Jump Ball: Did the NBA Tip-Off Litigation Too Soon?

One day after meeting to discuss settlement of its labor dispute for the first time since the NBA locked out its players on July 1, 2011, the NBA filed a claim with the National Labor Relations Board (“NLRB”) and a lawsuit in federal court against the National Basketball Players Association (“NBPA”).

The lawsuit, filed in the United States District Court for the Southern District of New York, was brought by the NBA and its individual member teams.  The lawsuit names as defendants the NBPA and various players, including:  NBPA President Derek Fisher; other officers of the NBPA; New York Knicks NBPA player representative and New York resident Amar’e Stoudemire; New York resident and free agent Mike Dunleavy; New York resident and 2011 NBA draftee Jimmer Fredette; other 2011 NBA draftees; and “all those similarly situated.”

The lawsuit seeks a declaratory judgment from the court.  This means that the NBA is seeking for the court to state what its rights are with respect to the current labor dispute it is engaged in with the NBPA.  28 U.S.C. section 2201 allows for “. . . any court of the United States, upon the filing of an appropriate pleading, [to] declare the rights and other legal relations of any interested party seeking such declaration. . .”

In its lawsuit, the NBA seeks for the court to make the following declarations:

1.  That regardless of whether the NBPA can validly decertify as a union under law (for more on decertification, see this post), the NBA’s lockout of its players is “. . . lawful and protected from antitrust attack by virtue of the labor exemption provided by Section 20 of the Clayton Act. . .”

2.  That the “. . . lockout is lawful and protected from antitrust attack by virtue of the non-statutory labor exemption.”

3.  That the lockout doesn’t violate the antitrust laws.

4.  That the “. . . Norris-LaGuardia Act deprives the federal courts of jurisdiction to enjoin or restrain the lockout.” (For a discussion of the Norris-LaGuardia Act, see this post).

5.  That if the NBPA validly decertifies, thus terminating the collective bargaining relationship between the NBA and NBPA, then “. . . all existing contracts between NBA players and NBA teams would be void and unenforceable.”

In order for a court to issue a declaratory judgment under 28 U.S.C. section 2201, an “actual controversy” must exist.  A “precise test” does not exist for determining what constitutes an “actual controversy.”  However, the United States Supreme Court has found that in determining whether an “actual controversy” exists, “. . . the question. . . is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issue of declaratory judgment.”  Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941).

In this instance, it is arguable that a substantial controversy exists.  The NBA locked out its players on July 1, 2011 upon the expiration of the most-recent collective bargaining agreement entered into between the parties.  Prior to the expiration of the collective bargaining agreement and subsequent lockout, the parties engaged in negotiations in an effort to ratify a new collective bargaining agreement.  Since the July 1, 2011 lockout, the parties have met just once to negotiate a new labor agreement.  According to reports, this meeting did not produce any movement toward the negotiation of a new collective bargaining agreement by the NBA and NBPA.  Thus, substantial controversy arguably exists, as the parties remain divided over the terms they desire to be present within a new collective bargaining agreement.

Additionally, the NBA and NBPA arguably have adverse legal interests.  This is demonstrated by the fact that upon the expiration of the collective bargaining agreement previously entered into between the parties, the NBA locked out the players represented by the NBPA.  Thus, the legal posturing between the parties arguably differs, as the NBPA seeks to protect the rights of players and the NBA seeks to promote the profit-earning ability of its teams.  It is arguable though, that because the NBPA has not decertified as a union, that the parties do not have adverse legal interests.  The NBPA could assert that both parties’ legal interest at this time is in collective bargaining in order to reach a new labor agreement.  More than likely though, the parties have adverse legal interests.

However, the issue remains as to whether there is “. . sufficient immediacy and reality to warrant the issue of declaratory judgment” in this instance.

Throughout its lawsuit, the NBA refers to the NBPA threatening to decertify as a union and file an antitrust lawsuit against the NBA.    While the lawsuit references threats made by the NBPA to decertify during previous labor disputes, the NBPA has never decertified.  Every previous labor dispute between the NBA and NBPA has been resolved through negotiation of a new collective bargaining agreement by the NBA and NBPA.  NBPA attorney, Jeffrey Kessler, further deflated any possibility of the existence of a “sufficient immediacy and reality to warrant the issue of declaratory judgement” when he stated, “The NBA Players Association has made no decision to decertify. They talk about the fact that this is something the players have considered for 30 years, and that’s true. And they haven’t done it for 30 years”

Thus, the defense should argue against declaratory judgment in this matter by showing that the course of action taken by the NBPA in previous labor disputes and currently undertaken in the present labor dispute demonstrates that the NBPA will not decertify, and that as such, sufficient immediacy and reality do not exist to warrant a declaratory judgment.  In order to make this argument, however, the NBPA must stay its course as a labor union and not decertify.  This decision is in-line with my previous post explaining why, if ever, the NBPA should decertify after November 2011.

3 thoughts on “Jump Ball: Did the NBA Tip-Off Litigation Too Soon?

  1. wonderful post, very informative. I wonder why the other experts of this sector do not notice this. You should continue your writing. I’m sure, you’ve a great readers’ base already!

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