NBA Owners Take First (Legal) Blood in Labor Negotiations

The NBA filed suit against the players' union today in the Southern District of New York federal courthouse, as well as filing a proceeding with the National Labor Relations Board, alleging that the union's threat to decertify and sue the league for antitrust violation is a bad-faith negotiating tactic, in violation of federal labor law.

To my mind, the most compelling arguments in the SDNY complaint come at Paragraphs 40 and 41, wherein the NBA lawyers argue that recent decertifications by the NFL players' union were eventually revealed to be wholly without credibility, as the NFLPA immediately re-formed after the execution of a new collective bargaining agreement. (No court has found the NFLPA's decertification tactic to be against any law, however.) The league also argues at Paragraph 47, and 72-77, that decertification of the NBA players' union would render all existing player contracts void and unenforceable. This latter point goes beyond the NLRB's decision from the 1998 lockout, which held that player contracts are unenforceable while a collective bargaining agreement is not in force. The NBA's argument today seems to suggest that if a hypothetical union decertification were found to be legitimate, then the player contracts would be permanently annulled, even if some sort of labor agreement were later finalized. (Yet such legal interpretation was not the case – at least, no judge found it to be so – when the NFL Players Association decertified earlier this year.)

The NBA is clearly worried that the NBPA could successfully use a union decertification and subsequent antitrust suit under the Sherman Act as leverage against the owners, as the pro football players did a couple weeks ago. In its complaint, the league asks for several declaratory judgments (Paragraphs 52, 61, 65) that their lockout is hunky-dory with regard to US antitrust law. (The pendency of the NLRB proceeding may help to insulate the owners' lockout from antitrust scrutiny, as hinted in Paragraph 58 of the complaint.) This request for declaratory judgment is something of a gamble by the owners: On one hand, they have removed a key weapon from the union's bag. The NBPA can no longer threaten to bring an antitrust suit into court, because the owners have already asked a court to adjudicate the very same issues that a putative players' lawsuit would raise. So the union has been neutered somewhat. On the other hand, there is now a real risk that the SDNY court could actually rule against the owners, finding (upon the decertification of the union) that the owners' lockout is violating the Sherman and Clayton Acts. Thus, the union still has a strong threat point with its possible decertification; perhaps the owners, worried about suffering treble damages if the SDNY court rules against them, could still be inclined to tidily wrap up negotiations. The assignment of a conservative or liberal judge to the SDNY case would certainly affect the owners' calculus. We should also note that under Federal Rule of Civil Procedure #57, declaratory judgment suits can be fast-tracked with a "speedy hearing".

In essence, the owners have cut off their own arm to stop the union from cutting it off first. Tickling oneself generally does not induce laughs, but cutting off an arm can be downright painful.

When Immature Billionaires Try Their Hand At Lawyering

Ross Perot Jr., former owner of the Dallas Mavericks (and still a 5% owner), sued Mark Cuban's investment entity in 2010, alleging that Cuban was financially mismanaging the team. Following the Mavericks' recent title win, Cuban's legal team filed the following motion for summary judgment today in Dallas County court (via Dallas Observer):

Funny stuff, but the 3-page legal filing is borderline legal malpractice by Cuban's lawyers. It may be worth a chuckle to show Nowitzki with the trophy, but one picture alone doesn't address the plaintiff's arguments. Is Cuban doing a good job of maximizing the entity's profits? As I noted in my most recent post, the billionaire Cuban is known for paying starters's money to backups like Brendan Haywood and Shawn Marion (who was supposed to be the team's backup SF/PF this season before Caron Butler's injury), and before them, guys like Antoine Walker, Antawn Jamison, Nick Van Exel, Juwan Howard, and several others. Cuban also fired head coach Avery Johnson in spring 2008 with three years and $12 MM of obligation remaining on his contract. Cuban may not mind losing money (or failing to maximize profits) on the Mavs, but Perot Jr. might. A lone championship does not necessarily imply fat operating profits. The championship itself will likely raise the franchise's financial value somewhat, but the defense attorneys still must address Cuban's 11 prior years of financial stewardship.

To Cuban's credit, the Mavs ranked first in the league in 2010-11 in home attendance as a percent of arena capacity. However, the summary judgment motion did not mention this, only listing, again, that photo of Nowitzki with the LOB.