## Facts

- James McCoy Smith, a highly drafted college football player, was selected in the first round of the 1968 NFL draft by the Washington Redskins (operated by Pro-Football, Inc.).
- Under the 1968 draft rules, once a team drafted a player, other NFL teams were barred from signing him, requiring the player to negotiate only with the drafting team.
- Smith signed a one-year contract with the Redskins that included salary and bonus components; he made the team and played the 1968 season.
- Smith suffered a serious neck injury in the final game of the season, ending his professional career.
- Smith sued the NFL and Pro-Football, Inc. under § 1 of the Sherman Act, alleging the draft unlawfully restrained competition for player services and depressed his compensation.
- Defendants conceded the draft depressed starting salary levels of top college players, a category that included Smith.

## Issues

1. Whether the 1968 NFL draft was per se unlawful as a “group boycott” under § 1 of the Sherman Act.
2. Whether, under the rule of reason, the draft was an unreasonable restraint of trade in the labor market for NFL player services.
3. Whether the district court’s damages model, based on a hypothetical multi-year guaranteed free-market contract, was legally and evidentially supportable.

## Decision

- The court rejected per se treatment and held the draft was not a traditional group boycott subject to automatic condemnation.
- Applying the rule of reason, the court held the 1968 draft constituted an unreasonable restraint of trade in violation of § 1 of the Sherman Act.
- The court affirmed the finding of antitrust liability against the NFL and Pro-Football, Inc.
- The court vacated the district court’s damages award as too speculative and remanded for recomputation based on a supportable measure of injury.

## Legal Principles

- Cooperative arrangements among sports league members may require rule-of-reason analysis because league competition depends on some coordination to produce games.
- A restraint that eliminates competition for labor—by forcing an athlete to negotiate exclusively with one team—can violate § 1 when it materially suppresses bargaining power and wages.
- Under the rule of reason, claimed procompetitive goals (such as competitive balance and orderly player distribution) do not justify restraints that are more restrictive than necessary to achieve those goals.
- Clayton Act § 4 injury and standing may be shown when the restraint foreseeably depresses compensation in the relevant labor market and the plaintiff falls within the affected group.
- Antitrust damages must be grounded in evidence; courts may reject models that assume contract terms or duration not supported by the record.

## Conclusion

The D.C. Circuit held that the 1968 NFL draft was not per se illegal but violated § 1 of the Sherman Act under the rule of reason because its exclusive-negotiation restraint suppressed competition for player services beyond what was shown necessary to achieve league objectives; liability was affirmed, but damages were vacated and remanded for a less speculative calculation.


Smith v. Pro-Football, Inc., 593 F.2d 1173 (D.C. Cir. 1978)