Fordham Urban Law Journal Volume 4 4 Article 7 Number 3 1976 The Legality of the Rozelle Rule and Related Practices in the National Football League Donald Novick Follow this and additional works at: https://ir.lawnet.fordham.edu/ulj Part of the Antitrust and Trade Regulation Commons Recommended Citation Donald Novick, The Legality of the Rozelle Rule and Related Practices in the National Football League, 4 Fordham Urb. L.J. 581 (1976). Available at: https://ir.lawnet.fordham.edu/ulj/vol4/iss3/7 This Article is brought to you for free and open access by FLASH: The orF dham Law Archive of Scholarship and History. It has been accepted for inclusion in Fordham Urban Law Journal by an authorized editor of FLASH: The orF dham Law Archive of Scholarship and History. For more information, please contact [email protected]. THE LEGALITY OF THE ROZELLE RULE AND RELATED PRACTICES IN THE NATIONAL FOOTBALL LEAGUE I. Introduction Traditional rules designed to control player movement within the National Football League (NFL)' have recently been challenged in two federal district courts. In Kapp v. NFL' Judge Sweigert con- cluded that these rules constitute a violation of the antitrust laws.' In Mackey v. NFL4 Judge Larson held that the Rozelle Rule5 is in violation of the antitrust laws.' The system of player control in the NFL begins with a draft of college seniors held annually by the 28 member clubs.7 Once a team selects a player in the draft and places him on its reserve list, that team has the exclusive right to negotiate for his services.' A team which attempts to negotiate with a player reserved by another team is subject to severe disciplinary action, known as the Tampering Rule.' A prospective player must sign the Standard Player Con- tract,'" one clause of which binds him to the NFL Constitution and 1. The National Football League (NFL) is an unincorporated association of football clubs. There are currently 28 teams, each operating in the United States. The NFL schedules and organizes the games played between the teams, providing the officials and formulating the rules. Pete Rozelle, after whom the Rozelle Rule is named, is an employee of the NFL., and its chief executive officer and Commissioner. Mackey v. NFL, No. 4-72-Civil 277, at 1 (D. Minn. Dec. 30, 1975). At the time Mackey was decided the NFL had 26 teams but has since expanded to 28. 2. 390 F. Supp. 73 (N.D. Cal. 1974). 3. Id. at 82. 4. No. 4-72-Civil 277 (D. Minn. Dec. 30, 1975). 5. NFL CONST. AND BY-LAws art. XII, § 12.1(H). For a discussion of this rule, see text accompanying notes 14-15 infra. 6. No. 4-72-Civil 277, at 9. 7. NFL CONST. AND BY-LAWS art XIV, § 14.3(A) [hereinafter cited as Draft Rule]. The current rules provide for a draft by the 26 member clubs, but the league has expanded and now has 28. The draft is conducted in the following way: Each club picks one player in each round. Selection is made in the reverse order of the final standings the year before. The team with the worst won-lost record the previous year selects first, the team with the best record picks last, and so on. Id. 8. Id. art. XIV, § 14.5. 9. Id. art. IX, § 9.2 [hereinafter cited as Tampering Rule]. 10. Id. art. XV, § 15.6(a) [hereinafter cited as Standard Player Contract Rule]. FORDHAM URBAN LAW JOURNAL [Vol. IV By-Laws." This contract also contains an option clause which gives the employing team the right to renew a player's contract for one year beyond the time stipulated in the contract, at a compensation rate of 90% of the expired contract. 2 Once this option year is over, the player is then a free agent; free to sign a contract with any team in the league.'3 The NFL Constitution and By-Laws provide that a team which signs a player who has become a free agent in this way must compensate the former employing team." If the two teams are unable to reach a mutually satisfactory agreement on compensa- tion, the League Commissioner has the right, in his sole discretion, to fix the rate of compensation."' The rule requiring compensation and giving the Commissioner the power to fix compensation is the Rozelle Rule. In Kapp, plaintiff signed a two year contract with the Minnesota Vikings in 1967. He played for that team during the 1967 and 1968 seasons, and in 1969 he played without a contract, as the Vikings invoked the option clause. Plaintiff refused to sign a contract in 1970 and the New England Patriots, agreeing to compensate the Vikings in satisfaction of the Rozelle Rule, contracted with Kapp for the 1970 season and the following two years. Kapp did not sign the Standard Player Contract. He played in 1970, but when he refused to sign the Standard Player Contract in 1971 he was told to leave the team at the summer training camp prior to the start of that season. 