COLLECTIVE BARGAINING
IN SPORTS AND ENTERTAINMENT
EDITORIAL ADVISORS
Vicki Been
Boxer Family Professor of Law
New York University School of Law
Erwin Chemerinsky
Dean and Distinguished Professor of Law
University of California, Irvine, School of Law
Richard A. Epstein
Laurence A. Tisch Professor of Law
New York University School of Law
Peter and Kirsten Bedford Senior Fellow
The Hoover Institution
Senior Lecturer in Law
The University of Chicago
Ronald J. Gilson
Charles J. Meyers Professor of Law and Business
Stanford University
Marc and Eva Stern Professor of Law and Business
Columbia Law School
James E. Krier
Earl Warren DeLano Professor of Law
The University of Michigan Law School
Richard K. Neumann, Jr.
Professor of Law
Maurice A. Deane School of Law at Hofstra University
Robert H. Sitkoff
John L. Gray Professor of Law
Harvard Law School
David Alan Sklansky
Yosef Osheawich Professor of Law
University of California at Berkeley School of Law
ASPEN SELECT SERIES
COLLECTIVE BARGAINING
IN SPORTS AND ENTERTAINMENT
PROFESSIONAL SKILLS AND BUSINESS STRATEGIES
MICHAEL H. LEROY
PROFESSOR
UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN
SCHOOL OF LABOR AND EMPLOYMENT RELATIONS AND
COLLEGE OF LAW
Copyright © 2014 CCH Incorporated.
Published by Wolters Kluwer Law & Business in New York.
Wolters Kluwer Law & Business serves customers worldwide with CCH, Aspen
Publishers, and Kluwer Law International products. (www.wolterskluwerlb.com)
No part of this publication may be reproduced or transmitted in any form
or by any means, electronic or mechanical, including photocopy, recording,
or utilized by any information storage or retrieval system, without written permission
from the publisher. For information about permissions or to request permissions online,
visit us at www.wolterskluwerlb.com, or a written request may be faxed to our
permissions department at 212-771-0803.
To contact Customer Service, e-mail [email protected],
call 1-800-234-1660, fax 1-800-901-9075, or mail correspondence to:
Wolters Kluwer Law & Business
Attn: Order Department
PO Box 990
Frederick, MD 21705
Printed in the United States of America.
1234567890
ISBN 978-1-4548-4743-4
About Wolters Kluwer Law & Business
Wolters Kluwer Law & Business is a leading global provider of intelligent information and
digital solutions for legal and business professionals in key specialty areas, and
respected educational resources for professors and law students. Wolters Kluwer Law &
Business connects legal and business professionals as well as those in the education
market with timely, specialized authoritative content and information-enabled solutions
to support success through productivity, accuracy and mobility.
Serving customers worldwide, Wolters Kluwer Law & Business products include those
under the Aspen Publishers, CCH, Kluwer Law International, Loislaw, ftwilliam.com and
MediRegs family of products.
CCH products have been a trusted resource since 1913, and are highly regarded
resources for legal, securities, antitrust and trade regulation, government contracting,
banking, pension, payroll, employment and labor, and healthcare reimbursement and
compliance professionals.
Aspen Publishers products provide essential information to attorneys, business
professionals and law students. Written by preeminent authorities, the product line
offers analytical and practical information in a range of specialty practice areas from
securities law and intellectual property to mergers and acquisitions and
pension/benefits. Aspen’s trusted legal education resources provide professors and
students with high-quality, up-to-date and effective resources for successful instruction
and study in all areas of the law.
Kluwer Law International products provide the global business community with reliable
international legal information in English. Legal practitioners, corporate counsel and
business executives around the world rely on Kluwer Law journals, looseleafs, books,
and electronic products for comprehensive information in many areas of international
legal practice.
Loislaw is a comprehensive online legal research product providing legal content to law
firm practitioners of various specializations. Loislaw provides attorneys with the ability
to quickly and efficiently find the necessary legal information they need, when and
where they need it, by facilitating access to primary law as well as state-specific law,
records, forms and treatises.
ftwilliam.com offers employee benefits professionals the highest quality plan
documents (retirement, welfare and non-qualified) and government forms (5500/PBGC,
1099 and IRS) software at highly competitive prices.
MediRegs products provide integrated health care compliance content and software
solutions for professionals in healthcare, higher education and life sciences, including
professionals in accounting, law and consulting.
Wolters Kluwer Law & Business, a division of Wolters Kluwer, is headquartered in New
York. Wolters Kluwer is a market-leading global information services company focused
on professionals.
For constant and unconditional encouragement, I drew upon
the strength and love of my mother, Carol LeRoy, and my
wife, Janet LeRoy. This book is dedicated to their irrepressible
optimism and faith in me.
Table of Contents
Preface ..................................................................................................... xxi
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
ON ATHLETES AND ENTERTAINERS ............................................................1
Major League Baseball as a Monopoly .......................................................1
The Reserve Clause......................................................................................3
Philadelphia Ball Club, Ltd., v. Hallman, 8 Pa.C.C. 57, 1890 WL 2951
(Pa.Com.Pl. 1890) ........................................................................................3
Question .......................................................................................................6
The Uniform Player Contract.......................................................................7
Metropolitan Exhibition Co. v. Ward, 9 N.Y.S. 779 (N.Y. 1890) ...............7
Question .....................................................................................................12
The Sherman Act of 1890: Do Uniform Players Contracts Violate
Antitrust Law? ...........................................................................................12
American League Baseball Club v. Chase, 86 Misc. 441 (N.Y. Sup.
