Disclaimed interest by NBPA? Here's what it means to labor squabble

by | CBSSports.com Senior NBA Blogger
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Meet the new faces of the NBA players' labor fight -- David Boies (left) and Jeffrey Kessler. (Getty Images)  
Meet the new faces of the NBA players' labor fight -- David Boies (left) and Jeffrey Kessler. (Getty Images)  

So the NBPA decided to circumvent any more playing footsy with the NBA and just decertified. Only they didn't decertify. They "disclaimed interest." Here's what that actually means.

What's the difference between decertification and a disclaimer of interest?

Collective bargaining was established to protect employers in their negotiations with unions and vice-versa. Subsequently, it was established in U.S. law that employers are exempt from antitrust litigation, provided they stay within the framework of collective bargaining. So if you want to sue your employer for antitrust, you need to dissolve your union.

You can do that two ways. You can decertify, which involves what we've been talking about, where union membership petitions for a vote to decertify the union; the National Labor Relations Board (NLRB) verifies that petition; and then a vote is held to decertify, needing a simple majority to pass. Or you can disclaim interest -- which means union leadership dissolves itself. Decertification is bottom-up; disclaimer of interest is top-down.

So which is better, disclaimer of interest or decertification?

There are advantages and drawbacks to both. Decertification takes longer, which is the primary reason the NBPA elected to go the other route. A disclaimer of interest essentially goes into effect immediately upon paperwork being filed with the U.S. Department of Labor. The National Basketball Trade Association's new lawyers told reporters Monday that should they elect to file suit against the NBA (which they will), they won't be seeking an injunction, but a summary judgment.

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Disclaim of interest brings with it a greater threat the court will rule it a "sham" negotiating tactic, but to counter that the agents behind the recent decertification movement will submit their petitions for an involuntary decertification as counter-evidence. Disclaim of interest also removes the NLRB from interest in the case -- without a union, the NLRB has no jurisdiction. In short, disclaimer of interest is faster, but doesn't carry the weight decertification does.

Can the players and league still negotiate?

In the interim, between the disclaimer and the suit being considered, negotiations can take place ... but not with the players as a whole. They no longer exist as a collective entity. Teams can negotiate only with individual players. And of course the teams won't, since they consider this to be a "sham" dissolution meant only as a negotiating tactic. Also, the NBA would lose its protection from antitrust laws if it negotiated with individual players instead of a union.

The only way a new CBA is ratified is if the threat of legal action -- or a summary judgment with substantial damages -- forces the league to abandon its position and cave to the players.

I'll let you determine the odds of that based on your working knowledge of, you know, logic. But if you want the legal perspective, based on the 8th U.S. Circuit Court of Appeals' ruling in the NFL case as well as antitrust standards, David Scupp, an antitrust litigation expert, says that while the players may not have a lot to lose in this pursuit based on where the CBA negotiations were, "their prospects are not great."

Why didn't the players decertify?

Because it takes longer. But the other thing to consider is that an involuntary decertification provides protection from the "sham" argument. A movement from within the players against union leadership to dissolve the union is pretty unlikely to be determined to be a sham. In contrast, the disclaimer of interest is more succeptible to that, although the players have have substantial evidence that disclaiming was their only option after the league negotiator repeatedly issued ultimatums and informed them that negotiations were over unless the players accepted their offer. That's one of the many questions to be answered.

What happens next?

If we assume the players are going to file suit -- which is what's going to happen, that's why you do this -- then the first question is where the case will be heard. The players will want California, the 9th Circuit, which is more favorable toward unions. The league will push for the same court they filed suit in, the 2nd Circuit in New York, which has been their friend in the past. From there, the players will ask for a summary judgment. The court proceedings regarding the actual suit cannot begin until the issue of where the case will be heard is settled, a process that takes more time off the season's clock.

A summary judgment? Not to get too technical on you, but it's basically looking for the court to say, "Obviously! Of course the NBA is wrong! Here you go!" It seeks to circumvent a trial in cases with no disputes of "material fact." Scupp told CBSSports.com that a summary judgment is granted when the court rules there are "no issues of fact" and that a trial is not needed. In short, the players want to get around the wait of a trial and gain a decision in their favor as quickly as possible. There still have to be motions, exhibits, discovery, etc., so a summary judgment could take longer than an injunction -- but it potentially has more value. The NFL players got an injunction lifting the lockout in their antitrust case against the NFL, but it was lifted in a matter of days while the 8th Circuit considered the appeal.

Scupp says the players could file for the summary judgment specifically on the grounds that the NBA's lockout is illegal. In that scenario, if granted, the players could earn triple their lost salary in damages -- as opposed to an injunction, which would simply lift the lockout and force the players to resume play. Ken Berger of CBSSports.com reports that if the summary judgment was granted in 60 days, which is the soonest it could be (and even that is a stretch), the league could face damages as high as $2.4 billion. As the 8th Circuit ruled that the court could not enjoin such a lockout, the players are looking to dodge that question and instead focus on the fact that the court did not rule on whether the lockout was in fact legal.

In any instance, Scupp says it's likely the NBA would file a counter-motion for its own summary judgment. Such a ruling would block any further efforts by the players outside of appeal on the grounds of the lockout being illegal. The NBA also would appeal a possible summary judgment against it, but the impact of having a potentially multi-billion-dollar judgment against the owners might be enough to prompt them to settle.

Also, there are expected to be at least two lawsuits -- a class-action suit challenging every aspect of the NBA business, such as the salary cap, luxury tax and draft as antitrust violations, and another one specifically on behalf of rookies and free agents.

Why the second one? In the majority opinion in the NFL case, the 8th Circuit panel specifically questioned whether employees who are not under contract can be locked out. It could be on behalf of such rookies and free agents that the players would be able to achieve their quickest and most decisive legal opinion rejecting the NBA's operations as illegal.

From there, we start to answer the question of whether the players have a case here, and what legal victories they can obtain. Then the league will appeal, and the question will be whether the impact of the initial ruling will be sustained during the appeals process. Then the players need to survive the appeals process, and likely more until the league either decides to cave or it runs out of courts to appeal to.

It could take years for the case to wind through the appeals process, something that neither side will want to sustain given the current state of negotiations.

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