Antitrust Law Daily Wrap Up, ANTITRUST—8th Cir.: NFL players association may petition to reopen antitrust settlement, (Jun 23, 2014)

By Linda O’Brien, J.D., LL.M.

The U.S. Court of Appeals in St. Louis has reversed a district court’s denial of a football players association’s petition to set aside, on the basis of fraud, a stipulation of dismissal and to reopen a settlement that resolved allegations of collusion among football team owners to secretly cap players’ salaries. However, the appeals court affirmed the denial of the association’s petition to set aside the dismissal on the ground that court approval under class settlement procedures was not required (White v. National Football League, June 20, 2014, Wollman, R.).

The National Football League (NFL) is a group of 32 independently-owned football teams that operate primarily in the United States. In 1992, Reggie White and four other football players filed a class action suit against the NFL, alleging that certain practices—such as free agency, the college draft, and use of standard form contracts—violated antitrust laws. The suit was resolved with the signing of an extensive collective bargaining agreement, the Stipulation and Settlement Agreement (SSA) that governed labor relations between the NFL and the players. Set to expire in 1996, the SSA was extended in 1996, 2000, 2002, and 2006. In 2008, the NFL decided not to extend the SSA and as a result, during the 2010 season, there was no limit on the amount of money that teams could pay their players. However, in the absence of a salary cap in 2010, player salaries remained stable.

In March 2011, the SSA expired and the NFL ceased league operations until a new labor agreement could be signed. The NFL Players’ Association filed suit against the League, alleging that the NFL teams colluded to suppress competition for free agents during the 2010 season. In August 2011, the NFL and NFL Players’ Association came to terms on a new collective bargaining agreement. As part of the agreement, the lawsuit was settled by signing a dismissal under Federal Rule of Civil Procedure 41. In 2012, the Association petitioned the district court to reopen the suit, citing new evidence of public statements by NFL team owners about alleged collusion of a secret salary cap in 2010. The district court denied the petition and the Association appealed.

Dismissal invalid. The court found that the class settlement procedures of Federal Rule of Civil Procedure 23 were not required and the failure by the court and litigants to comply with the procedures did not invalidate the dismissal. Rule 23 mandates that the claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with court approval. According to the court, the parties stipulated to class certification in 1993 in the suit by the Association, which challenged certain NFL labor practices, and the imposition of a salary cap in 2010 was unrelated to any of those claims. The two sets of allegations involved different plaintiffs, different defendants, and different conduct. The mere fact that a class has suffered harm seventeen years after they were certified for purposes in unrelated litigation did not mean that they could seek redress for that harm as a class.

Additionally, the parties treated the SSA as if it were a contract and not a class settlement, the court noted. The SSA was a comprehensive collective bargaining agreement that set the players’ terms of employment. The concessions made by the NFL were given to the players in exchange for their agreement to play football and not for the release of their claims against the League. Over the span of the SSA, the Association filed numerous complaints on behalf of players for violations of the SSA and never invoked Rule 23 in litigating those claims. Furthermore, even if the SSA was treated as a bona fide class settlement, the Rule 23 requirements would only affect a small fraction of the class since most of the class had retired by 2010.

Fraud. However, the court determined that the dismissal stipulated to under Rule 41 constituted a judgment, order, or proceeding under Rule 60 and the Association could seek to set aside the dismissal. Rule 60 permits a court to set aside a final judgment, order, or proceeding that was obtained by fraud, misrepresentation, or misconduct. Since the Rule was designed to prevent injustice by allowing a court to set aside unjust results of litigation, it should be liberally construed when substantial justice will be served, the court noted. Although such determination did not express a view on the merits of the Association’s, the Association could seek relief from the dismissal under Rule 60, the court concluded.

The case is No. 13-1251.

Attorneys: David Barrett (Latham & Watkins) for Reggie White and NFL Players Association. Benjamin Conrad Block (Covington & Burling), Daniel Joseph Connolly (Faegre & Baker), and Shepard Goldfein (Skadden, Arps, Slate, Meagher & Flom LLP) for National Football League, The Five Smiths, Buffalo Bills, Inc., Chicago Bears Football Club, Inc., and PDB Sports, Ltd.

Companies: NFL Players Association; National Football League; Buffalo Bills, Inc.; Chicago Bears Football Club, Inc.; PDB Sports, Ltd.

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