1914) ..........................................................................................................15
Questions....................................................................................................19
Trading a Player for Cash: Assignment of Contract or Peonage? .............19
Augusta Baseball Ass’n v. Thomasville Baseball Club,
93 S.E. 208 (1917) .....................................................................................20
Question .....................................................................................................21
The Performing Arts as a Monopoly .........................................................21
Employer Monopoly of Artistic Performers Who Have Unique and
Extraordinary Talent ..................................................................................21
Lumley v. Wagner, 42 Eng. Rep. 687 (Ch. 1852) .....................................22
Question .....................................................................................................26
The Lumley Doctrine Comes to America...................................................26
Daly v. Smith, 38 N.Y.Super.Ct. (N.Y. 1874) ...........................................27
Question .....................................................................................................31
JY
X
CONTENTS
Blacklisting by Theatrical Employers: The Flip Side of Boycotting by
Unions ........................................................................................................32
Corrigan v. Macloon, 22 F.2d 520 (9th Cir. 1927) ....................................32
Question .....................................................................................................36
Who Owns a Script? Exclusive Rights and Terms of Employment ..........36
Thompson v. Famous Players–Lasky Corp., 3 F.2d 707 (D.C.
Ga. 1925)....................................................................................................37
Question .....................................................................................................39
Chapter 1: Business Strategy—Exploiting Human Capital .......................40
CHAPTER 2: BEFORE COLLECTIVE BARGAINING: CONCERTED
ACTIVITIES BY ENTERTAINERS .................................................................41
Why Do Workers Form Unions? The Monopoly Side of Labor
Organizations .............................................................................................41
The Closed Shop: Union Expulsion as a Restraint of Trade .....................43
Froelich v. Musicians’ Mutual Ben. Ass’n, 93 Mo.App. 383 (1902) ........44
Questions....................................................................................................49
Scott-Stafford Opera House Co. v. Minn. Musicians’ Ass’n, 136 N.W.
1092 (Minn. 1912) .....................................................................................49
Question .....................................................................................................52
Maintenance of Wages and Standards, or Price-Fixing? ...........................52
Bachman v. Harrington, 102 N.Y.S. 406 (1906) .......................................52
Question .....................................................................................................56
Personal Agents and Collective Bargaining Representatives:
Organizing the Labor Market, or Monopolizing It? ..................................56
Edelstein v. Gillmore, 35 F.2d 723 (2d Cir. 1929) ....................................57
Questions....................................................................................................64
The Closed Shop and Picketing .................................................................64
Danz v. American Federation of Musicians, Local 76, 233 P. 630
(Wash. 1925) ..............................................................................................66
Question .....................................................................................................69
&217(176
Free Speech or Extortion? ..........................................................................69
Kirmse v. Adler, 166 A. 566 (Pa. 1933) ....................................................69
Question .....................................................................................................73
Industrial Self-Government and Unions ....................................................73
Kourpal v. Baker, 172 N.Y.S. 114 (N.Y.Sup. 1918) .................................74
Question .....................................................................................................75
Chapter 2: Business Strategy—The Modern Boycott................................76
CHAPTER 3: BEFORE COLLECTIVE BARGAINING: ANTITRUST
PROBLEMS FOR ENTERTAINERS AND PLAYERS ........................................77
Why Didn’t Baseball Players Form a Union and Strike? ..........................78
Why Do Players Sue Leagues Under Antitrust Law? ................................79
Sherman Act (enacted 1890), as amended by the Clayton Act
(enacted 1914) ............................................................................................80
National League of Professional Baseball v. Federal Baseball Club
of Baltimore, Inc., 269 F. 681 (D.C.Cir. 1920)…………………………..83
Federal Baseball Club of Baltimore, Inc. v. National League of
Professional Baseball Clubs, 259 U.S. 200 (1922) ...................................85
Questions....................................................................................................86
Finally . . . A Player Sues Major League Baseball to Abolish the
Reserve Clause ...........................................................................................87
Gardella v. Chandler, 172 F.2d 402 (2d Cir. 1949) ...................................88
Questions....................................................................................................94
Toolson v. New York Yankees, 346 U.S. 356 (1953) ...............................94
Question .....................................................................................................96
Section 6 of the Clayton Act and Labor Injunctions..................................96
Vaughan v. Kansas City Pictures Operators’ Union, 36 F.2d 78
(D.C. Mo. 1929) .........................................................................................98
Question ...................................................................................................102
Were Entertainment Unions Able to Secure Injunctions to Protect
Employees? ..............................................................................................102
XI
XII
CONTENTS
Weber v. Nasser, 286 P. 1074 (Cal.App. 1930) .......................................103
Weber v. Nasser, 292 P. 637 (Cal. 1930) ................................................107
Question ...................................................................................................108
The Consequences of No Duty to Bargain ..............................................108
Sen. Robert Wagner (D, N.Y.), 78 Cong. Rec. 3678 (1934),
reprinted in 1 NLRB, LEGISLATIVE HISTORY OF THE NATIONAL
LABOR RELATIONS ACT, 1935, at 18-20 (1959) .......................................109
National Labor Relations Act (29 U.S.C. §§ 151-169) ...........................110
Rights of Employees ................................................................................111
The Norris-LaGuardia Act: Further Removing Federal Courts
from Labor Disputes ................................................................................111
Chapter 3: Business Strategy—The Antitrust Exemption
and Relocating Baseball Teams ...............................................................115
CHAPTER 4: MEET THE UNIONS IN SPORTS AND ENTERTAINMENT ......117
Labor Organizations.................................................................................117
Writers Guild of America, East ...............................................................117
Writers Guild of America, West ..............................................................118
Screen Actors Guild .................................................................................118
American Federation of Television and Radio Artists (AFTRA) ............118
International Association of Theatrical and Stage Employees
(IATSE)....................................................................................................119
Directors Guild of America (DGA) .........................................................119
National Association of Broadcast and Engineering Employees
(NABET-CWA) .......................................................................................119
Major League Baseball Players Association (MLBPA) ..........................119
National Football League Players Association (NFLPA) ........................120
National Basketball Association Players Association (NBAPA) ............121
