NBA labor dispute legal FAQ

NBA labor dispute legal FAQ

The NBA players dissolved the union immediately by filing a disclaimer of interest and filing an anti-trust suit in the state of California. Interested about the legal battle? Here are the answers [as I've found them] to the questions I've had.

What is the difference between a disclaimer of interest and decertification?

There are a few practical differences that I've been able to glean:

First, a disclaimer of interest happens immediately while decertification could take up to two months to go through. The disclaimer allows the players to push their anti-trust suit faster in the courts.

In this process, the NBPA has morphed from a union into a trade association. As such, Billy Hunter keeps his job as an adviser to individual players negotiating contracts rather than as representation of the players union. In effect, he keeps his job.

One downside is that during a decertification process the NBA and union could still meet in an attempt to bargain and form an agreement then halt the process. Under the disclaimer this can't legally happen as there is no one representing the players. All that can happen is a lawsuit can be settled and then a union reformed afterwards.

While this doesn't mean the players won't talk to the owners in an attempt to form a new deal, any attempt to bargain collectively would eat away at their attempt to win a lawsuit. The players are, more or less, in a catch 22 with the legal system now.

They want to use the legal system as leverage to negotiate a better CBA, but any attempt at negotiation now decreases their odds of winning a law suit.

So what is the basis of this law suit anyway?

The players are now arguing that since they are no longer a collective bargaining unit, the league can no longer lock them out. They need to open the doors and let players play under their existing contracts and sign new players.

If the owners start the league with any of the traditional league structure they will then get sued for anti-trust violations in terms of how they operate the league. Things like the draft, salary cap, and maximum salary would all unfairly restrict labor opportunities.

The players may or may not win such a law suit if it actually was allowed to reach its conclusion. Baseball, as an example, has an anti-trust exemption allowing it to operate in this fashion. However, my understanding is there have been threats to remove that exemption over the years, and that it's unlikely more exemptions would be granted.

[edit - the baseball antitrust was repealed in regards to labor relations and now only impacts franchise relocation, and in further research other sports attempted to file anti trust and were declined, so it seems like a lock that without a CBA, basketball would need to open up in a free market like environment not immune to anti-trust rules]

If the players do win, they now have actual damages in terms of lost salaries over the course of a lockout [if it were deemed illegal]. They could also win up to triple damages, but that scenario seems highly unlikely given the NBA's lockout is certainly not an obscene abuse of power as it started off legally and most will not view the NBPA's attempt to dissolve as serious.

Can David Stern really void all contracts?

Stern's argument is that all existing contracts are no longer valid without a CBA in place. If you read the standard player contract, it is so interwoven with the CBA that he may have a valid point.

Now whether or not those contracts would be voided entirely or just have CBA related pieces stricken would become another court case. However, Stern likely won't move forward on the threat to cancel them as an attempt to do so would be an acknowledgement that the union is truly dissolved and not using the disclaimer as a sham.

If contracts are canceled, the NBA would likely be forced to open its doors and then would need to do so as a free market without restrictions in order to not put itself in heavy jeopardy of losing a law suit.

If the NBPA's real intention [unlikely] is to truly and fully stop bargaining then these contracts might end up voided, but no one believes that is the true intention of the NBPA. Most believe they just want to bargain with more legal leverage.

How does the NFL ruling impact the NBA's law suit?

While the circumstances between the NFL and NBA differ, one ruling came out of the NFL suit that will adversely affect the NBA. It was ruled that the Norris LaGuardia act did not require a union/employer relationship.

The act basically says that the federal courts can't issue injunctions to resolve labor disputes. The players will seek an injunction to lift the lockout and argue that because they are no longer represented by a union the lockout is illegal.

As such, based on that precedent the players will struggle to win an injunction and force the NBA to open its doors and then force along further anti-trust charges.

However, I'm not certain that it would impact their ability to win damages from a missed season this summer if the two sides don't get back together before then.

What happens now?

Who knows? It will be fascinating to see where this goes. I am only speculating here, but I would imagine the longer the players operate without a union the stronger their case becomes as they are viewed more and more as acting without a union in truth rather than as a ploy.

