Ruling in favor of NFL, lockout extension set up key June decision

Burning questions coming out of Monday's ruling to keep the lockout in place ...

1. Does the Eighth Circuit's ruling mean that the lockout will last at least until June?

Unless the players and league reach a deal on their own or through federal mediation, yes. The three-judge panel for the U.S. Court of Appeals for the Eighth Circuit, which on April 29 voted 2-1 to temporarily stay Judge Susan Nelson's order to enjoin the NFL lockout, has just extended the stay until June. On June 3 the panel will hear oral arguments from both the NFL and the players on the merits of the order and will make its decision shortly thereafter. That decision will be the most important development since the CBA expired in March.

While a four- or five-week extension of the lockout may not sound momentous, it will further test the patience of NFL players. They will remain barred from interacting in any meaningful way with their teams. As a result, free agents will remain unemployed, rookies would not become acclimated to their teams and players eligible for off-season bonuses would be denied those bonuses.

More troubling for players, they may fear that they are headed into another losing vote before the same three-judge panel. In their 2-1 opinion, Judges Steven Colloton and William Benton unmistakably warned that, "The league has made a strong showing that it is likely to succeed on the merits." While the players could still prevail before the panel, the odds appear stacked against them.

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The players could also reason that if the panel was sympathetic to their legal arguments, it would have maintained Judge Nelson's order until a hearing. Such a concern seems plausible when considering the concept of irreparable harm, which refers to a type of harm that cannot be remedied by money damages and which serves as a key justification for a preliminary injunction. In their opinion, Judges Colloton and Benton highlighted how the league would probably suffer irreparable harm if forced to allow player transactions that would "occur only with an injunction against the lockout."

In contrast, the judges appeared skeptical of Judge Nelson's reasoning that locked-out players would suffer irreparable harm when denied opportunities to sign with teams and train with them. The judges likely determined that players would still have time to sign with teams if the panel decides in June to prohibit the lockout. Put another way, the harm suffered by players due to the lockout may be reparable in May, even if that harm becomes irreparable this summer or particularly in the fall. To support that logic, consider that NFL training camps do not begin until the last few days of July (the Colts and Giants, in fact, do not start their training camps until Aug. 1). So if next month the Eighth Circuit sustains Judge Nelson's order to enjoin the lockout, players would still have about six weeks before the start of training camp to sign with teams and get their situations in order. The harm they suffered in May as a result of an illegal lockout would thus be reparable.

2. What happens if the NFL wins before the Eighth Circuit in June?

If the NFL defeats Judge Nelson's preliminary injunction order, it will mean that the NFL could continue its lockout, probably for as long as it wants. Absent an unlikely re-hearing by the Eighth Circuit or an even less probable hearing by the U.S. Supreme Court, the lockout could continue at least into next year, which is probably the earliest trial date for Tom Brady et al. v. NFL. With the prospect of no NFL income in 2011, players would become much more willing to accept a new collective bargaining agreement, even one with terms clearly advantageous to the league. Also of benefit to the league, a new CBA would render the Brady litigation moot.

3. What happens if the players win before the Eighth Circuit in June?

If the preliminary injunction is placed back in effect, it would mean that, absent an unlikely re-hearing before the Eighth Circuit, an equally unlikely intervention by the Supreme Court or the league pursuing a radical path -- a total shutdown of operations -- the lockout would be over and players would go back to work. The NFL would at that point be enjoined from conducting a lockout. While the NFL could eventually regain the right to conduct a lockout should it prevail in a trial of Brady v. NFL, such a trial, as noted above, is unlikely to occur until next year. The NFL would thus have to play a 2011 season.

In this scenario, it is likely the NFL would agree on a new CBA with the players in June or July. If the league does not sign a new CBA, its restraints on trade -- including restricted free agency and the salary cap -- would be subject to antitrust scrutiny. As I explained in a recent column, many core components of NFL football could fail to satisfy antitrust scrutiny and failure would result in treble damages, possibly in the billions of dollars.

In short, if the Eighth Circuit rules in favor of the players in June, the players would be in the driver's seat to extract a very favorable CBA -- and to do so quickly.

4. You mention that the NFL could completely shut down operations if it loses before the Eighth Circuit -- how would that work?