National Hockey League Players Association (NHLPA) ........................121
World Umpires Association (WUA) .......................................................121
&217(176
Employer Association ..............................................................................121
Are Talent Agencies Labor or Non-labor Groups? Intersection
of Antitrust and Labor Law......................................................................122
H. A. Artists & Associates, Inc. v. Actors’ Equity Ass’n, 451
U.S. 704 (1981) ........................................................................................124
Questions..................................................................................................130
Snow White and the Seven Dwarfs: Do They Belong in the Same
Union? .....................................................................................................130
Walt Disney Productions, Ltd., 13 N.L.R.B. 865 (1939) ........................131
Question ...................................................................................................138
Allocating Pay through a Multi-Employer/Multi-Union Bargaining
Structure ...................................................................................................139
League of New York Theatres, Inc., 129 N.L.R.B. 1429 (1961). ...........140
Questions..................................................................................................144
How Far Does Federal Baseball Club Reach? Keeping Umpires
Out of the Strike Zone..............................................................................144
The American League of Professional Baseball Clubs and
Association of National Baseball League Umpires, Petitioner,
180 N.L.R.B. 190 (1969) .........................................................................145
Question ..................................................................................................152
Organizing a Sports Union.......................................................................153
American League of Professional Baseball Clubs, 189 NLRB 541
(1971) .......................................................................................................154
Question ...................................................................................................162
Community of Interest and Appropriate Bargaining Unit .......................162
Blue Man Vegas, LLC v. NLRB, 529 F.3d 417 (D.C. Cir. 2008) ...........163
Question ...................................................................................................171
Interference, Restraint and Coercion in Voting for Union
Representation..........................................................................................172
KDEN Broadcasting & Am. Fed. of Television and Radio Artists,
225 NLRB 25 (1976) ...............................................................................172
XIII
XIV
CONTENTS
Question ...................................................................................................175
Chapter 4: Business Strategy—Expansion Teams Meet Unions from
Other Nations ...........................................................................................176
CHAPTER 5: EMPLOYEE CHALLENGES TO LABOR ORGANIZATIONS ....177
Can Everyone Fit Under Labor’s Big Tent? ............................................177
In the Matter of Balaban & Katz (Princess Theatre), and Toledo
Projectionist Association, 87 N.L.R.B. 1071 (1949) ...............................178
Question ...................................................................................................182
Kaplan v. International Alliance of Thetarical Stage Employees and
Moving Picture Operators of U.S. and Canada, 1973 WL 11540
(C.D.Cal. 1973) .......................................................................................182
Questions..................................................................................................186
Minority Representation in a Diverse Entertainment Union ...................187
Metropolitan Opera Association, Inc. and Operatic Artists of America
(Petitioner), 327 NLRB 740 (1999) .........................................................188
Questions..................................................................................................192
Democracy, Autocracy, and Corruption in Sports and Entertainment
Unions ......................................................................................................193
Cleveland Orchestra Committee v. Cleveland Federation of
Musicians, Local No. 4, American Federation of Musicians,
303 F.2d 229 (6th Cir. 1962) ...................................................................194
Forbes v. Eagleson, 228 F.3d 471 (3d Cir. 2000) ....................................201
Questions..................................................................................................206
Union Security Clauses and Mandatory Dues: Right-to-Work or
Freeloading? .............................................................................................207
Marquez v. Screen Actors Guild, Inc., 525 U.S. 33 (1998) .....................208
Question ...................................................................................................214
Are Unions Accountable to Retirees? ......................................................215
Eller v. National Football League Players Ass’n, 872 F.Supp.2d 823
(D. Minn. 2012) .......................................................................................216
Questions..................................................................................................223
&217(176
Chapter 5: Business Strategy—Lowering the Voting Threshold for
Ratifying a CBA ......................................................................................224
CHAPTER 6: THE DUTY TO BARGAIN .....................................................227
Mark Burnett Productions and Stephen R. Frederick (Petitioner),
349 N.L.R.B. 706 (2007) ........................................................................ 228
Questions..................................................................................................232
The Gray Zone: Standards for Player Conduct and Safety .....................233
National Football League Management Council and National Football
League Players Association, 203 NLRB 958 (1973) .............................. 234
Question ...................................................................................................239
Note to Umpires: “You’re Out!”............................................................. 240
Professional Baseball Umpire Corporation (PBUC),
2010 WL 4685877 ...................................................................................240
Questions..................................................................................................246
The Elusive Nature of Impasse: Is a Bargaining Subject Mandatory
or Permissive? ..........................................................................................247
Silverman v. Major League Baseball Player Relations Committee,
Inc., 67 F.3d 1054 (2d Cir. 1995) ........................................................... 248
Question ...................................................................................................257
Impasse, Surface Bargaining, and the Duty to Disclose Information ......258
ABC, Inc., 2007 WL 5294094 (N.L.R.B.G.C.) ...................................... 260
Question ...................................................................................................270
The Multi-Employer Bargaining Unit: Duty to Bargain or Duty to
Disband?........................... .......................................................................270
Brown v. Pro Football, Inc., 518 U.S. 231 (1996) .................................. 272
Questions..................................................................................................277
The Internationalization of Professional Sports .......................................277
National Lacrosse League, 2005 WL 4674278 (N.L.R.B.G.C.) ............. 278
Question ...................................................................................................282
Chapter 6: Business Strategy—The Growth of Runaway Productions ...283
XV
XVI
CONTENTS
CHAPTER 7: STRIKES, LOCKOUTS, AND OTHER ECONOMIC
WEAPONS .................................................................................................285
The Balance of Economic Weapons: Does Pressure Induce
Settlements? ............................................................................................ 285
ABC, Inc. & Academy of Motion Picture Arts and Sciences, 1998 WL
1759017 (N.L.R.B.G.C.) ......................................................................... 286
Questions..................................................................................................295
