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Kallas Remarks: Latest On The NBA Lockout

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Stern, Hunter (credit: Patrick McDermott/Getty Images)

Stern, Hunter (credit: Patrick McDermott/Getty Images)

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By Steve Kallas
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Well, push came to shove this week in the NBA lockout.  After David Stern’s, essentially, take it or leave it stance, the players decided to leave it – and filed two federal antitrust lawsuits against the NBA and its owners, one in California and one in Minnesota.

FASCINATING STRATEGY

The players went out and hired David Boies, arguably one of the best lawyers on the planet.  Representing the NFL owners during the NFL lockout was no problem for Boies, who now switches to the players’ side in this pending (NBA players) litigation.

One of the most fascinating parts of this is the location of the lawsuits.  One is in federal district court in Minnesota.  When the NFL players filed their lawsuit in Minnesota, they had a long history of success against the NFL owners in federal court in Minnesota.  While they won (briefly) a decision on a request for an injunction (ending the NFL lockout) in the lower federal court, the 8th Circuit Court of Appeals stayed that decision (twice) and eventually held for the owners in a strained, 2-1 decision (see Kallas Remarks, 7/11/11).

It seemed to this writer (and, more importantly, to the dissenting judge in the 8th Circuit) that the 8th Circuit decision stood 50 years of legal precedent on its head; that is, no circuit court had ever held that the Norris-LaGuardia Act applied to protect employers (the owners) rather than employees (the players), while three circuit courts had held that the Norris-LaGuardia Act did not apply to employers (for a more complete discussion, see the prior column referenced above).

In any event, you will recall that the case was not decided on the merits.  It was simply a decision on the injunction which, interestingly (at least for now), has not been asked for by the NBA players (that is, they are not asking a judge in this case for an injunction ending the NBA lockout).

Maybe David Boies thinks he can win on the merits in Minnesota.  If it goes long enough, however, and absent a settlement, there will probably be an appeal to the 8th Circuit (unless the case is transferred, see below) and, possibly, the United States Supreme Court.

So, while one lawsuit was filed in Minnesota, the location of the second lawsuit makes more sense.  By filing in federal district court in California, that lawsuit is in a location of one of the three circuits (in this case, the 9th Circuit Court of Appeals) that has held that the Norris-LaGuardia Act does not apply to employers.

Indeed, Mr. Boies seemed to recognize this (again, this was under an injunction analysis which has NOT been asked for by the NBA players), by declaring that it would be best if all of the cases were consolidated in the Northern District of California, which is both a liberal court (including, of course, the 9th Circuit Court of Appeals) and a circuit where the law is favorable under a Norris-LaGuardia Act analysis.

WHAT’S THE NBA DOING?

Well, it says here that the NBA will try and keep all of the cases in federal court in lower Manhattan, where their litigation against the players is already pending.

While the NBA came out with a statement saying that the players have chosen “to litigate, rather than negotiate,” no matter what you hear, the two are not mutually exclusive.  While, as with the NFL, the lawsuits will now have to be “settled” to satisfy all parties, that doesn’t mean that the NBA and its players (and representatives for both sides) can’t sit in a room and figure out a deal.

But, as we have discussed for months, there were more problems with the NBA (and its number of owners (8? 22? depends who you believe) who are losing money) than there were with the NFL owners.  While $4.2 billion (NBA revenue) isn’t $9+ billion (NFL revenue), it’s still a huge chunk of change.

WHAT’S THE NLRB DOING?

Well, not very much.  The National labor Relations Board is notorious for taking its time.  Nobody seems to know when (or if) the NLRB litigation between the owners and players will be decided.  It’s more likely that a decision of some sort will be rendered in a federal court and/or an agreement will be reached between the players and the owners.

WHAT HAPPENS NOW?

Well, the players and owners will now be litigating in four separate jurisdictions (federal courts in New York, Minnesota and California, as well as the NLRB).  That’s a nightmare for everybody (but the lawyers).  There will probably be important motions to consolidate the three federal cases in one jurisdiction.

It says here that the owners and players can and should still sit in a room this week and/or next week and try to work out a deal.

Just like the NFL did.

If not, it will be a long, dark winter for the NBA.

What’s next for the labor impasse? Will there be NBA basketball in 2011-12? Be heard in the comments below…

And its fans (remember them, parties to these lawsuits?), many of whom will not return if this is a protracted, possibly season-ending situation.

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