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From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
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And I'm Robert Siegel.
At the U.S. Supreme Court today, the justices turned their attention to sports, specifically to the NFL and its exclusive deal with Reebok to sell billions of dollars worth of hats, shirts and other apparel.
NPR legal affairs correspondent Nine Totenberg reports.
NINA TOTENBERG: It used to be that lots of different companies had NFL licenses to sell stuff with NFL team logos. But in 2001, the NFL decided to award its merchandising license for all 32 teams to just one company: Reebok. Among those frozen out was American Needle, a family-owned company that until 2001 specialized in manufacturing NFL team caps. Indeed, the caps were one-quarter of its business. The company challenged the exclusive licensing deal in court, claiming it amounted to a conspiracy among the teams to fix prices and noting that cap prices had gone way up since the deal.
But a federal appeals court ruled that the league is a single entity that operates as one business, not 32 competing businesses. And it tossed the case out of court without a trial. Anti-trust experts saw the decision as an opportunity for the NFL and other leagues to gain immunity from lawsuits over more than just merchandising agreements. They saw the ruling as a vehicle to allow sports leagues to potentially, at least, set prices for tickets, or parking at games, or fees for fantasy football, for instance.
Today, in the Supreme Court, American Needle's lawyer Glen Nager told the justices that the NFL should not be able to circumvent the nation's anti-trust laws that way. He said the NFL teams are separately owned and operated businesses and that by construing the league as a single entity, the lower court had approved a merchandising monopoly for the NFL. Several justices asked where to draw the line. After all, you need agreement on league rules and a schedule. Justice Breyer, noting that he knows baseball better than football, questioned the premise of apparel competition. You want the Red Sox to compete in selling T-shirts with the Yankees? I don't know a Red Sox fan who would take a Yankee sweatshirt if you gave it away.
Justice Stevens suggested that the real competition for apparel is between sports - football and basketball, for instance - not between teams. But the questioning got even more intense when the NFL's lawyer Gregg Levy rose to argue. He conceded that the teams used to individually license their own logos. But he maintained that the purpose of the NFL exclusive deal with Reebok was not to make money, but to promote the game of football.
Justice Scalia: They don't care whether the sale of T-shirts promotes the game. They sell it to make money. Justice Sotomayor observed that if the aim is to make money, and she said she could well see that argument, then a league agreement to fix prices would be a violation of the anti-trust laws. Sotomayor prodded further: What decision could sports teams make that would be subject to anti-trust scrutiny? Answer: The NFL clubs are not separate sources of independent power. They're a unit, a single entity.
Justice Sotomayor: So you're seeking through this ruling what you haven't gotten from Congress - an absolute bar to an anti-trust claim. Justice Breyer analogized the situation this way: A joint venture to play football is one thing, a joint NFL venture to build houses is another. Chief Justice Roberts: And the other side says selling logos is closer to selling houses than it is to playing football. So, if there's a factual dispute about whether a particular activity of the league is designed to promote the game or is designed simply to make money, then that's the sort of thing that should go to a trial.
Justice Scalia: You say that the trademarks have no value apart from the game? I guess you could say the same thing for each of the 32 franchises. They're worthless if the NFL disappears. So does that mean they can agree to fix the price at which their franchises would be sold? Lawyer Levy didn't directly answer that question, but contended that the NFL is much like a law firm that sets the prices charged by its lawyers.
Nina Totenberg, NPR News, Washington.