For Whom the [Section 8(d)] Bell Tolls and the Cooling-Off Period .....295
International Alliance of Theatrical Stage Employees and
Moving Picture Machine Operators v. N.L.R.B., 779 F.2d 552
(9th Cir. 1985) ......................................................................................... 297
Question ...................................................................................................303
Collective Bargaining or Class Action Lawsuits? The Narcotic Effect
of Antitrust Law .......................................................................................304
Table 1: Work Stoppages to Resolve Labor-Management Disputes
for Players in Professional Sports: Collective Bargaining vs. Antitrust
(1970–June 2013).................................................................................... 305
League Restraints on Player Mobility: The Non-Statutory Labor
Exemption ................................................................................................306
Robertson v. National Basketball Ass’n, 556 F.2d 682 (2d Cir. 1977) .. 309
National Basketball Ass’n v. Williams, 45 F.3d 684 (2d Cir.1995) ....... 311
Questions..................................................................................................320
How the Narcotic Effect Works in Football: Step 1 ................................320
Powell v. National Football League, 930 F.2d 1293 (8th Cir. 1989) ..... 322
Question ...................................................................................................326
How the Narcotic Effect Works in Football: Step 2 ................................327
McNeil v. National Football League, 1992 WL 315292
(D.Minn. 1992) ....................................................................................... 327
Question ...................................................................................................336
How the Narcotic Effect Works in Football: Step 3 ................................336
Table 2: Expansion of the Lockout Doctrine ...........................................337
Brady v. National Football League, 644 F.3d 661 (8th Cir. 2011) ......... 339
&217(176
Question ...................................................................................................348
Are Player Antitrust Actions Foreclosed? .............................................. 349
White v. National Football League, 766 F.Supp.2d 941
(D.Minn. 2011) ....................................................................................... 351
Questions..................................................................................................356
Chapter 7: Business Strategy—What Are the Trade-Offs in Hiring
Replacements? .........................................................................................357
CHAPTER 8: BEYOND WAGES AND TERMS OF EMPLOYMENT FOR
ATHLETES AND ENTERTAINERS ..............................................................359
The Team Physician at the Dawn of Collective Bargaining in
Football ....................................................................................................360
Krueger v. San Francisco Forty Niners, 234 Cal.Rptr. 579
(Cal. 1987) .............................................................................................. 361
Questions..................................................................................................366
Workers’ Compensation and Sports Injuries ...........................................367
Martin v. Casagrande, 559 N.Y.S.2d 68 (N.Y.A.D. 1990) ......................367
Question ...................................................................................................370
Sudden Death in Football: A Tort, a Contractual Grievance
—or Both? ............................................................................................... 371
Stringer v. National Football League, 474 F.Supp.2d 894
(S.D.Oh. 2007) ........................................................................................ 371
Death by a Thousand Hits: Who Is Responsible for Player Suicide? ..... 381
Duerson v. National Football League, Inc., 2012 WL 1658353
(N.D.Ill. 2012)......................................................................................... 382
Disability and Retirement for NFL Players .............................................388
Questions..................................................................................................388
Jani v. Bell, 209 Fed.Appx. 305 (4th Cir. 2006)......................................389
Questions..................................................................................................401
Discord in Collective Bargaining: Are Orchestras Dying
or Reorganizing? ..................................................................................... 401
XVII
XVIII
CONTENTS
New Mexico Symphony Orchestra, Inc. and Musicians Association
of Albuquerque, Local 16, American Federation of Musicians, 335
N.L.R.B. 896 (2001) ................................................................................402
Peters v. Pikes Peak Musicians Ass’n, 462 F.3d 1265 (10th Cir. 2006) .407
Questions..................................................................................................417
Digital Extensions and Residuals.............................................................417
Cable News Network, Inc. v. CSC Holdings, Inc., 2008 WL 4843616
Supreme Court of the United States, Appellate Petition, Motion, and
Filing (2008) ........................................................................................... 419
Questions..................................................................................................427
Chapter 8: Business Strategy— The Paradox of Violence in Football
and Hockey ..............................................................................................427
CHAPTER 9: ADJUSTING DISPUTES BY ARBITRATION ...........................429
The Bunt that Became an Inside-the-Park Home Run for
Baseball Players .......................................................................................432
Kansas City Royals Baseball Corp. v. Major League Baseball Players
Ass’n, 532 F.2d 615 (8th Cir. 1976) ....................................................... 433
Questions..................................................................................................436
Collusion in Baseball: Another Antitrust Problem Is Resolved by
Arbitration ................................................................................................439
Major League Baseball Players Ass’n v. Garvey, 532 U.S. 504
(2001) ...................................................................................................... 439
Question ...................................................................................................443
How Umpires Struck Out: Arbitration Resolves Another Major
Dispute in Baseball ..................................................................................443
The Major League Umpires Ass’n v. The American League of
Professional Baseball Clubs, 357 F.3d 272 (3d 2004) ............................ 444
Question ...................................................................................................449
“The Mature Labor Agreement May Attempt to Regulate All
Aspects of the Complicated Relationship” ..............................................450
Williams v. National Football League, 2012 WL 3642839
(10th Cir. 2012) ....................................................................................... 450
&217(176
Question ...................................................................................................454
Designing Your Own Dispute Resolution System...................................454
Marino v. Writers Guild of America, East, Inc., 992 F.2d 1480
(9th Cir. 1993) ......................................................................................... 454
Question ...................................................................................................460
The Limits of Arbitration .........................................................................460
Hagan v. Feld Entertainment, Inc., 365 F.Supp.2d 700
(E.D.Va.2005) ......................................................................................... 461
Questions..................................................................................................468
Reviewing a Labor Arbitration Award Under the FAA ..........................468
Grosso-Jacobson Productions, Inc. v. Directors Guild of
America, Inc., 1990 WL 26294 (S.D.N.Y. 1990) ................................... 469
Questions..................................................................................................474
It’s Over: The Finality of Arbitration ......................................................474
Associated Musicians of Greater New York, Local 802, AFM v.
