Decertification would put 2011-12 NBA season in serious jeopardy
Frustrated by an inability to negotiate a new collective bargaining agreement with owners, some NBA players have sought the advice of an antitrust attorney on the possibility of decertifying the National Basketball Players' Association. Such a maneuver would likely be followed by the filing of a class action antitrust lawsuit against the league and it would make the cancellation of the 2011-12 NBA more probable.
Here are the biggest questions with players considering decertification of the union:
Decertification would mean that NBA players formally remove the capacity of the union to collectively bargain on their behalf. Players would become independent employees of NBA teams and would lose union protections they currently enjoy. The NBPA would continue to exist, but only as a trade association, which would have limited capabilities for bargaining (for instance, the players' association could continue to bargain in regards to licensing deals, such as for players' images and likenesses in video games). Billy Hunter, Derek Fisher and other union leaders would likely see their influence over players wane, while other players or possibly player agents could attempt to fill the leadership void. Without a unifying entity, however, rival factions of players and agents could emerge and hinder attempts to resolve the labor crisis, especially if the NBA is not sure with whom they should negotiate.
Decertification would provide players with a powerful legal weapon: the ability to file federal antitrust litigation against the league. Indeed, without collective bargaining between NBA players and the league, various restrictions on how teams compete with one another -- such as the salary cap and the NBA draft -- would become subject to federal antitrust law. Although generally popular with fans and although they promote parity, these restrictions are also at least partly anticompetitive. After all, they reflect agreements among competing teams to refrain from free-market competition for players.
This reduced competition limits players' earning potential and choice of employers. Without an NBA draft, for instance, top amateur players could encourage multiple teams to bid for their services and those players could sign with teams in preferred locations. The comparative competitiveness and anti-competitiveness of these rules would provide the basis of any antitrust litigation; if sufficiently persuasive, players could convince a judge to issue injunctive relief in the form of ending the lockout until a full trial on the merits of the claims. If players ultimately prevailed in such a trial -- which would likely take years -- they would be entitled to treble damages, which would likely mean billions of dollars.
Decertification is not an immediate event, nor is it instantly reversible. Instead, it normally requires recognition by the National Labor Relations Board, a federal agency that regulates union-management activities. In the alternative, players could seek a disclaimer of interest, which is a similar but swifter and more retractable step and refers to the players' association disclaiming interest in representing players. Either decertification or disclaimer of interest would enable players to file antitrust litigation.
NBA players are inclined to opt for decertification because it could help them defend against the league's unfair labor practices charge with the NLRB. Decertification would signal that the players are serious about the Players' Association no longer representing them; only disclaiming interest could suggest that the players' association will reclaim interest the moment a deal is reached with the NBA. The NBA could argue that the players are only disclaiming interest to bring antitrust litigation.
For starters, the NBA has been one step ahead of the players when it comes to antitrust litigation. In August, the league filed a lawsuit in the U.S. District Court for the Southern District of New York, decisions from which are reviewed by the U.S. Court of Appeals for the Second Circuit. The NBA asks the court for preventative relief, namely to block players from challenging the lockout on antitrust grounds. More ambitiously, the league also asks the court for permission to void player contracts in the event the union legally decertifies. This week U.S. District Judge Paul Gardephe ruled that he needs more time to evaluate the claims. His decision would likely delay the filing of separate antitrust litigation by players.
In antitrust litigation with players, the NBA is bolstered by recent precedent, specifically the U.S. Court of Appeals for the Eighth Circuit's opinion in
The NBA's choice of filing the lawsuit in the Second Circuit, instead of the Eighth Circuit, is intriguing. With the Timberwolves based in Minneapolis, the NBA would have seemingly possessed sufficient nexus to file the lawsuit in the Eighth Circuit, which has appellate jurisdiction over federal district courts in Arkansas, Iowa, Missouri, Minnesota, Nebraska, North Dakota and South Dakota. And had the NBA's lawsuit been filed in the Eighth Circuit, it would have been governed by favorable precedent set in the Tom Brady litigation. However, the NBA probably reasoned that 1) since both the NBA and players' association are headquartered in New York, the players could have sought to have the case moved to the Second Circuit, a process which would have delayed the litigation process; and 2) the Second Circuit has its own set of league-friendly labor and antitrust law rulings, including in
By filing a lawsuit in the Second Circuit, the NBA also makes it much harder for players to seek redress in a more sympathetic circuit, such as the U.S. Court of Appeals for the Ninth Circuit, which has appellate jurisdiction over courts in California, Oregon and Arizona and which is regarded as more pro-labor than other federal circuits. While players could still file an antitrust claim in the Ninth Circuit, courts there would be poised to refuse to consider the claims given that the relevant issues are already being heard in the Second Circuit.
