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BRIDGEMAN v. NBA

December 29, 1987

Junior Bridgeman, David Robinson, Armon Gilliam, Reggie Williams, Jose Ortiz, Rory Sparrow, Darrell Walker, Phil Hubbard, and Ken Barlow, Plaintiffs,
v.
National Basketball Association, Atlanta Hawks, Ltd., Boston Celtics Limited Partnership, Capital Bullets Basketball Club, Inc., Chicago Professional Sports Limited Partnership, Dallas Basketball Limited, Denver Nuggets Entertainment Co., L.P., Detroit Pistons Basketball Co., Golden State Warriors, A California Limited Partnership, Houston Rockets Pro Basketball Club Ltd., Jazz Basketball Investors, Jerry H. Buss, d/b/a California Sports and the Los Angeles Lakers, Kings Professional Basketball Club, Inc., LAC Basketball Club, Inc., Meadowlands Basketball Associates, t/a New Jersey Nets, Milwaukee Bucks, Inc., National Advertising Service Inc., Cleveland Cavaliers Division, New York Knickerbockers Basketball, a division of Madison Square Garden Center, Inc., Pacers Basketball Corp., The Philadelphia 76ers Basketball Club, Inc., Phoenix Professional Basketball Club, Ltd., Pro Basketball, Inc., Seattle Supersonics Inc., Spurs Professional Basketball Club, Ltd.; National Basketball Association, Atlanta Hawks, Ltd., Boston Celtics Limited Partnership, Capital Bullets Basketball Club, Inc., Chicago Professional Sports Limited Partnership, Dallas Basketball Limited, Denver Nuggets Entertainment Co., L.P., Detroit Pistons Basketball Co., Golden State Warriors, A California Limited Partnership, Houston Rockets Pro Basketball Club Ltd., Jazz Basketball Investors, Jerry H. Buss, d/b/a California Sports and the Los Angeles Lakers, Kings Professional Basketball Club, Inc., LAC Basketball Club, Inc., Meadowlands Basketball Associates, t/a New Jersey Nets, Milwaukee Bucks, Inc., National Advertising Service Inc., Cleveland Cavaliers Division, New York Knickerbockers Basketball, a division of Madison Square Garden Center, Inc., Pacers Basketball Corp., The Philadelphia 76ers Basketball Club, Inc., Phoenix Professional Basketball Club, Ltd., Pro Basketball, Inc., Seattle Supersonics Inc., Spurs Professional Basketball Club, Ltd., Counterclaimants, v. Junior Bridgeman, David Robinson, Armon Gilliam, Reggie Williams, Jose Ortiz, Rory Sparrow, Darrell Walker, Phil Hubbard, and Ken Barlow, Counterdefendants



The opinion of the court was delivered by: DEBEVOISE

 DEBEVOISE, District Judge:

 Plaintiffs, a group of current and former players and first round draft choices in the NBA ("the players"), brought this action pursuant to sections 4 and 16 of the Clayton Act, 15 U.S.C. sections 15 and 26, and the Sherman Antitrust Act, 15 U.S.C. section 1 et seq. Their complaint alleges that the enforcement by the National Basketball Association and its 23 member teams (collectively referred to as "the NBA") of the college player draft, the salary cap, and the right of first refusal constitutes an antitrust violation.

 I. PROCEDURAL HISTORY

 Before instituting this action, plaintiffs and the National Basketball Players Association ("the Players Association") filed a class action complaint with this court on October 1, 1987 ("Bridgeman I"), alleging on behalf of themselves and all class members the same antitrust violations against the same defendants that are included in the instant complaint. 87 Civ. 4001. Because the plaintiffs in Bridgeman I sought speedy resolution of the labor exemption issue and the NBA defendants had raised objections to the class action allegations contained in that complaint, I suggested that a second complaint be filed eliminating the class allegations so as to put the case in a procedural posture that would permit an early resolution of the labor exemption issue. Plaintiffs filed the complaint in the present action ("Bridgeman II") on October 16, 1987.

 The matter is now before the court on the players' motion for partial summary judgment and a declaratory judgment declaring any labor exemption to the antitrust laws inapplicable to the practices at issue in this case. The NBA has cross-moved for an order directing plaintiffs to join the National Basketball Players Association ("the Players Association") as a party, and for summary judgment dismissing the complaint. *fn1"

 II. FACTS

 The following facts are undisputed. As noted above, the practices at issue are the college player draft, the salary cap, and the right of first refusal. Under the college player draft, the NBA defendants allocate the exclusive rights to negotiate with and sign rookie players. The salary cap is a system whereby the NBA defendants agree to set maximum limits on the aggregate amount teams can spend to compensate their players. Under the right of first refusal, an NBA team has the right to retain a veteran free agent's services indefinitely by matching offers received by that player from other NBA teams. As described below, the players agreed to these practices for a limited period of time in a settlement agreement that arose out of an antitrust class action lawsuit.

 The Robertson Litigation and Settlement Agreement

 In 1970, the NBA players commenced a class action suit against the NBA in the federal district court for the Southern District of New York, challenging on antitrust grounds certain player restrictions imposed by the NBA team owners, including the NBA college player draft and the reserve system. The NBA defendants moved for summary judgment, arguing, among other things, that the practices were shielded from the anti-trust laws by a labor exemption. The district court denied the NBA's motion. Robertson v. National Basketball Association, 389 F. Supp. 867, 884-89 (S.D.N.Y. 1975).

 In 1976, the parties in the Robertson litigation entered and the district court approved a settlement agreement. *fn2" This agreement effected a number of changes in the operation of the NBA, including modification of the college player draft and institution of the right of first refusal. The settlement agreement provided that it would expire at the end of the 1986-1987 NBA season, and further provided that

 
Neither the settlement of the Class Action, nor entry into this Stipulation and Settlement Agreement or any collective bargaining agreement or any Player Contract, nor the effectuation thereof, nor any practice or course of dealing thereunder shall be deemed to be a waiver or estoppel by any NBA player or players or the Players Association of their right to challenge in a court of competent jurisdiction any future unilateral imposition by the NBA or any NBA member of any rule, regulation, policy, practice or agreement, or to contend (subject to the right of the NBA to contend otherwise) that the same is not a mandatory subject of collective bargaining or a subject over which they are otherwise required to collectively bargain, nor do they concede that the same is a mandatory subject of collective bargaining or a subject over which they are otherwise required to collectively bargain.

 Collective Bargaining in the NBA

 When the Robertson settlement agreement was adopted in 1976, the Players Association and the NBA also entered into a multi-year collective bargaining agreement that incorporated the substantive terms of the settlement agreement. The 1976 collective bargaining agreement expired on June 1, 1979, and on October 10, 1980, the parties again entered into a multi-year collective bargaining agreement that expressly incorporated the terms of the Robertson settlement agreement.

 The 1980 agreement expired on June 1, 1982. In 1983, the NBA defendants sought for the first time to introduce the salary cap, contending that such a restriction was necessary because the majority of NBA teams were losing money, in part because of rising player salaries and benefits. The players responded by filing a lawsuit challenging the legality of the proposed practice. Lanier v. National Basketball Association, 82 Civ. 4935 (S.D.N.Y.). A Special Master appointed to hear disputes under the Robertson settlement agreement determined that the ...


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