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Keywords

contractinjunctionappealtrustantitrustgood faith
contractdefendantattorneyinjunctionappealtrialtrustantitrust

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McCourt v. California Sports, Inc., 600 F.2d 1193, 87 Lab.Cas. P 11,570, 1979-1 Trade Cases P 62,649

Facts

Dale McCourt, a professional hockey player, signed a contract with the Detroit Red Wings but was later assigned to the Los Angeles Kings due to the NHL's reserve system. McCourt challenged the legality of this reserve system, claiming it violated antitrust laws. The district court initially granted a preliminary injunction against the enforcement of the reserve system, leading to an appeal. The case centered on whether the reserve system was a product of good faith bargaining and whether it was exempt from antitrust scrutiny under labor laws.

On October 10, 1977, Dale McCourt, a 21-year-old hockey player from Canada, signed a NHL Standard Players Contract (1974 form) with the Detroit Hockey Club, Inc. to play professional hockey for three years with the Detroit Red Wings. McCourt was to be paid $325,000 over three years.

Issue

Whether the reserve system in the National Hockey League, incorporated in the collective bargaining agreement, is subject to antitrust laws and whether it qualifies for the nonstatutory labor exemption.

Whether the reserve system in the National Hockey League, incorporated in the collective bargaining agreement, is subject to antitrust laws and whether it qualifies for the nonstatutory labor exemption.

Rule

The nonstatutory labor exemption applies to collective bargaining agreements that involve mandatory subjects of bargaining, provided that the agreement is the result of good faith, arm's length negotiations. The Sherman Anti-Trust Act prohibits agreements that restrain trade, but labor agreements may be exempt if they primarily affect the parties to the bargaining relationship and are negotiated in good faith.

Analysis

The court analyzed whether the NHL's reserve system was the result of bona fide arm's-length bargaining. It noted that the NHLPA had vigorously negotiated against the reserve system, and while the NHL maintained its position, the inclusion of the reserve system in the collective bargaining agreement was seen as a product of intense negotiations. The court concluded that the reserve system's provisions were not merely imposed but were part of a broader negotiation process that included significant concessions from the NHL.

The trial court and the parties before us in this appeal have all relied upon Mackey as properly enunciating the governing principles in determining whether the non-statutory labor exemption applies to the reserve system provisions of a collective bargaining agreement in professional sports.

Conclusion

The court vacated the preliminary injunction and remanded the case, concluding that the reserve system was incorporated into the collective bargaining agreement as a result of good faith bargaining and thus was entitled to the nonstatutory labor exemption from antitrust laws.

The injunction is vacated, and the cause remanded for entry of judgment in favor of defendants upon Count I of the complaint.

Who won?

The National Hockey League and its member clubs prevailed in this case. The court found that the reserve system was a legitimate part of the collective bargaining agreement, established through good faith negotiations. The court emphasized that the NHLPA had actively participated in the bargaining process, and the inclusion of the reserve system was not a result of collusion but rather a reflection of the bargaining dynamics between the players and the league.

We see no reason to disagree with the judgment of the district court and of the attorneys on both sides that the proper standards are set out in Mackey.

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