NBA litigation reverses NFL roles

We saw this during the NFL lockout; but in the NBA, the other side is litigating

Originally Published: August 3, 2011
By Lester Munson |

NBA owners filed two separate legal actions against the players and their union on Tuesday. The actions claim that the players are threatening to (A) decertify their union and then (B) sue the owners under antitrust laws in an attempt to end the owners' lockout. The owners filed one action in federal court in New York and the other with the National Labor Relations Board. The owners' legal actions raise questions about the bargaining process and its effect on the 2011-12 NBA season. Here are some of the questions and their answers.

Decertification, litigation, injunctions, lawyers, judges, threats and counter-threats: This all sounds familiar. Didn't we just go through this in the NFL?

The situation is similar and the legal rules are the same. But there is an important difference. On the day their contract with the owners expired and the lockout began, the NFL players immediately decertified their union and filed an antitrust lawsuit against the owners. NFL players wanted to litigate, while NFL owners wanted to negotiate. In the NBA, it is now the exact opposite. NBA players want to negotiate, while NBA owners want to litigate.

[+] EnlargeDavid Stern
Neilson Barnard/Getty ImagesThanks to litigation from David Stern and the owners, the NBA lockout appears to be taking a different direction than the NFL lockout did.

Even though the collective bargaining agreement expired June 30, the National Basketball Players Association has not decertified as a union and has not filed any litigation against the owners. Players and union officials have been meeting and bargaining with the team owners and NBA commissioner David Stern about an agreement that would save the coming season -- unsuccessfully, so far. Both sides offer the usual claims that the other side is not bargaining in good faith. But the players have focused only on bargaining. They have not attempted to open new fronts in the disputes. Instead of filing the antitrust lawsuit that all owners in all sports detest (an antitrust suit raises the possibility of triple damages, and the certainty of huge legal fees), the players have worked only on the bargaining process that has gone on for two years. In his response to the owners' legal actions, union chief Billy Hunter urged NBA owners "to engage with us at the bargaining table and to use more productively the short time we have left before the 2011-12 season is seriously jeopardized."

Are there other differences between the NFL and the NBA labor situations?

There is one important difference. NFL players sought leverage in litigation in federal courts. They filed a lawsuit that sought to stop the lockout, and they filed a lawsuit that challenged the NFL's renegotiation of TV network contracts to include lockout clauses. NFL players relied on federal judges to help them level the playing field. NBA players are not yet relying on federal judges to give them leverage. They are relying on the NLRB, the government agency that investigates and decides labor disputes. They filed a serious complaint about the owners' bargaining tactics with the NLRB on May 24 and have twice added additional charges, most recently on July 1, the first day of the lockout. NFL players relied on federal courts and ignored the NLRB. NBA players are ignoring federal courts and relying on the NLRB.

Who will succeed at the NLRB? The owners or the players?

The owners' charge at the NLRB is based on their belief that the players will decertify, which the players have not yet done, and might not do. Even if the players do decertify, it is not a move the NLRB has taken seriously in the past. The more important of the two complaints to the NLRB is the one filed by the players. Based on the facts and the applicable law, the players could easily prevail at the NLRB and obtain a finding from the board that the owners are guilty of unfair labor practices. The players claim that the owners are making "harsh, inflexible and grossly regressive 'takeaway' demands that the NBA knows are not acceptable to the union." If the players can prove the charge, they are well on their way to success.

[+] EnlargeDerek Fisher
AP Photo/Mary AltafferThe talks haven't been fruitful, but Derek Fisher, right, NBA union chief Billy Hunter, left, and the LA Lakers' Theo Ratliff at least claim they're trying to negotiate.

The NLRB, under President Barack Obama, has been offering more and more support to unions in its decisions. But even though the players appear to have a strong case in the NLRB, the board's decision-making process is so slow that, for example, it never ruled on the NFL owners' complaint about decertification. It was still investigating the charge when the players and the owners reached an agreement to end that lockout. Any victory for NBA players would come at a time when it would be meaningless. The only time an NLRB decision ever made a difference in a sports dispute came in the 1994 baseball work stoppage, which continued into spring training in 1995, allowing the board to complete its work at its usual glacial pace. Its ruling for the baseball players' union was critical in getting the 1995 MLB season started.

