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Kallas: Perceived Split Among NBA Players May Be Bad For NBA Owners

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(Photo by Nathaniel S. Butler/NBAE via Getty Images)  | (Photo by Mike Stobe/Getty Images)

(Photo by Nathaniel S. Butler/NBAE via Getty Images) | (Photo by Mike Stobe/Getty Images)

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By Steve Kallas
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While there are no NBA games going on (Question: “Hey, what did you think of that big Heat-Magic match-up last night? Answer:  “I heard Dwyane Wade and Dwight Howard were battling it out on a conference call with an antitrust attorney.”), there is plenty going on in the NBA owners v. NBA players dispute.

This past Wednesday, in federal district court in Manhattan before Judge Paul Gardephe, the NBA owners tried a pre-emptive strike against the players, asking a federal judge to rule that, if the players decertified the union and sued the NBA for antitrust violations (sound familiar, NFL fans?), such a lawsuit would not be allowed to end the lockout.

While seeking a “declaratory judgment” from the court, the NBA apparently failed to sway the judge to rule in their favor BEFORE such a decertification and lawsuit took place.  While the judge did not rule this past Wednesday, he, at a minimum, cast serious doubt on the notion that such potential actions by the players would be stopped in advance by a court decision.

MEANWHILE, AT ABOUT THE SAME TIME …

Unbeknownst to many (although players’ union leader Billy Hunter says he was aware of at least one of the phone calls), about 50 NBA players, including superstars Dwyane Wade and Dwight Howard, participated in a conference call with an antitrust attorney to get the lay of the land of the decertification process and the possibility of a potential antitrust lawsuit against the NBA.

This raises some fascinating questions like: Why hasn’t this already happened? What are the chances of victory in court, especially after the Wednesday hearing where the NBA owners clearly didn’t hear what they were hoping to hear from Judge Gardephe? How, if at all, can this help the players settle the dispute?

LET’S TAKE A LOOK (AGAIN) AT THE NFL DISPUTE

The actual legal issues were discussed in this column at length back during the NFL lockout (see Kallas Remarks, 7/11/11, for a detailed discussion).  Back then, the NFL did decertify their union, they did sue for antitrust violations (remember Brady v. NFL?) and, at least in the lower federal court in Minnesota, they won an end to the lockout.

But a rapid-moving NFL (through it attorneys) quickly got not one, but two, stays of the decision and eventually won an appeal in the conservative 8th Circuit (strained as it may have been, see Kallas Remarks above) which allowed the lockout to continue in the NFL.

According to the dissenting opinion in the 8th Circuit, the majority decision became the first one to give employers (i.e., the NFL owners) the protection of long-established antitrust laws which were made for the protection of the employees (i.e., the players).

Nevertheless, the 8th Circuit decision stands as the law of the 8th Circuit (as no appeal was ever perfected) and, eventually, the millionaires and billionaires worked out an agreement to split that nine Billion dollar pie (which, of course, will only get bigger).

WHAT EFFECT, IF ANY, DOES THAT DECISION HAVE HERE?

Well, New York City, where the NBA filed its pending case, is in the Second Circuit and, according again to the case in the 8th Circuit, three other Circuit Courts of Appeal (the First, Seventh and Ninth Circuits) have already held that the applicable provisions of the Clayton Act and the Norris-LaGuardia Act apply to employees, and not employers, in these situations (to be clear, the hierarchy in federal court is federal district court, circuit court of appeals and Supreme Court of the United States).

Clearly Judge Gardephe (a federal district court judge) wasn’t swayed, at this time, by the 8th Circuit decision.  Nor is it incumbent upon him (or any non-8th Circuit federal district judge) to follow that case.  And, frankly, the whole notion of, in effect, deciding this case in advance, is not going to fly with Judge Gardephe (or, in this writer’s opinion, with virtually any non-8th Circuit federal district judge).

So, the effect of the NFL case on this case at this time, in this writer’s opinion, is probably nothing.

WHAT HAPPENS NOW?

Well, the NBA owners had hoped to be in a much stronger position.  If they were able to get Judge Gardephe to rule in their favor, the NBA players would have lost a lot of leverage.  But now, with new talks (not surprisingly) scheduled for this weekend, there is a chance for a settlement.

But if you have hard-line players (if there are enough of them who believe the union should actually decertify) who don’t want to “give up” any more to the owners on the one hand, and hard-line owners who believe they will simply lose too much money (again) by actually playing NBA games, well that’s a recipe for disaster.

WHAT ARE THE ANSWERS TO THE QUESTIONS RAISED ABOVE?

Billy Hunter has said all along that the decertification process was something that he would consider as an option but clearly was not a road he wanted to go down (at least, in the past).  The NBA players could, in theory, try to bring a case in a Circuit where there have already been favorable rulings on these issues on behalf of employees (Boston, Chicago and San Francisco are three cities that fit in Circuits (the First, Seventh and Ninth, respectively, where such a suit could be brought).  But the NBA might try and keep that suit in New York or have it transferred to New York if it’s filed somewhere else.

It says here that even the threat now of bringing such a case (with a belief that it will not be dismissed in the first instance, given the Wednesday hearing in New York) could help the parties reach an agreement this weekend.

But if both sides stick their heels in, there could very well be no NBA season in 2011-12.

One final, interesting note: with a “split” in the Circuits (one has ruled that the relevant sections of these antitrust laws can apply to employers, three have ruled that they cannot), a future NBA players case v. the NBA owners could eventually wind up in the United States Supreme Court.

But the owners and the players don’t want to go down that road.

Do they?

Here’s hoping that cooler heads prevail (on both sides) and the billionaires and millionaires can work out a deal this weekend to split their four Billion dollar pie (which, of course, if there is a long lockout, might very well go down, not up, at least for the next couple of years).

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