League of American Theatres and Producers, Inc., 2006 WL
3039995 (S.D.N.Y. 2006) ....................................................................... 474
Question ...................................................................................................482
Chapter 9: Business Strategy—Should Athletes and Entertainers
Waive the Right to Sue? ......................................................................... 482
CHAPTER 10: PREPARING AND PRESENTING AN ARBITRATION CASE ..485
Arbitration ................................................................................................485
Mock Arbitration: The Hearing ...............................................................485
Just Cause: The Seven Key Tests ............................................................496
Contract Interpretation Principles ............................................................498
Grievance Arbitration: Testing for Steroids ............................................503
Grievance Arbitration: Striker Misconduct .............................................512
Grievance Arbitration: Mandatory Overtime...........................................523
Grievance Arbitration: Safe Working Conditions ...................................529
Grievance Arbitration: Injury Pay ...........................................................539
XIX
Preface
Do unions matter today? Certainly, although their influence is declining.
However, in a large array of sports and entertainment industries, unions
are robust. Indeed, they are necessary institutions for regulating labormarket competition in professional sports, major theater productions, and
other talent-driven businesses. There are courses and casebooks on labor
law, sports law, entertainment law, and sports management—but nothing
that specifically examines the intersection of these areas in collective
bargaining in sports and entertainment. This book has been developed to
fill that void.
In a small but tangible way, this book also addresses a crisis in legal
education. As some law schools contemplate a major shift from a threeyear to two-year degree program, Collective Bargaining in Sports and
Entertainment offers “mini-courses” on antitrust, labor law, and dispute
resolution. The topic of the book is nearly ideal for presenting these
substantive areas in equal measures. Federal jurisdiction—another subject
that is part of a three-year curriculum—is also prominently featured here.
Collective Bargaining in Sports and Entertainment serves another
important purpose by offering several mock arbitration cases. Five
simulations are available here—two in professional sports and three in
entertainment. Some involve discipline, while others raise an issue of
contract interpretation. A practical discussion is embedded in the mock
cases, with tips and pointers on presenting a case at arbitration that address
the following questions:
x
x
x
x
x
How do you conduct a direct examination?
What are common objections at an arbitration hearing?
How does a cross examination differ from a direct examination?
What are the effective elements of an opening statement?
How should a closing argument differ from an opening statement?
Students receive concise and concrete answers to these questions to assist
them in preparing their cases. Thus, students have an opportunity for a
capstone experience—one that integrates their doctrinal knowledge and
their introduction to techniques in oral advocacy. (The course can be
offered for two credit hours, with little or no use of the arbitration cases, or
three or more credit hours, with some of or all the arbitration cases.)
YYJ
XXII
35()$&(
Some instructors and students might shy away from this book and course
out of concern for knowing little or nothing about the intricacies of
football, opera, a circus, theater productions, symphonies, script writing,
stage work, and so forth. This was a personal concern as I started to
develop the course and casebook. I soon realized that when judges hear
critical disputes from these diverse entertainment venues, they may have
little or no personal understanding of the work of these exceptionally
talented litigants and the unique business conditions of these employers. In
four years of development at the University of Illinois College of Law and
School of Labor and Employment Relations, and two years at the
University of Chicago Law School, several hundred students have
embraced this casebook and mock cases. The fact that many had no idea
about the work of choristers, costumers, music technicians, lion handlers,
projectionists, cartoonists, offensive linemen, goalies, relief pitchers, point
guards, news producers, broadcasters, script writers, copy editors, and so
forth did not interfere with their learning experience.
I owe a debt of gratitude to my students, especially to those who offered
concrete suggestions for improving these materials. I am also grateful to
Ann Perry and David Zarfes (University of Chicago Law School) and
Elizabeth Barker (School of Labor and Employment Relations, University
of Illinois at Urbana-Champaign), who made the course possible in its
experimental phases. Carol McGeehan, Richard Mixter, and Steve
Silverstein (Aspen Publishers) were intellectual partners in envisioning
this book and shaping its contours.
