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NFLPA Collusion Suit Against NFL Alleges Conspiracy

(May 24, 2012): NFLPA Collusion SuitAre the Washington Redskins and Dallas Cowboys, the greatest rivals across all sports, finally working together? Not exactly, but penalties recently imposed on both teams have served as a catalyst, in part, for the National Football League Players Association (NFLPA) to file an antitrust suit against the National Football League (NFL) for allegedly conspiring to set a secret salary cap during the 2010 season. The NFLPA collusion suit alleges that the NFL and the owners of the NFL teams conspired to secretly maintain a $123 million salary cap (a maximum amount each team can pay its players) when publicly maintaining that the 2010 season was not subject to a salary cap. In essence, the antitrust suit alleges that NFL players were damaged by the NFL because they did not receive the salary amounts they could have earned had the season truly been uncapped.

I.  What is Antitrust?

Antitrust laws have existed in the United States for over a century. Starting with the Sherman Antitrust Act of 1890, this body of law has grown to encompass any type of collusive activity which is anti-competitive. Collusion refers to two or more individuals or entities secretly working together to impede competition (defined broadly) in a market. In the NFLPA collusion suit, the competition alleged to have been impeded is in the players’ market, with the NFL tacitly agreeing to not pay players more than a combined $123 million. Because the Redskins and Cowboys violated this tacit agreement by going above this $123 million threshold and “front-loading” many of their free agent contracts, the NFL imposed sanctions against the organizations.

Antitrust cases generally come in two flavors: cases where a company is exercising or attempting to exercise monopoly power, and cases where companies are colluding to restrain trade and competition. In the second type, cases are very categorized into either “per se illegal” collusion or restrain reviewed under the “rule of reason” which balances all the competitive efficiencies and the anti-competitive harms.

While much of this case will be based on procedural issues, such as whether the NFLPA had already released its claims against the NFL (thereby invalidating the NFLPA collusion suit), it is an interesting legal battle from an anti-competitive standpoint as well. Antitrust litigation often comes down to creating a “story” of antitrust harms or, conversely, pro-competitive efficiencies, and this case will probably be no exception. This case is important in other industries, however, because the NFLPA and NFL’s prior dealings and communications are relatively commonplace business dealings for unions and owners. Moreover, in franchised organizations, this case begs the question of whether collusion between franchise owners can create liability for the entire organization.

II. Why Should Healthcare Providers Care?

The NFLPA collusion suit has many similar elements to cases involving unionized workers in any industry. This is especially true when considering healthcare labor relations. For instance, the recent case of Cason-Merenda et al. v. Detroit Medical Center et al., which involved eight Detroit-area hospitals and the unionized nurses working in those hospitals, highlights the importance of owners of healthcare facilities ensuring compliance with federal trade and labor laws. 2012 WL 995293 (E.D. Mich. 2012). In that case, area nurses filed suit, alleging that the hospitals had colluded to hold down wages paid to the nurses, and had illegally exchanged information about wages and employment of their nurses. Most recently, Detroit Medical Center’s Motion for Summary Judgment was partially denied as to the “Rule of Reason” claims, with litigation still ongoing.

Nevertheless, healthcare providers should recognize that the Federal Trade Commission (FTC) and Department of Justice (DOJ) have long scrutinized the actions of healthcare providers. Whether it is in labor and employment relations or buying, selling, or merging healthcare assets, FTC and DOJ are quick to investigate collusive claims against healthcare entities, as they often lead to anti-competitive effects and price increases for consumers. The NFLPA collusion suit, while in a different industry, effectively demonstrates the legal problems which could affect healthcare providers.

Healthcare LawyerLes Johnson is a Partner in the Baton Rouge office of Liles Parker. As the Co-Leader of the Health Law Practice Group, Les works with the firm’s healthcare clients  on a variety of business matters, including fraud and abuse, compliance, and mergers and acquisitions. For a free consultation to discuss your healthcare organization’s business matters, call Les today at: 1 (800) 475-1906.

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