As originally reported by Mike Florio of Pro Football Talk, the NFL could engage in a total shutdown of business operations if it loses before the Eighth Circuit next month. A total shutdown would mean the indefinite suspension of all NFL activities. Essentially, everyone and everything connected to the NFL would be locked out. Contracts for coaches and staff would be suspended indefinitely -- meaning no one gets paid -- and team offices would be locked. While it is unclear if the total shutdown would include the league's separate and wholly-owned entities, such as NFL Properties or NFL Charities, the contractual obligations between the league and teams with sponsors and other groups might also be jeopardized. The shutdown would continue until the players agreed on a new CBA.

The threat of a total shutdown is likely more of a device to obtain negotiating leverage than an actual strategy. If the league was to conduct a total shutdown, new types of litigation would spawn and the situation would become far more complicated, contentious and without a clear end in sight.

For starters, the Eighth Circuit might view a total shutdown as an attempt to circumvent its order that the league lift the lockout. If the Eighth Circuit came to such a conclusion, it could request enforcement assistance from the U.S. Marshal Service, the federal agency entrusted with enforcing court orders. The marshals could compel owners and league officials to continue operations under threat of jail or fines.

Second, the players would seek another preliminary injunction, this time to stop the NFL from completely shutting down. The success of the players in getting the lockout lifted by the Eight Circuit would lead them to use "res judicata" -- meaning if the Eighth Circuit and Judge Nelson conclude that the players' lockout was illegal, then a total shutdown (or total lockout) should also be deemed illegal.

Staff of NFL teams could also bring litigation, arguing that a shutdown wrongly invalidates their lawfully-signed contracts. If sponsorship contracts are also suspended, sponsors could likewise file lawsuits seeking recovery.

In response to these lawsuits, the NFL would likely cite contractual language that would enable them to suspend or void contracts in the event of a labor dispute. Sometimes such language refers to a "force majeure clause" in a contract. A force majeure clause would relieve the NFL and its teams of performing any contractual obligation in the event of a labor crisis or an unforeseeable event.

The problem for the NFL would be that force majeure clauses usually refer to disruptions not caused by the defendant -- here the NFL. A total shutdown of operations would be executed at the hands of the NFL, albeit in response to a labor crisis that also involves the players. To say the least, a total shutdown would give rise to a dicey situation and is unlikely to occur.

5. You also mention the possibility of other appeals. How would they work?

After the Eighth Circuit makes its decision in June, the losing party would preserve the right to pursue an interlocutory appeal, which refers to appeals made before the final outcome in a case. Two appeals could be made by the losing party, neither of which would likely succeed.

En banc re-hearing

Expect the party which loses before the Eighth Circuit to immediately seek a rehearing of the matter before all judges on the Eighth Circuit. "En banc rehearings," as they are called, are seldom granted. A minimum of six of the 11 active judges on the Eighth Circuit would have to support the granting of one.

Requests for en banc rehearings are usually denied unless there are extraordinary circumstances. One such circumstance is an "inter-circuit conflict," whereby a three-judge panel in one circuit construes federal law differently than in another circuit. The concern with such a conflict is that federal law -- which in theory should apply evenly across the country -- would impact citizens differently depending on which federal circuit they reside. Lawyers for the losing party (be it the league or players) would likely highlight language in other cases involving decertification and lockouts that could be construed to show a conflict. The odds would be stacked against them.

While neither the league nor players would be poised to obtain the requisite votes for an en banc rehearing, the players would seem particularly disadvantaged. Assuming, for a moment, that the three panel judges again vote 2-1 in favor of the league, Judge Kermit Bye -- who dissented in the granting of the stay -- would likely offer his support for an en banc rehearing, while Judges Colloton and Benton -- who voted to grant the stay -- would likely oppose. Players would thus need support from five of the remaining nine active judges. Eight of those nine -- like Judges Colloton and Benton -- were nominated by Republican presidents. To be sure, the party affiliation of the president who nominated a federal judge is far from a perfect predictor of the judge's views on NFL and the law. We know that from Judge David Doty, whom the NFL and NFLPA selected in 1993 to hear labor disputes. Although he was nominated to the bench by President Ronald Reagan, he has proven to be very pro-player. Still, the NFL would be confident in how the Eighth Circuit judges would vote.