Michael H. LeRoy
January, 2014
CHAPTER 1
BEFORE COLLECTIVE BARGAINING:
LEGAL RESTRAINTS ON ATHLETES AND ENTERTAINERS
Major League Baseball as a Monopoly
By the late 1800s, professional baseball was wildly popular. Its early history is
lovingly chronicled in Flood v. Kuhn, 407 U.S. 258 (1970). A great team, the
Cincinnati Red Stockings, won 57 of its 58 games (and tied one) while touring
the nation in 1869. The sport reached a new level of organization—and enduring
success—when the National Association of Professional Baseball Players formed
a league two years later.
Due to its loose structure and inability to enforce rules between member teams,
the league lasted only four years. It gave way to the National League in 1876—a
league that pioneered an enduring business model based on capping the number
of franchises and enforcing strong rules to limit competition among these teams.
The eight teams were the Chicago White Stockings, Hartford Dark Blues, St.
Louis Brown Stockings, Boston Red Caps, Louisville Grays, New York Mutuals,
Philadelphia Athletics, and Cincinnati Reds.
Much of the league’s success owed to an ingenious type of agreement, known as
a Uniform Player Contract (sometimes called UPC). These were form contracts,
with lines here and there for a player’s name, a team, and amount of pay. The
contract established the authority of the team over every aspect of the player’s
conduct and life during a season. It also contained a “reserve clause.” This
allowed teams to employ their best players indefinitely. The purpose of the
clause was to cultivate and retain a loyal fan base. Thus, as the teams competed
against each other, they designated fourteen players to be “reserved” in personal
service contracts.
Where did baseball teams get the idea to exclusively reserve their most talented
players? By one published account, the idea germinated with A. H. Soden,
president of the Boston baseball club in 1876. He borrowed the idea from
theatrical contracts for star performers—for example, the much-publicized case
of Johanna Wagner, a young opera star who was under an exclusive contract to
perform for one theater and “jumped” to a competing venue by signing a more
2
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
lucrative contract.1 In a highly influential ruling, Lumley v. Wagner, the virtuoso
was enjoined from performing for the second theater. Closer to Boston—and
much nearer to baseball owners—a New York state court enjoined a star actress
from skipping out of her long-term contract to perform for another company.2
The Uniform Player Contract in baseball allowed teams, at the end of a season, to
exercise their option to reserve each player’s services for a predetermined salary.
In theory, this business strategy stifled competition for talented players because
they could not establish their market value by making themselves available to
other teams. Teams had a monopoly on their best talent. And by spreading this
talent relatively evenly among themselves, they made their sport marketable by
ensuring competitive exhibitions of baseball. The Boston Red Caps played their
games, for example, at the South End Grounds—a venue similar to today’s
ballparks, with seating for 6,800 patrons. Other people wanted “in” on
professional baseball but were kept out by the National League. So they formed
their own league—for example, the American Association and the Union
Association in the 1880s. To enliven competition between leagues, some teams
broke the rest and sanctity of the Christian Sabbath by scheduling Sunday
baseball. The leagues had a price war on tickets.
But nothing shook up the National League’s monopoly more than raids on their
star players by rival leagues. These teams were not subject to any disciplinary
provisions in the National League charter. The Pittsburgh franchise was so adept
at raiding talent that they were named the Pirates. The name stuck.
In the following cases, teams sought to enforce the reserve clause that they
exercised to keep star players under their legal control. Courts showed great
reluctance to enforce these contracts. Imagine if these early cases had enduring
precedential value. Possibly baseball players would not have turned to collective
bargaining, an institution that allows them to form a union and negotiate with
teams over the terms and conditions of their employment. Indeed, they did not
engage in collective bargaining with teams until 1968. In other words, they
played (more precisely, they were employed) without a union to represent them
for nearly a century.
The early “reserve clause” cases remain important, however. In spite of the early
successes that players enjoyed in court rulings, the reserve clause persisted. This
is because courts ruled on only one player’s contract at a time, not the totality of
1
Ted Smits, Theatrical Contracts Probably Inspired Baseball’s Much Discussed Reserve
Clause, THE MILWAUKEE JOURNAL (April 5, 1949), at 8.
2
Lea S. VanderVelde, The Engendered Origins of the Lumley Doctrine: Binding Men’s
Consciences and Women’s Fidelity, 101 YALE L.J. 775 (1992).
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
the Uniform Player Contract. Thus, when teams lost these cases in court, they
lost the services of only one player. The form contract remained intact, however.
Today, the reserve clause is alive and well today in baseball and other
professional sports. To counteract the reserve clause and raise other concerns
with team owners, baseball players formed a union (Major League Baseball
Players Association) in 1953, and in 1968 negotiated their first collective
bargaining agreement with Major League Baseball (MLB). Subsequent CBAs
have provided a measure of compromise on the reserve clause for players and
teams. Since the 1970s, player unions have bargained time limits on these
agreements (usually several years) in exchange for free agency during the prime
years of a player’s career.
The early cases in this section also preview a tendency among modern
professional teams to band together to limit labor market competition among
players. In addition, the cases presage the significant role that courts play in
refereeing contract disputes between professional teams and their star performers.
***
The Reserve Clause
Philadelphia Ball Club, Ltd., v. Hallman,
8 Pa.C.C. 57, 1890 WL 2951 (Pa.Com.Pl. 1890)
THAYER, P. J.
This case arises upon a demurrer by the defendants to a bill filed by the plaintiff
company to enjoin the defendant, Hallman, from playing base-ball during the
season of 1890 with any club, organization or persons other than the plaintiff.
