hunter predicted Monday, the players will have missed paychecks totaling about $800 million -- making the potential for treble damages $2.4 billion.




Posted on: November 14, 2011 2:56 pm
Edited on: November 14, 2011 8:54 pm
 

NBA players blow up union, take fight to court

NEW YORK -- Unable to reach a collective bargaining agreement with the NBA, the union representing the players dissolved Monday and paved the way for a potentially lengthy and ugly antitrust lawsuit to be filed within days.

With a unanimous show-of-hands vote from as many as 50 players, the union sent a disclaimer of interest letter to commissioner David Stern, which effectively ended the National Basketball Players Association's role as the collective bargaining agent for the players. Outside counsel Jeffrey Kessler and star attorney David Boies -- whom the players met for the first time Monday -- will lead the legal team that will sue the NBA alleging antitrust violations.

"We've negotiated in good faith for over two years," said Billy Hunter, who now becomes executive director of the National Basketball Players Trade Association -- no longer the leader of the players' union. "The players just felt that they've given enough."

Stern, speaking live on league broadcast partner ESPN, called the players' tactic "a charade" and characterized it as a "magical trick" that ultimately will fail.

"What they've done is destroyed incredible value that would've gone to the union membership," Stern said. "... We were very close, and they decided to blow it up."

Stern made no pronouncements about further cancellation of games, but added, "The calendar takes care of that." Although the disclaimer action initiated by union executive director Billy Hunter is more expeditious than a decertification vote initiated by the players, the legal fight that will ensue certainly imperils the 2011-12 season.

"Obviously, Mr. Kessler got his way," Stern said, "and we're about to go into the nuclear winter of the NBA."

During a meeting attended by the players' executive committee, player reps from all 30 teams and about 20 more players -- including superstar Kobe Bryant, Tyson Chandler, Carlos Boozer, Rajon Rondo and Elton Brand -- union officials presented and explained details of the league's most recent offer. It had been characterized as the final revised proposal the league intended to offer, and if the players didn't accept it, Stern's negotiating position would revert to a harsher offer -- including player salaries being derived from a 47 percent share of revenues, a hard team salary cap and rollbacks of existing contracts.

The deal on the table for the players Monday included a 50-50 split of revenues -- a 12 percent reduction from their previous share of 57 percent -- and a long list of system and spending restrictions. Hunter said the meeting gained momentum and changed in tone once players raised the option of decertification. They ultimately chose the more expeditious option of a disclaimer, with Hunter saying a summary judgment in the antitrust case could possibly be reached in 60 days -- about the length of time it would've taken the National Labor Relations Board to authorize an election through a player-initiated decertification. 

About 200 players already had signed decertification petitions, displeased with the league's negotiating tactics and the concessions made by the union. Among these were 15 players in the meeting Monday, Hunter said.

The former union executive director said he has no intentions of withdrawing the NBPA's unfair-labor practices charge with the NLRB, although it is not clear how the agency will view it now that the union has been dissolved.

While the route the union chose is quicker than decertification, it is no silver bullet for the NBA players to win what are known as "treble damages" -- three times lost earnings resulting from the lockout -- or to eventually get a better deal. For starters, there will be a significant legal fight over where the union is allowed to file its antitrust case. Presumably, the players would prefer to file it in an employee-friendly district in California, under the auspices of the 9th U.S. Circuit Court of Appeals. For this reason, the NBA in August filed a pre-emptive lawsuit in the Southern District of New York, which falls in the employer-friendly 2nd Circuit. 

Once that is resolved, the league will argue that the players' disclaimer is a "sham" -- in other words, a tactic designed to gain negotiating leverage rather than a serious union dissolution. The NFL Players Association tried the same tactic, and started much earlier in the process -- principally because it had no other choice due to a litigated deadline to decertify or disclaim or lose the option going forward.

The NFLPA never got an ultimate ruling on whether the lockout or disclaimer were legal, but instead got a narrow ruling from the 8th U.S. Circuit Court of Appeals that the federal district court did not have the authority to lift the lockout.

"I felt the combination of Boies and Kessler, from my perspective, would be an unbeatable team," Hunter said. "... We feel extremely confident that we can prevail in this matter. That’s the opinion of both lawyers."

In a statement released by the league office after his live TV interview, Stern said, "The 2011-12 season is now in jeopardy," and immediately began laying the groundwork for what could be the mother of all antitrust lawsuits. Stern alluded to a February 2010 bargaining session in which union attorney Kessler threatened that the players would "abandon the collective bargaining process and start an antitrust lawsuit against our teams if they did not get a bargaining resolution that was acceptable to them."

"The NBA has negotiated in good faith throughout the collective bargaining process but -- because our revised bargaining proposal was not to its liking -- the union has decided to make good on Mr. Kessler's threat."
 
 
 
 
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