In terms of its legal arguments, the NBA may be poised to offer more persuasive reasoning for the legality of its lockout than the NFL could muster for its own lockout. One key factor in a legal analysis of whether a lockout should be enjoined is the irreparable harm to the locked out employees. Unlike NFL players, who had nowhere else to play professional football during the lockout and some of whom would have never returned to the NFL had the 2011 season been canceled, some NBA players have already signed lucrative contracts with teams in foreign basketball leagues. The NBA can maintain that if players can sign to play abroad, then a lockout will not cause their professional basketball careers irreparable harm (or at least will cause much less harm than NFL players suffered/would have suffered). In response, the players would likely contend that playing abroad, and living in a foreign country (and possibly relocating one's family there), constitutes a materially different experience than having an NBA career and living in a U.S. city. Plus, many NBA players have not been able to find roster spots abroad.
The NBA also boldly demands that if the union decertifies in a way endorsed by a court, the league should be able to declare all player contracts void and unenforceable. The league insists that because the Uniform Player Contract (signed by every NBA player) is contained in and governed by the collective bargaining agreement, player contracts should become void once the collective bargaining relationship between the league and players ends. In response, the players can argue that the dissolution of a union should not empower an employer to void contracts between individual employees and the employer. If the NBA ultimately prevails in its argument on player contracts, players would collectively stand to lose billions of dollars. It would also throw the league and its franchises in an uncertain state, with every player, save for those drafted in 2011 and who haven't signed contracts, becoming a free agent.
Both the NBA and the union have filed unfair labor practices charges with the NLRB. They each argue that the other has failed to bargain in good faith. In May, the players' association asserted that the league refuses to offer any meaningful concessions in negotiations because, in the players' view, owners want a prolonged lockout. Two months later, the league contended that players, who have threatened to decertify their union and thereby commence antitrust litigation, have failed to bargain in good faith in hopes of filing antitrust litigation. The NLRB has to gauge whether the NBA and players' negotiation tactics are reasonable bargaining measures or merely abuses of the bargaining process.
The NLRB normally takes a few months to investigate and resolve charges, although that time frame appears extended for league-player disputes. These disputes are rare and tend to involve numerous facts and unique applications of labor law. Keep in mind, the NFL filed an unfair labor practices charge in February and that charge was still not resolved by the conclusion of the NFL lockout. Along those lines, by filing a charge of its own, the NBA may have gained a tactical advantage in terms of delayed timing: the NLRB will probably take longer to consider both charges instead of just one -- particularly since both charges emanate from the same set of facts -- and that could mean the NBA receives favorable and decisive court rulings long before the NLRB acts.
If the NLRB ultimately determines that either charge is meritorious, it would then issue a complaint against the offending party and try to work out a settlement. If a settlement cannot be reached, the NLRB could seek a court order for injunctive relief, such as one that would enjoy the NBA from continuing the lockout. A trial for money damages could also be held and verdict from the trial could be appealed. The entire timeline could take a year or more and not end until possibly after a 2011-12 season will have been played or canceled.
There is reason to believe that the NLRB will not find that either the players' association or league has engaged in unfair labor practices. The willingness of the two sides to engage in substantial negotiations over the last few months, and the ability of the two sides to bridge some of the gap, suggests that they regard themselves as engaged in difficult, but substantive discussions.
Less likely. Decertification would probably be followed by the filing of antitrust litigation, which would take weeks or months to unravel, let alone resolve. While the league and players could still in effect negotiate during the litigation, since (like during the NFL lockout) settlement discussions over the antitrust lawsuit tend to cover the same issues driving the lockout, the litigation process itself would give commissioner David Stern greater reason to cancel the remainder of the season.
Consider also that financial considerations may only heighten owners' resolve to impose a lockout for as long as is necessary to procure a very different system of player compensation. Keep in mind, while the NFL struggled to show that any of its teams were losing money, the NBA has maintained that 22 of its 30 teams lost money last year (despite records in attendance and TV ratings) and that player salaries are rising to average about $5 million a season.
NBA players dispute the league's numbers and argue that sharing of local TV revenue by teams would mean that more teams turn a profit. Still, it is clear that the league's financial situation is troubling from the vantage point of its owners. This matters considerably in the owners' calculus of whether to continue a lockout into the season.
Put bluntly, if most teams will make more money by not playing games in 2011-12, then the prospect of losing those games is less troubling. With players appearing unified in their core arguments and also apparently prepared to withstand a lengthy work stoppage, the season could very well turn into one that never occurs.