Powell v. National Football League

In 1982, the National Football League (NFL) (defendant) and the NFL Players Association (PA) (plaintiff) entered into a collective-bargaining agreement (CBA). Among other things, the CBA limited players’ abilities to change teams freely upon the expiration of their contracts by providing incumbent teams with rights of first refusal. Upon the expiration of the 1982 CBA, the NFL and the PA entered into negotiations for a new CBA. However, after the parties failed to reach agreement on a new CBA, the NFL declared that negotiations were at an impasse with respect to the right-of-first-refusal term, allowing the NFL unilaterally to impose a right of first refusal. Marvin Powell and eight other NFL players (plaintiffs) and the PA (collectively, players) did not claim that the NFL negotiated in bad faith regarding the right-of-first-refusal term, but they sued the NFL, alleging that its imposition of the right of first refusal violated the Sherman Antitrust Act. The NFL responded that the nonstatutory labor exception to the federal antitrust laws—which immunized the products of bona fide collective bargaining from federal antitrust scrutiny—shielded it. The players countered that the labor exception had expired when the NFL declared an impasse. The district court agreed with the players, concluding that terminating the labor exception at impasse promoted good-faith collective bargaining and encouraged compromise. The NFL appealed, arguing that the district court’s ruling would unduly incentivize the union to seek an impasse so as to manufacture an antitrust lawsuit and its attendant treble damages. The NFL further argued that the act was inapplicable because it was concerned only with product markets and did not regulate the market for player services.