6 Plaintiff alleged in his complaint that enforcement of these rules constituted a combination among the clubs in the NFL to refuse to deal with players except under the above stated conditions. He claimed that in effect this was a boycott or blacklist and as such a 11. "The Player agrees at all times to comply with and be bound by: the Constitution and By-Laws .... " National Football League Standard Players Contracts § 4. 12. Id. § 10. This section states: The Club may, by sending notice in writing to the Player, on or before the first day of May following the football season . renew this contract for a further term of one (1) year on the same terms as are provided by this contract, except that (1) the Club may fix the rate of compensation to be paid by the Club to the Player during said further term, which rate of compensation shall not be less than ninety percent (90%) of the sum set forth . .. 13. Id. 14. Id. 15. Id. 16. 390 F. Supp. at 76-78. 19761 NOTES per se violation of the Sherman Act. He further contended that even if the challenged rules were not a per se violation, they were illegal under the rule of reason, because they go beyond what is reasonably necessary to achieve the business goals involved. He claimed that enforcement of these rules drove him out of professional football, and sought damages for this injury. 7 Mackey was an action brought by present and former professional football players in the NFL. The complaint consisted of two counts, both of which alleged the illegality of the Rozelle Rule as a per se violation of the Sherman Act, or in the alternative, as illegal under the rule of reason. In Count I plaintiffs sought an injunction against enforcement of the Rozelle Rule. In Count II they sought damages sustained as a result of previous enforcement of the Rozelle Rule. 8 In both cases, the NFL based its defense on two major issues. The first involved the standard to be used in determining the legality of the challenged rules. II. Per Se v. Rule of Reason Unlike baseball which has received an exemption from the Su- preme Court, 9 football was held subject to the antitrust laws in Radovich v. NFL.2" Plaintiffs in Kapp" and Mackey" claimed that the challenged rules were per se violations of sections 1 and 2 of the Sherman Act.23 The per se doctrine in antitrust law was explained by the Su- preme Court in United States v. Trenton Potteries Co. 4 The Court noted that price-fixing agreements are prohibited by the Sherman 17. Id. at 79. 18. No. 4-72-Civil 277, at 1-2. 19. Flood v. Kuh'n, 407 U.S. 258 (1972); Toolson v. New York Yankees, Inc., 346 U.S. 356 (1953). 20. 352 U.S. 445, 452 (1957). 21. 390 F. Supp. at 75. 22. No. 4-72-Civil 277, at 2. 23. 15 U.S.C. § 1 (1970) provides in part: Every contract, combination in the form of trust or otherwise, or conspiracy, in re- straint of trade or commerce among the several States . is declared to be illegal 15 U.S.C. § 2 (1970) states that: Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States . shall be deemed guilty of a misdemeanor . .. 24. 273 U.S. 392 (1927). FORDHAM URBAN LAW JOURNAL [Vol. IV Act because of their unavoidable effects, and they are illegal regard- less of whether the prices agreed to are reasonable. 5 Other categories of agreements have also been found to cause prohibited injuries to competition. Once it is established that an agreement falls within one of these categories, it automatically comes within the prohibitions of the Act without the necessity of further inquiry under the rule of reason."6 Where a certain trade practice has been before the courts on numerous occasions and has been uniformly condemned, the courts take judicial notice that its effect is substantially to restrain trade. They infer that the only intent underlying the practice is to achieve such an anti-competitive effect.27 The net effect of the challenged NFL practices is analogous to trade association practices which have been declared illegal in the past. The draft and the restraints on player movement imposed by the owners are analogous to trade association action requiring all members to deal with prospective employees only on uniform terms.