Ruling in favor of NFL, lockout extension set up key June decision
A June 3 decision will be the most important news since the CBA expired in March
If the NFL wins, it could continue the lockout, probably for as long as it wants
If the players win, the lockout likely would be over and they could go back to work
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.
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.