U.S. Supreme Court review of interlocutory order

Assuming the losing party fails to obtain an en banc rehearing, the party could then pursue an interlocutory appeal before the U.S. Supreme Court. Its odds of getting heard by the Supreme Court, let alone winning an appeal, would be remote. The Supreme Court accepts only one or two percent of writs of certiorari. Also, the Supreme Court usually declines to review interlocutory orders unless, as it has previously stated, "[I]t is necessary to prevent extraordinary inconvenience and embarrassment in the conduct of the cause."

The Supreme Court has accepted writs for a variety of reasons, but there are two typical rationales: to resolve a split in authority among federal circuits or to address a novel question of law. It is possible that the Supreme Court could deem it appropriate to address the murky relationship between labor law and antitrust law in the context of a professional sports league lockout and a players' association decertification, especially considering the NBA and its players association are headed down the same path and likely in a different federal circuit, which could present a circuit split.

The Supreme Court could also find it important to assess the potential unfairness of a players' association using the court system to obtain relief under antitrust law and the league using an administrative agency (in this case, the National Labor Relations Board -- the NLRB) to do so under labor law, when only the players' complaint may get heard before the start of the 2011 season.

Consider that while both a federal district judge and federal court of appeals will have addressed the players' antitrust complaints by next month, the NLRB, which is investigating the NFL's unfair labor practices charge against the NFLPA and its decertification, could take until the fall or winter before it asks an administrative law judge to preside over a trial. Given that the key date in this labor dispute is the start of the 2011 season, the NFL's unfair labor practices charge may be rendered inconsequential by the litigation/administrative calendar. This is problematic for two reasons: 1) the administrative law process is supposed to be faster, not slower, than a traditional court hearing; and 2) the relative slowness of the NLRB process could give the players a huge tactical advantage should the Eighth Circuit rule in the players' favor.

6. How does Judge Doty's decision on TV broadcasting rights fit into the players' strategy?

Even if the players fail to convince the Eighth Circuit to bar the lockout, they still possess a major bargaining card: Judge Doty's decision that the league cannot rely on $4 billion in network television revenues in the event of a lost 2011 season. The players convinced Judge Doty that the guaranteed payments violated the recently expired collective bargaining agreement. On May 12, Judge Doty held a hearing to determine fines assessed to the league and how to allocate the $4 billion. Depending on Judge Doty's configuration of damages, owners could become substantially more motivated to play a 2011 season.

The NFL, however, will likely appeal Judge Doty's decision to the Eighth Circuit -- the same circuit that may be poised to rule in favor of the league and its lockout -- once Judge Doty issues a final, appealable order. Plus, even if Judge Doty's decision stands, owners, though undoubtedly harmed by the loss of some of the $4 billion, may not view the lost TV revenue as sufficient justification to capitulate on their more substantial demands. With their enormous wealth and varied sources of non-NFL income, owners seem less likely to "blink first" in the negotiations.

7. Will the players stay unified during the lockout?

If the players lose before the Eighth Circuit next month, the unified players' front may splinter into factions. Here's why:

The major advantage for players to decertify was that it empowered them to bring a very threatening antitrust case against the league. Decertification meant that the NFLPA no longer represented NFL players in negotiations with the NFL over employment conditions. As a result, the federal labor exemption, which immunizes collectively bargained rules from antitrust scrutiny, was taken off the table, thus exposing core parts of NFL football -- the draft, the salary cap, restricted free agency, etc. -- to antitrust review. The NFL is very vulnerable to losing an antitrust case, and a loss would command that the owners pay treble damages, likely in the billions of dollars.

The decertification strategy seemed successful on April 25, when Judge Nelson issued a preliminary injunction against the NFL lockout. The injunction meant the lockout was lifted, the league had to figure out new employment rules which would prove compatible with federal antitrust law and players were positioned to eventually win their antitrust litigation. The players, in other words, had all the leverage.

Everything changed on April 29, when the Eighth Circuit granted the temporary stay of the preliminary injunction. If the Eighth Circuit rules in favor of the league next month, and assuming neither the Eighth Circuit grants an en banc rehearing nor the Supreme Court favorably intervenes on behalf of players, the antitrust litigation path would essentially be punted to 2012 or beyond, when a trial on Brady v. NFL might happen. By that time, some current players will be too old to play; others might fail to stay in top condition and not be able to get it back.

Such a situation could cause the players to rethink the decertification strategy and possibly contemplate recertification.

