Employment & Labor Insider

EDITOR’S NOTE: A version of this article was previously published on Forbes.com.

The collective bargaining agreement between the Women’s National Basketball Association and its players union expires on October 31. Reports indicate that the parties are not near an agreement and are increasingly engaged in acrimonious bickering. Under similar circumstances, players in men’s leagues – particularly the National Football League and the National Basketball Association – would be contemplating the “nuclear option” of dissolving the union and pursuing antitrust litigation. 

That option is probably unavailable to the WNBA players.

The “nuclear option”

Section 1 of the Sherman Antitrust Act prohibits competitors in a market from reaching agreements that unreasonably restrain competition in that market. Yet, teams in the major North American sports leagues agree on rules that restrain player labor markets in a variety of ways, including maximum salaries for players, salary caps for teams, free agency restrictions, player drafts, and more.

Nevertheless, through a legal concept known as the non-statutory labor exemption, these restrictions are legal if they are negotiated with the players. More specifically, the non-statutory labor exemption protects employers from potential antitrust liability for rules and policies that they have collectively agreed on if those rules and policies were agreed to by a union that represents the employers’ employees.

This tension between antitrust law and labor law is generally what compels leagues and their players to negotiate comprehensive collective bargaining agreements that govern the sports’ operations and create a partnership between leagues and players to expand the revenue “pie” they have agreed to share.

In the 1980s and 1990s, a series of cases between NFL players and the NFL established that the non-statutory labor exemption does not apply if the union ceases to be the players’ designated representative for purposes of collectively bargaining with the league. This union decertification (or disclaimer) is accomplished through filings with the National Labor Relations Board.

If the union is decertified, players may bring a class action lawsuit against the teams contending that the various restrictions on their labor market violate antitrust law. The prospect is concerning to the leagues because damages under antitrust law are tripled. 

This happened in the early 1990s. The NFL players decertified the NFL Players Association as their bargaining representative and then filed a class action lawsuit against the NFL and its teams.  The eventual settlement of that case in 1993 brought about free agency in the NFL for the first time and included a payment to players of $200 million. The NFL got a salary cap in return.

The NFL players re-formed their union after that settlement but employed the same strategy in 2011 after the league locked out the players upon expiration of the collective bargaining agreement. That same year, the National Basketball Players Association also disbanded as part of filing antitrust lawsuits amid failed labor negotiations. In each instance, the parties eventually reached a new collective bargaining agreement, dismissed the lawsuits, and agreed to the reconstitution of the unions – a necessary element for the application of the non-statutory labor exemption to the rules the leagues wish to impose.

The idea of unions voluntarily giving up their authority seemed so extreme, that it has been referred to as the “nuclear option,” including by former NBA Commissioner David Stern.

Soccer players disarmed

When Major League Soccer began play in 1996, it did so according to rules concerning the player labor market that were not negotiated with the players. Those rules imposed strict salary caps and generally barred free agency. 

At that time, the players had not yet formed a union to represent their interests, so the non-statutory labor exemption did not apply.

In 1997, rather than unionize, the players filed a class action lawsuit led by player Iain Fraser against MLS and the entities that invested in the league and operated the teams, alleging that the rules they had agreed on were antitrust violations.

The league’s principal defense was based on what is commonly referred to as its “single-entity” status. In the other major North American sports leagues, individual clubs employ the players and operate a league structure by way of a contract among the clubs (for example, a league constitution and bylaws). MLS is different. It is the counterparty and employer on player contracts. Moreover, the entities that operate clubs are investors/owners in Major League Soccer, LLC. MLS argued that, because there was only entity in the labor market (MLS), there could not be an antitrust violation.

A federal district court initially bought the single-entity defense, even though it was questionable then and almost certainly not possible today based on the way MLS and its clubs independently operate. In 2021, a federal court in Oregon rejected the same argument when made by the National Women’s Soccer League in defense of a lawsuit by player Olivia Moultrie challenging the league’s age eligibility rule.

The U.S. Court of Appeals for the First Circuit called the single-entity argument “doubtful” but did not have to address it substantively. Instead, the court affirmed a jury verdict in favor of MLS based on a jury’s conclusion that MLS did not have sufficient power in the market to unreasonably restrain that market. Given that there were at that time (and today) dozens of professional soccer leagues across the globe in which players could play, the rules implemented by MLS and its clubs did not unfairly restrict player pay and employment options. If players did not like the MLS rules, they could go play somewhere else without much fuss. 

Having lost their effort to strike down the league’s player restraints, MLS players formed a union in 2003 and have been negotiating collective bargaining agreements with the league ever since.

Decision time for the WNBPA

If this were a labor dispute between the NBA and its Players Association, you can be sure that the Players Association and its lawyers would be ready to decertify itself with the NLRB and file its class action antitrust lawsuit upon expiration of the collective bargaining agreement.

But the WNBPA may not have that option (even if it made sense practically, which is questionable). Although the WNBA may be an elite women’s basketball league, it is far from the only one. Many of the best WNBA players have for years played in the EuroLeague Women or other international leagues often making more than they do in the WNBA. Moreover, WNBA players themselves helped form Unrivaled, a three-on-three league that started last year and is generating increased funding and interest.

Given the availability of other options, it is questionable whether the WNBA and its clubs have sufficient market power to unreasonably restrain the labor market for professional women’s basketball players. 

If the players do not like what the WNBA is offering, they could focus on playing overseas and in Unrivaled with probably no financial harm. To that end, it is ironic that in seeking to create additional opportunities for themselves through Unrivaled, WNBA players may have partially undermined a potentially large point of leverage – their ability to bring a class action antitrust lawsuit.