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Monday, September 29, 2003
Ohio State's star sophomore running back, Maurice Clarett, who led the Buckeyes to the national championship last season, has been suspended since then for the season by the NCAA and the Buckeyes for academic violations and other reasons. He has responded by seeking to enter the NFL draft. The NFL has a rule that prohibits college sophomores and freshmen from entering the NFL draft. Clarett is now suing the NFL on antitrust grounds.

I should start off by saying that I am not an expert in antitrust law. I do, however, know how to read cases. And I have read the case that everyone cites as the precedent for Clarett's suit, Denver Rockets v. All-Pro Mgmt., Inc., 325 F. Supp. 1049 (C.D. Cal. 1971). That case involved Spencer Haywood's ultimately successful attempt to play pro basketball before his college class had graduated. A very good judge, Warren Ferguson, held that the NBA's rule prohibiting the entry of such players into the league was a "group boycott" that was per se illegal under the antitrust laws. (There are two types of antitrust violations-- many anticompetitive practices are struck down because they are "unreasonable", i.e., that they harm competition more than they benefit it. Some antitrust violations are "per se" violations, meaning that the conduct has been found to be so anticompetitive that it is always illegal no matter what the purported justification is for the conduct.)

At the time Judge Ferguson rendered his decision, it was consistent with governing Supreme Court precedent that held that group boycotts were per se illegal under the Sherman Anti-Trust Act. (The NBA's rule was a group boycott because it was essentially an agreement among all the independently owned and operated NBA franchises that none of them would purchase the services of an athlete whose college class had not graduated.) Many sportswriters writing about Clarett's case have assumed that Mr. Clarett has a very good case based on the Haywood precedent.

However, since 1971, antitrust law has seen a sea-change. Robert Bork (yes, that Robert Bork) wrote an influential book that argued against per se rules in antitrust cases and in favor of an analysis as to whether the particular challenged conduct harmed consumers. And Bork's analysis has been followed in many antitrust cases. For instance, Silver v. New York Stock Exch., 373 U.S. 341 (1963), which was relied on heavily by Judge Furgeson, was overruled in Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284 (1985), which held that the expulsion of a business from a wholesale cooperative (a form of "group boycott") would be analyzed for reasonableness rather than being barred by a per se rule. In NYNEX Corp. v. Discon, Inc., 525 U.S. 128 (1998), the current Supreme Court recast the group boycott per se rule as only applying in circumstances where the purpose of the group boycott was to harm competitors. (Indeed, the "group boycotts" that are usually the subject of antitrust cases involve agreements by a group of businesses to refuse to deal with a competitor to one or more of the businesses, in order to put the competitor out of business. It is obvious how such a tactic would harm consumers.) Of course, a sports league's determination of who is eligible and who is not eligible in no way harms consumers or prevents competition-- if anything, it invites competition, because if the public desires to see players like Clarett play professional ball, they might patronize a league that permits such players to do so. (Judge Furguson did not see this in the Denver Rockets case, even though Mr. Haywood had played in the ABA, a competitor to the NBA that had no comparable eligibility restriction.)

There are broader issues that go to the extent to which courts should involve themselves in setting and enforcing the rules in sporting contests. I plan to blog on that at another time. There are also broader issues about whether governing authorities in sporting events ought to have the authority to set eligibility rules for their contests, taking into account not only competitive interests but also societal interests (it may do some good, for instance, to force football players to attend college whether they want to or not).

Suffice to say, however, that I do not see Mr. Clarett's lawsuit as a slam dunk. Indeed, I would venture to say that later Supreme Court cases have called Judge Furguson's decision in Denver Rockets into question, and I am skeptical as to whether that case ought to be relied on in deciding Clarett's case. Ultimately, if Clarett presses his claim, he may end up going down as the man responsbile for overturning the Spencer Haywood precedent.

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