Hallman, it is charged in the bill, being under an obligation to give his services as
a base-ball player to the Philadelphia Ball Club, during the season of 1890, has
contracted with the other defendant, Love, to play at base-ball for him during the
season mentioned, with the privilege on the part of Love of assigning the contract
to the “Players’ National League Base-Ball Club of Philadelphia.”
The plaintiffs contend that they are without adequate relief at law, inasmuch as
there is no standard, or measure, by which the damages which they will sustain in
consequence of Hallman’s breach of his engagement with them can be justly and
properly calculated or determined, and that they are therefore entitled to the
remedy which they have sought in equity.
....
3
4
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
Since the case of Lumley v. Wagner, 1 De G. M. & G. 604; 13 Eng. L. & Eq. R.
252, in which Lord Chancellor St. Leonards, one of the greatest of English equity
lawyers, enjoined a public singer from singing at the Italian opera, Covent
Garden, London, because she was under an engagement to sing at the same time
for another manager at another theatre, the modern doctrine has been well
established that such cases, being practically without redress at law, are proper
subjects for the control of chancery, and that the power to interfere by the writ of
injunction in such cases ought to be exercised, in order to prevent a flagrant
breach of good faith for which the suffering party would, otherwise, be wholly
without any adequate means of redress. The argument of Lord St. Leonards that
when the reason why the court should not decree specific performance is, not that
the plaintiff is not entitled to it, but merely the want of means to compel
performance, a court of equity ought not upon that ground to refrain from doing
what is clearly within its power, viz., to forbid a performance which will violate a
contract, with another person, would seem to be unanswerable. The decision in
Lumley v. Wagner has accordingly been generally followed both in England and
in this country.
If this case depended, therefore, alone upon the exercise of the jurisdiction which
is invoked by the plaintiffs; if the plaintiffs were fairly entitled upon the facts set
forth in their bill to the remedy which they seek, we should have no hesitation
whatever in awarding it. But it is necessary to inquire whether, upon the facts
which they have set forth, they are entitled to the writ of injunction which they
pray for.
On the 24th of Oct., 1888, the plaintiffs and the defendant, Hallman, entered into
an elaborate written agreement, consisting of nineteen different articles, by which
Hallman bound himself to play base-ball for the plaintiffs for the period of seven
months from April 1, 1889. The 18th article of the agreement is as follows:
18. It is further understood and agreed that the said party of the first part
shall have the right to ‘reserve’ the said party of the second part for the
season next ensuing the term mentioned in paragraph 2, herein provided,
and the said right and privilege is hereby accorded the said party of the
first part upon the following conditions, which are to be taken and
construed as conditions precedent to the exercise of such extraordinary
right or privilege, viz.:
I. That the said party of the second part shall not be reserved at a salary
less than that mentioned in the twentieth paragraph herein, except by the
consent of the party of the second part.
II. That the said party of the second part, if he be reserved by the said
party of the first part for the next ensuing season, shall be one of not
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
more that fourteen players then under contract, that is, that the right of
reservation shall be limited to that number of players and no more.
On the 21st of Oct., 1889, the plaintiffs served upon the defendant, Hallman, a
written notice, requiring him to sign a written contract for the season of 1890,
“similar in tenor, form and terms” to the contract of Oct. 24, 1888, including of
course article 18 above quoted. This demand Hallman refused to comply with,
and the agreement of 1888 having expired, he made the agreement with Mr. Love
for the season of 1890, the fulfillment of which the plaintiffs now seek to enjoin.
Now a careful reading of the agreement of 1888 discloses the fact that there is
not a word in it binding Hallman to renew that contract for another season, upon
the same terms, or to sign for 1890 another contract which was to be in all
respects the duplicate of that entered into for 1889. All that the plaintiffs exacted,
in the 18th article of the agreement, was that they should have the privilege of
“reserving” him for the next season. But upon what terms? It would have been
easy to have said “upon the terms and conditions mentioned in the agreement of
1888,” but that was not said, nor anything like it, but only that they should have
the right to “reserve” him, and that they should pay him some salary, which was
not fixed, but which should not be less than that previously given. But Hallman
did not covenant to serve them at the same salary which they paid him for 1889,
but only to serve them for some salary to be agreed upon, which should not be
less than that which he received before. The fact is that article 18 does not make
any definite contract whatever between the parties, in 1890, but only reserves the
defendant, subject to a contract thereafter to be made setting out the particular
terms and provisions upon which he should be engaged. The salary was not to be
less than $1,400. Does not that plainly imply that it might be more? In case they
did not agree upon the amount, who was to decide? It is not said anywhere in the
agreement that the terms upon which he is to be “reserved” are to be the same as
those upon which he was employed for 1889.
The failure to designate the terms and conditions of the new engagement under
which he is to be “reserved” renders the contract of reservation wholly uncertain,
and therefore incapable of enforcement, especially by a proceeding which is a
substitute for a decree for specific performance, for specific performance is never
decreed of a contract the terms of which are uncertain: Hanmer v. McEldowney,
46 Pa. 334; Jones v. Pennell, 1 Phila. 539; Fussell v. Rhodes, 2 Phila. 165;
Backus’ Ap., 58 Pa. 186. If they made an incomplete, an uncertain, or an
ineffectual agreement to retain the defendant for another season it is their fault,
for the agreement was evidently drawn up wholly in their interest.