If the players have not decertified and are still a union, how can the NBA owners sue them? Doesn't decertification come before litigation?

For the players to file a lawsuit in a labor dispute, they must first decertify. American law prohibits a labor union from filing antitrust litigation. As soon as their union has ceased to exist as a union, the players can sue the owners and claim that the owners' lockout is a violation of antitrust laws. That's what the NFL players did with the lawsuit filed by Peyton Manning, Drew Brees and others shortly after the NFLPA decertified. But the owners need not wait for the decertification step if they want to sue. So they've now sued, and are claiming that despite Hunter's statements to the contrary, the union will decertify and the players will sue the owners. In other words, Stern and the owners are anticipating decertification and litigation. According to the lawsuit filed Tuesday, the union has "made it clear that it intended to pursue a course of action" that will lead to decertification and "antitrust litigation directed and financed by the NBPA and its lawyers." Rather than waiting for the players to decertify and sue, the owners decided to take the initiative.

Is it advantageous to the owners if they are the first to file a lawsuit?

Yes. Litigation between NBA owners and players could be filed almost anywhere in the U.S. But the owners want the litigation in a court where they have a better chance to win. If they file first, the owners pick the court where the case will be tried and decided. Stern and the owners decided to file in New York City. They obviously feel that they have a better chance to win there than they would in Minneapolis or in Newark, where players' unions have succeeded in past antitrust litigation. Or in Chicago, where Stern fought the Chicago Bulls in antitrust litigation over Michael Jordan-era television rights. By filing first, Stern and the owners picked the forum where any dispute will be resolved. It is called "forum shopping." A business that knows it will be sued finds a favorable court and races to file first. Although there is some stigma attached to "forum shopping," it is a time-honored phenomenon of American jurisprudence. The best lawyers in the best firms spend countless hours ascertaining which court will be most favorable to their clients' situations.

The players, should they turn to litigation, would want injunctions and damages -- things they can demand in a suit. What are the owners suing for?

[+] EnlargeJeffrey Kessler
AP Photo/Mary AltafferThe owners apparently think NBA union lawyer Jeffrey Kessler's decertifying past is prologue in this dispute.

The owners are using a legal device known as a "declaratory judgment." It is a routine part of the American court system. Instead of demanding an injunction or money damages, the owners ask the court to "declare" the rights of the parties to the dispute. In their lawsuit, the owners claim, quite reasonably, that there are serious issues that divide the players and the owners. And the NBA asks the court to "declare that its lockout of the players in support of its bargaining demands does not violate the antitrust laws." Instead of waiting to be the target, the owners become the accuser. In legal lexicon, the declaratory judgment mechanism allows the defendant (NBA owners) to become the plaintiff. And, most importantly, it allows the owners to pick the site of the battle.

What will happen? Will we again go through the process of a sports union decertification and litigation?

The owners are convinced that the union will decertify and follow the path of the NFL players. In their lawsuit, the NBA owners mention attorney Jeffrey Kessler -- a nationally recognized antitrust expert who has represented the football and basketball unions for more than 20 years -- no less than four times. They describe what they see as a "pattern" in Kessler's representation of player unions, and the pattern is decertification and litigation. There is no doubt that Kessler and James Quinn used the pattern in NFL litigation in the early '90s and produced a series of historic triumphs. It is obviously the belief of the owners that if Kessler is in the picture, the picture will include decertification and litigation. But the governing law has grown murkier in recent years, and the path is not as clear. And the owners might be underestimating Kessler. He is a creative and brilliant advocate, and he is not limited to a one-trick pattern. Kessler and the players could have some surprises for the owners. My guess is that there will be no decertification and no litigation from the players. But that does not mean we will see a complete NBA season. It means that negotiation will replace litigation as the centerpiece of the lockout.

What will the NBA owners' lawsuit and the various charges at the NLRB accomplish? Will these actions help save the 2011-12 season?

We learned from the NFL lockout and its thicket of litigation that most of the legal maneuvering does not seem to matter. One side might gain an advantage for a few days. Then the other side gains the advantage in another ruling or in an appeal. Arguing for a decision, awaiting the decision and appealing the decision consume valuable time as a season approaches. If the time devoted to the litigation were invested in face-to-face bargaining, both the owners and the players would benefit. The key to saving the season will not be this litigation. The real chance for saving the season will come in negotiation and compromise.
