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Supreme Court Rules Against NFL in Merchandise Antitrust Case

May 24, 2010 at 12:00 AM EST
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The Supreme Court has ruled that a sportswear company may proceed with its lawsuit against the National Football League. Ray Suarez talks to Marcia Coyle of the National Law Journal for more on what the case will mean for competition in the world of sports merchandise.
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JEFFREY BROWN: Next: decisions and orders at the Supreme Court, and to Ray Suarez.

RAY SUAREZ: In two separate rulings today, the high court paved the way for an antitrust lawsuit against the NFL to go forward and said that a lawsuit against Chicago for racial discrimination in the hiring of firefighters wasn’t time-limited. Justices also agreed to hear a case on a death row inmate’s access to new DNA evidence.

Here to walk us through it, as always, Marcia Coyle, of “The National Law Journal.”

Now, Marcia, the first case involved the NFL, contracts to provide hats, T-shirts, jerseys, that kind of thing. What kind of relief was American Needle looking for? What did they argue in their original case?

MARCIA COYLE, “The National Law Journal”: Well, American Needle had sued the NFL and its 32 teams, claiming that they violated the federal antitrust laws when they granted an exclusive license to Reebok to manufacture and sell trademarked headwear for the NFL teams.

So, American Needle was asking the Supreme Court, because it had lost in the lower court, to find that the NFL didn’t have immunity from the federal antitrust laws.

RAY SUAREZ: So, American Needle wanted the NFL to act like 32 separate companies, instead of one company?

MARCIA COYLE: That’s right. American Needle had been selling trademarked headwear for something, I think, close to 40 years, as were other vendors. So, it was saying, basically, this was a very anti-competitive arrangement that the NFL had come up with, with Reebok.

RAY SUAREZ: So, what did the justices decide, and how do they explain what they decided?

MARCIA COYLE: OK.

Justice Stevens wrote for the court, and he said that the NFL and its teams had many common interests, but they actually operated as independent, profit-maximizing entities. They weren’t a single entity. He said what you really have to look at here is, is there a restrain of trade, such that there is no real competition or potential competition in the marketplace?

If what happened here was a restraint of trade, a lower court has to decide whether it was reasonable or unreasonable under our antitrust laws. So, the case is going to go back to the lower court, where Reebok, the NFL and American Needle will have to battle out over whether this exclusive license agreement was an unreasonable restraint of trade.

RAY SUAREZ: This has been called a closely watched case.

MARCIA COYLE: Yes.

RAY SUAREZ: Who was watching closely? And what was at stake?

MARCIA COYLE: Well, I think, probably, the group that had the strongest interest in this case was the national players association, the unions for players. They didn’t want the NFL to get antitrust immunity, because they felt that this gave the NFL great leverage in union negotiations with players.

RAY SUAREZ: Well, the court has cleared the way for 6,000 African-American firefighters in Chicago to move ahead with their suit against the city. What was at stake here?

MARCIA COYLE: These African-American applicants challenged the city of Chicago’s test for hiring firefighters. These 6,000 had been deemed qualified under the test. The city said it was going to hire from those who were well-qualified, those who had earned scores of 89 and above out of 100 points.

The firefighter — I’m sorry — the applicants here, the African-Americans, said that this had a discriminatory or disparate impact on their — on the minority applicants for firefighter jobs. And they sued the city because of that.

Its lower court, the district court her, actually ruled in favor of these applicants. The city conceded that its practice was discriminatory and had a discriminatory impact. But the city had argued that these applicants had filed their discrimination charges too late, that the time to do it was 300 days after the city announced it was going to use these test scores.

RAY SUAREZ: Now, the court has ruled in the past on cases involving a timeline and ongoing discrimination, most notably in the Lilly Ledbetter case.

MARCIA COYLE: Yes.

RAY SUAREZ: This time, they said that their — the ability to sue wasn’t time-limited. How do they explain that?

MARCIA COYLE: First of all, this case involves discriminatory or disparate impact cases. And, there, you do not have to prove intentional discrimination. Those other cases, like the Ledbetter case, did involve that.

But Justice Scalia, who wrote this opinion, he looked at the language of the statute, what Congress had written, and it spoke specifically to when an employer uses a practice that has a disparate impact on the basis of race, color, religion, sex, or national origin.

And uses, he said, means that an employer’s practice, if used down the road, not the very first time, but even down the road, can still give rise to a discrimination lawsuit. And that’s what he said happened here.

RAY SUAREZ: The aspiring firefighters maintain that the test itself was discriminatory. By ruling the way it did, did the Supreme Court agree?

MARCIA COYLE: The Supreme Court didn’t address the merits of this suit, which, by the way, the lower trial court found in favor of these applicants. The Supreme Court only faced the issue of whether their lawsuit was brought on a timely basis. And it said that it was.

RAY SUAREZ: The Supreme Court has already decided there’s no right to DNA evidence among death row inmates, yet, today they allowed a case to proceed from Texas that will at least slow down the march toward execution of one Mr. Skinner. What is going on there?

MARCIA COYLE: Henry Skinner has tried for about a decade now to get certain evidence tested with DNA evidence related to his conviction for the murder of his live-in girlfriend and her two adult mentally retarded sons.

What he is asking the court is a little different. The court last term, I believe it was, ruled that there was no federal constitutional right to DNA testing. He’s saying: Look, I have exhausted all the state avenues of getting this DNA testing. Texas says no. I want to know if I can use a civil rights lawsuit, under federal civil rights laws, in order to get the DNA testing.

And that’s an issue that the court didn’t decide in the last DNA case it had and what it agreed to decide this time, a case that will be argued next term.

RAY SUAREZ: Marcia Coyle, thanks for joining us.

MARCIA COYLE: My pleasure, Ray.