If a full season is missed then I would imagine their odds of winning damages or forcing the NBA to open would improve considerably. I would imagine the greatest strength in the decertification/disclaimer ploy is that if a full season is missed the players may have substantial legal leverage to offset their financial weakness.

I would speculate that if the owners want to lock out the players for two years to force them to break then they open themselves up to severe legal liability in doing so.

That may not be the case, but it seems reasonable to me that if the players don't discuss as a group to resolve this disagreement for a year or two then their leverage would improve dramatically.

However, that benefit faces a significant contradiction, as any attempt to use that leverage gained immediately destroys it as they are now operating as a union again.

How will this end? Hopefully with the owners making a couple concessions quickly and a season, but more likely a missed year of NBA action.

Comments

Leave a comment
  • This analysis seems pretty complete, and you did pick up the Norris-LaGuardia point from yesterday.

    One would have to see the individual contracts, but I would assume that they are subject to the CBA. Compare that to free lancers and other contract workers, who still have contracts even though employees at headquarters are out on a labor dispute. In any event, the only remedy would be for damages. This would be under the antitrust laws instead of under the contract. However, antitrust damages are trebled. 15 U.S.C. sec. 15. Now, maybe having to pay D. Wade and LeBron $72 million a year as opposed to $24 might get the owners' attention.

    BTW, looking up the prior reference indicates that the baseball antitrust exemption has been repealed with regard to labor relations, contrary to popular belief. 15 U.S.C. sec. 26b.* Up to a minute ago, I didn't know that, either.

    _________
    *1998, according to the official U.S. Code. Apparently, during the last strike, Congress went through with this threat, although it appeared at the time that it was only a threat by Florida's senators if St. Pete didn't get a team. 13 years of popular misconception here.

  • In reply to jack:

    Interesting note on the anti-trust exemption for baseball being repealed in terms of labor relations. I did not know that either [obviously].

    It's worth noting that antitrust laws are not automatically trebled, and my understanding is that there needs to be a willful violation to gain that. Given that the sides operated under a CBA for so long and most people view the present disclaimer of interest as a sham, I suspect trebling of damages would be unlikely.

    However, even just paying standard damages would destroy the owners. If they had to hand out 1.5 billion in damages to the players as a whole [or whatever is presently guaranteed this season] without any income source because there was no season then it would put the entire league in serious jeopardy financially.

  • In reply to DougThonus:

    15 U.S.C. sec. 15 says "... any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue ... and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee." Nothing there about anything being willful.

    Even if a judge would have discretion (and I doubt it, but I am not being paid to give legal advice on that issue), the owners' sure can't count on a court exercising its discretion in their favor.

  • In reply to jack:

    Wow, interesting note, I had read elsewhere that damages were not trebled automatically, so I stand corrected again.

  • So the players are not only interested in losing all their salaries this year - they want all future earnings wiped out that were previously guaranteed, regardless of how well the league does or not? I don't see how the league could pay those kind of damages let alone this season's salaries and still survive.

    Seems more like a bush league negotiating tactic to me. By the way, I thought Stern said the current offer would decrease if it was rejected. What is he waiting for??

  • In reply to MNBullsFan:

    He can't decrease an offer now. There is no one to decrease it to. There is no union.

  • In reply to MNBullsFan:

    Besides, if there were a union now, that probably would be an unfair labor practice--unless, in the usual labor-management situation, management said that was the final offer and opened the gates to those who are willing to work under it.

    The only definite in all of this is that, unlike the NFL, there won't be basketball for quite a while, and both sides have calculated risks.

    While the players won't get paid if locked out or the owners go bankrupt, the owners take the risk that the antitrust suit will bankrupt them. I don't think that even MJ has that kind of money. You also have to figure that most ownership groups are limited partnerships, so that while the limited partners may be protected from unlimited liability, the general partners are not. A few teams, like the Knicks may be owned by big corporations (MSG), and Mark Cuban may have deep pockets, but I bet the rest of the ownership groups don't.

    The only reason I brought up treble damages is that while those owners who are not making money may think that the lockout relieves them of the obligation to pay the players, those odds suddenly change. But there is no evidence that either the owners or the disbanded players' group has figured that out yet. Maybe both think that this will be like the NFL, and a judge calls in a mediator, instead of the Federal Mediation and Conciliation Service doing so.

Leave a comment