One leading reason to remain decertified is that recertification would support the NFL's argument that decertification was a sham. The NFL has filed an unfair labor practices charge with the NLRB on such a ground; the NLRB will likely decide on the charge by early next year. If NFL players recertify soon after their antitrust strategy failed, it would imply that decertification was only pursued to bring an antitrust case. That would play right into the owners' wheelhouse for the NLRB charge.

But there are downsides to remaining decertified. Foremost, players have abandoned the collective bargaining framework and are essentially acting on their own or, if they so choose, as factions of players. There is already discussion of players abandoning the NFLPA/Brady litigation and pursuing their own strategies, with their own attorneys and advisors. Expect that discussion to only amplify should the Eighth Circuit rule against the players in June. The NFLPA cannot prevent any players from negotiating with teams or the league; recertification would be required to do so. The NFL could take advantage of that situation by reaching a deal with one group of players and those players then convincing others to recertify, but perhaps with different NFLPA leadership in place.

This situation is unique and could place the NFLPA in a difficult position. Normally when there are splinter groups of employees, the employer takes a major risk by speaking with them, because Section 9(a) of the National Labor Relations Act commands that the employer speak to the duly-elected union representatives. Here, however, the NFLPA maintains that it has disclaimed interest in representing NFL players. In fact, if the NFLPA now tries to deny a splinter group a seat at the table, the NFL could argue this supports its position that the NFLPA's disclaimer was a sham.

Then again, the NFL may be wary of meeting with the splinter group. If the league does so, it could signal that the NFL acknowledges that the NFLPA has disclaimed interest in representing NFL players. Such a signal would undercut the league's argument to the NLRB that the decertification was a sham and that the NFLPA only decertified for purposes of bringing an antitrust case.

In short, if the players lose before the Eighth Circuit next month, the players and the league will have to think long and hard, not only about what to offer in a negotiation, but with whom to negotiate.

8. Are there third parties who could complicate the NFL's choice to cancel a 2011 season?

Often lost in the discussion of whether the owners or players will agree on a deal to play the 2011 season is the public's stake in the matter. While the public does not enjoy legal standing in a general sense to bring a lawsuit, certain individuals and communities might. So, too, might banks and lenders.

Ticket holders

For starters, Ken Lanci, a holder of 10 Personal Seat Licenses to Cleveland Browns games, has filed a lawsuit demanding that games be played in the fall. The lawsuit faces a number of obstacles, including that his contract with the Browns reportedly includes language that bars such a claim and that no games have been missed (yet). Still, if these types of lawsuits are filed across the country against NFL teams, owners could find themselves dealing with a good deal of unwanted and aggravating litigation.

Communities that publicly financed stadiums

Communities that have spent hundreds of millions of tax dollars to help finance the construction of privately owned NFL stadiums may be another legally entitled stakeholder in a 2011 season. These communities committed tax dollars to ensure that their favorite teams would not relocate. Tax dollars were also provided on the expectation that a new stadium would generate jobs and economic activity in the surrounding area. Without football games this fall, much of that activity and many of those jobs -- be they restaurant workers, street vendors, parking attendants and many others -- could be lost. Making matters worse, many of these communities have laid off teachers and others to avoid budget shortfalls or the imposition of tax increases.

A community may thus argue that teams have violated the terms of their public assistance -- which was premised on the playing of games -- by not playing games. Like lawsuits brought by aggrieved ticket holders, these types of lawsuits would probably be barred by a lack of guarantee that games be played as a condition of the assistance, but they are conceivable.

Private Lending Institutions

A lost 2011 season would cause team owners to lose substantial revenue, be it revenue evenly shared among teams (such as national TV and radio), revenue partially shared/partially retained (ticket sales) or revenue retained by teams (concessions, parking and local media). While owners would still generate some revenue during a lockout, such as through sponsorships, and would avoid paying players' salaries, Judge Doty's decision means they will not be able to rely on $4 billion in national TV revenue. The private institutions that lent these owners money will still demand payments. Should any owner be unable to satisfy those demands because of a lost season, the private institutions could take action against the owner. Such action is unlikely to compel the playing of games, but would motivate the owner to encourage his/her fellow owners to play a 2011 season.

Michael McCann is a sports law professor and Sports Law Institute director at Vermont Law School and the distinguished visiting Hall of Fame Professor of Law at Mississippi College School of Law. He also teaches a sports law and analytics reading group at Yale Law School. Follow him on Twitter.