## Facts

- In 1982, the National Football League (NFL) and the National Football League Players Association (NFLPA) entered a collective bargaining agreement (CBA) that included limits on player movement after contract expiration.
- The challenged restraint was the “Right of First Refusal/Compensation” arrangement for veteran free agents: an incumbent club could keep a player by matching another club’s offer; if it did not match, it would receive compensation (such as draft choices) from the signing club.
- When the 1982 CBA expired, the NFL and NFLPA negotiated for a successor agreement but did not reach agreement on, among other matters, the right-of-first-refusal term.
- After negotiations reached an impasse on that term, the NFL declared an impasse and continued/implemented the right-of-first-refusal restraint as a unilateral post-impasse term.
- Marvin Powell and eight other players, along with the NFLPA (on behalf of themselves and a class), filed a Sherman Act § 1 action alleging the NFL’s post-expiration, post-impasse imposition of the right-of-first-refusal term unlawfully restrained competition in the market for player services.
- The players did not allege that the NFL bargained in bad faith over the right-of-first-refusal term.
- The NFL moved for partial summary judgment, arguing that the nonstatutory labor exemption to antitrust law shielded the challenged restraint because it was a product of bona fide collective bargaining over a mandatory subject.
- The district court denied the motion, holding that after contract expiration the nonstatutory labor exemption ends when the parties reach an impasse on a mandatory subject.
- The NFL took an interlocutory appeal under 28 U.S.C. § 1292(b). The appeal addressed only the Right of First Refusal/Compensation system.

## Issues

1. Does the nonstatutory labor exemption to the antitrust laws automatically end when a CBA has expired and the parties reach a bargaining impasse, such that the employer’s continued use of a previously bargained restraint becomes subject to Sherman Act challenge?
2. Where a player-mobility restraint concerns a mandatory subject of bargaining and arose from arm’s-length collective bargaining, is the dispute still governed by federal labor law rather than antitrust law after expiration and impasse?

## Decision

- The Eighth Circuit reversed the district court’s denial of partial summary judgment and remanded.
- The court held that the nonstatutory labor exemption did not terminate solely because the CBA expired and the parties reached impasse on the challenged term.
- Because the right-of-first-refusal restraint concerned a mandatory subject of bargaining and arose from bona fide collective bargaining within an ongoing bargaining relationship, federal labor law continued to govern the parties’ dispute at that stage.
- The court rejected the district court’s impasse cutoff rule in part because it would skew bargaining incentives by giving the union a reason to seek impasse to trigger antitrust litigation and treble-damages exposure.

## Legal Principles

- The nonstatutory labor exemption shields certain collectively bargained restraints from antitrust scrutiny when they are the product of bona fide, arm’s-length collective bargaining and primarily affect the parties to the labor relationship.
- A post-expiration bargaining impasse, by itself, does not end the nonstatutory labor exemption when the collective bargaining relationship continues and the challenged restraint concerns a mandatory subject of bargaining.
- Federal labor law supplies the primary rules and remedies for handling bargaining over mandatory subjects after expiration, including the legal consequences of impasse and the availability of administrative oversight under the National Labor Relations Act.
- Antitrust intervention at the impasse stage risks displacing labor-law processes and changing the balance between collective bargaining and competition law.
- The exemption is not perpetual; its protection depends on the continuing existence of a meaningful collective bargaining relationship and the continued relevance of labor-law mechanisms to resolve the dispute.

## Conclusion

Powell held that the NFL’s post-expiration, post-impasse continuation of the right-of-first-refusal/compensation restraint remained insulated from Sherman Act attack by the nonstatutory labor exemption because the restraint concerned a mandatory bargaining subject, resulted from bona fide collective bargaining, and arose within an ongoing labor relationship governed at that time by federal labor law.


Powell v. National Football League, 930 F.2d 1293 (1989)