Sixth Circuit Affirms Dismissal of Sports Agent’s Antitrust Claim

Apr 7, 2023

A panel of circuit judges from the Sixth U.S. Circuit Court of Appeals has affirmed the ruling of a lower court, which dismissed a would-be sports agent’s antitrust claim against the NBA and the National Basketball Players Association (NBPA).

The plaintiff in the case was attorney Rosel C. Hurley III. Hurley applied to take an exam given by the NBPA that if he passed would certify him as an agent. The association initially told Hurley that he was approved to take the exam, only to reverse course and reject his application just days before the exam date. Hurley responded by filing an antitrust suit against the NBPA as well as the NBA. The district court dismissed the case for failure to state a claim, leading to the appeal.

The Sixth Circuit panel began its analysis by noting that the NBPA is a non-profit corporation and labor organization within the meaning of the National Labor Relations Act. See 29 U.S.C. § 152 (5). Furthermore, its player agents “are the exclusive representatives for NBA players. But becoming an agent is far from a slam dunk. To represent an NBA player, a prospective agent must both pass an exam and be certified by the NBPA,” according to the panel.

Hurley applied to take the exam. In his application, he disclosed that his law license at the time had been suspended by the Ohio Supreme Court. He also answered follow-up requests from the NBPA. Then, the NBPA informed Hurley that he had been approved to take the online exam. But just two days before the exam date, the NBPA told Hurley that he would not be allowed to do so.

Hurley claimed that “the reason given for his application’s denial—his disciplinary history—was pretextual,” wrote the panel. “In Hurley’s view, the NBPA and NBA, for reasons unstated, did not want him to be an agent. So, he filed suit against the two associations. The gist of Hurley’s complaint was that defendants violated the Sherman Act, 15 U.S.C. §§ 1 & 2. Defendants’ actions, Hurley alleged, ‘would cause a reasonable person to believe that the [NBPA was] acting in concert with and at the behest of a non-labor member or group, [the NBA,] in order to ensure [Hurley’s] exclusion from the marketplace the defendants completely control.’”

In dismissing the claim, pursuant to Federal Rule of Civil Procedure 12(b)(6), the district court concluded that the NBPA’s “alleged actions as statutorily exempted from the Sherman Act, and the NBA’s purported actions as nonstatutorily exempted from the same.”

In considering Hurley’s appeal boils down to one issue: whether he proffered viable Sherman Act claims. In essence, Hurley believed that the NBPA acted in concert with the NBA to deny him the ability to take the player agent exam in violation of sections 1 & 2 of the Sherman Act.

“Basic principles of antitrust law foreclose Hurley’s claims,” wrote the panel. “Start with his claim against the NBPA. Generally speaking, the Sherman Act prohibits monopolizing or unreasonably restraining trade and commerce. 15 U.S.C. §§ 1 & 2. But Congress did not dispatch the Act to cover all actors. One example is labor unions: Congress broadly exempted them from the Act’s prohibitions. Clayton Act § 20, 15 U.S.C. § 17 (‘Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor . . . organizations . . . , or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws.’); see also H.A. Artists & Assocs. v. Actors’ Equity Ass’n, 451 U.S. 704 , 713–16 (1981). In view of this broad exception, we see no basis for imposing antitrust liability against the NBPA alone. See also Indep. Sports & Ent. v. Fegan, No. CV 17-02397-AB, 2017 WL 2598550 , at *6 (C.D. Cal. May 30, 2017) (recognizing ‘that the NBPA is exempt from the Sherman Act and thus can monopolize the representation of basketball players’); Collins v. Nat’l Basketball Players Ass’n, 850 F. Supp. 1468 , 1475 (D. Colo. 1991) (‘The NBPA Regulations . . . are exempt from antitrust law.’), aff’d, 976 F.2d 740 , 1992 WL 236919 , at *2 (10th Cir. 1992) (unpublished table decision) (‘[T]he statutory labor exemption from the Sherman Act permits the NBPA to establish a certification procedure for player agents.’).”

The panel added that Hurley “fares no better by alleging conspiratorial conduct” between the NBPA and the NBA. The NBPA, according to Hurley, “was acting in concert with a non-union member to boycott [Hurley] from taking the NBPA Agent Exam. Blue Br. at *10. Here again, Hurley confronts the statutory exemption for unions, albeit in an extended fashion. Drawing upon the spirit of the union exemption, the Supreme Court, through ‘nonstatutory’ means, Connell Constr. Co. v. Plumbers & Steamfitters Loc. Union No. 100, 421 U.S. 616, 622 (1975), has similarly ‘excluded from antitrust scrutiny’ [a]ny anticompetitive effect of a properly bargained collective bargaining agreement.” Nat’l Hockey League Players Ass’n v. Plymouth Whalers Hockey Club, 419 F.3d 462, 474 (6th Cir. 2005). It did so in view of “the congressional policy favoring collective bargaining under the NLRA and the congressional policy favoring free competition in business markets.” Connell Constr., 421 U.S. at 622; see also Plymouth Whalers Hockey Club, 419 F.3d at 474.

Applied in this setting, that exception encompasses the NBPA’s agreement with the NBA.

“By all accounts, the parties’ collective bargaining was standard fare, done for the purpose of protecting players from unscrupulous agent behavior. Collins, 850 F. Supp. At 1478–79. In the absence of plausible allegations that the bargaining was not conducted in self-interested ways, there is little basis to find liability under the Sherman Act. United States v. Hutcheson, 312 U.S. 219 , 232 (1941); Meat Cutters v. Jewel Tea Co., 381 U.S. 676 , 689–90 (1965) (exempting restrictions obtained ‘through bona fide, arm’s-length bargaining in pursuit of their own labor union policies, and not at the behest of or in combination with nonlabor groups’); Brown v. Pro Football, Inc., 518 U.S. 231 , 250 (1996) (exempting conduct that ‘grew out of, and was directly related to, the lawful operation of the bargaining process[,] involved a matter that the parties were required to negotiate collectively[, and] concerned only the parties to the collective-bargaining relationship’).”

“True, as Hurley notes, the exemption has not been extended to situations where unions are ‘aid[ing] non-labor groups to create business monopolies and to control the marketing of goods and services.’ Allen Bradley Co. v. Loc. Union No. 3, Int’l Bhd. Of Elec. Workers, 325 U.S. 797, 808 (1945);…Yet Hurley points to nothing that would suggest that is what happened here. All he can muster is the assertion that ‘a reasonable person would assume that,’ in view of the NBPA’s eleventh-hour reversal and ensuing denial of his application, the NBPA and NBA must have impermissibly conspired to restrain trade. We need not credit this conclusory statement as true.” In fact, the panel further opined that this argument simply wouldn’t make sense in light of the relevant statutory and case law in this case. ‘After all, saying that the mere fact that parties entered into a standard collective bargaining agreement constitutes improperly ‘aid[ing] non-labor groups to . . . control the marketing of goods and services,’ Allen Bradley Co., 325 U.S. at 808, disregards the longstanding balance struck between competing congressional policies. See Connell Constr., 421 U.S. at 622. It would likewise elevate the exception to the point where it swallows the rule,” the panel explained.

In all, the Sixth Circuit stated that the bargained agreement between the NBPA and NBA is protected from Hurley’s antitrust suit, even if he could identify anticompetitive consequences arising out of it.

Rosel Hurley, III v. Nat’l Basketball Players Ass’n et al.; 6th Cir; No. 22-3038; 12/29/22

Articles in Current Issue