Now if, on the contrary, it be said, as was assumed by the plaintiffs’ counsel on
the argument, that the fair meaning of article 18 is that Hallman should enter into
another contract for the season of 1890, precisely similar in all respects to the
5
6
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
contract executed in 1888, and embracing all its provisions, then it follows of
course that he must thereby bind himself afresh by article 18 to renew the
contract for 1891, and again in 1891 for 1892, and in 1892 for 1893, and so on
from year to year, so long as it may suit the pleasure of the plaintiffs to insist
upon the reservation clause and its annual renewal; for there is no more reason,
and no more warrant, for dropping out article 18 from the new contract if the new
contract is required to be the same, in all respects, as the old, than for dropping
out of it any other of the original nineteen articles. In the meantime article 17 of
the agreement provides that the plaintiffs may discharge the defendant Hallman
from their service at any time and without any cause whatever, upon ten days’
notice to that effect.
So that, if the proper construction of the contract is that which the plaintiffs put
upon it, the necessary result is that while the defendant has sold himself for life to
the plaintiffs for $1,400 per annum, if they choose to hold him for that length of
time, he has no hold upon them for any period longer than ten days. He is
absolutely at their mercy, and may be sent adrift at the beginning or in the middle
of a season, at home or two thousand miles from it, sick or well, at the mere
arbitrary discretion of the plaintiffs, provided only they give him the ten days’
notice. Truly a defendant so situated may well be excused for insisting non haec
in foedera veni [“it was not this I was promised to do”], but if his denial of the
compact be overruled and it is determined that that is the real meaning of the
contract, then it is perfectly apparent that such a contract is so wanting in
mutuality that no court of equity would lend its aid to compel compliance with it.
To be entitled to the aid of a court of equity the agreement must, in the language
of Judge Story, “be certain, fair and just, in all its parts”: 2 Eq. Jurisp., § 769, and
the numerous cases there cited. Courts of equity will not decree performance of
hard and unconscionable bargains, or where the decree would produce injustice.
The result of the whole case is that the plaintiffs have shown no such case in their
bill as would justify us in affording them the extraordinary remedy which they
ask for. The demurrer is sustained, and it is ordered and decreed that the
plaintiffs’ bill be dismissed, the plaintiff to pay the costs.
QUESTION
1. Hallman did not enforce a baseball club’s reserve clause—and yet,
remarkably, over the next century, professional baseball built an empire
on this contract language. The current players association, powerful as it
is, has been unable to abolish completely the reserve clause. Drafted
players can be reserved to minor league contracts for three years. Major
league players do not qualify for free agency until they complete six
years of major league service. Most players with 4-6 years of service are
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
eligible for salary arbitration. This means they are paid market value but
cannot leave their team. A player with 2–3 years of service is also
eligible for salary arbitration if he meets a high standard for playing time
as a major leaguer. Why does free agency for baseball players continue
to be restricted? What would it take for players to achieve free agency
for everyone? Discuss one or more possibilities to make full free agency
a reality.
***
The Uniform Player Contract
The terms of the Uniform Player Contract were highly advantageous to baseball
teams. The following contract is excerpted from a case involving John Ward, a
legendary player who “jumped” his contract and was taken to court. The court
denied the team’s motion for a preliminary injunction. The case is excerpted to
show how teams pervasively controlled their players.
Metropolitan Exhibition Co. v. Ward, 9 N.Y.S. 779 (N.Y.Sup. 1890)
On April 23, 1889, the plaintiff entered into a contract with the defendant, John
M. Ward, a skilled and experienced base ball player, whereby for and in
consideration of the sum of $2,000, it was agreed among other things, that the
defendant should perform such duties pertaining to the exhibition of the game of
base ball as might be required of him by plaintiff, at such times and places as
plaintiff might designate, for the period of seven months commencing on the first
day of April, 1889, and ending on the thirty-first day of October, 1889, inclusive.
The contract also contained a provision giving to plaintiff the right on certain
conditions to “reserve” the defendant for the next ensuing season.FNa1
FNa1
The contract, after stating in the 1st paragraph the names of the
parties thereto, contained the following provisions: 2. That the said party
of the second part for the consideration hereinafter mentioned, and the
faithful performance of the covenants and conditions herein by the said
party of the first part hereby covenants and agrees to perform such duties
pertaining to the exhibition of the game of base ball as may be required
of him by said party of the first part, at such reasonable times and places
as said party of the first part may designate, for the period of seven
months, commencing on the first day of April, A. D. 1889, and ending on
the thirty-first day of October, A. D. 1889, inclusive. 3. Said party of the
second part agrees that he will yield a cheerful obedience to all directions
that may be given to him by any officer, manager, or field captain of said
party of the first part, and will hold himself subject to their orders at all
reasonable times during the entire term of his employment as aforesaid.
7
8
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
4. It is understood and agreed; that the party of the first part shall have
the right from time to time, to establish such reasonable rules for
government of its players at home or abroad as may be necessary and
expedient, and to discipline, suspend (for a definite period), or to expel
them, and that these powers shall not be limited to cases of dishonest
play or open insubordination, but shall include the right to discipline,
suspend (for a definite period), or expel players for carelessness or
indifference, or such other conduct as may be prejudicial to its interests
in any respect. And the party of the second part expressly agrees, at all
reasonable times, during the term of his employment as aforesaid, to
subject himself to such rules and discipline; to play base ball at home and
elsewhere as may be required of him, with the utmost of his skill and
ability; to cheerfully obey all rules and regulations of said party of the
first part, and to absolutely refrain from any excess or dissipation
whatever. 5. It is mutually agreed between the parties hereto, that if the
said party of the second part shall, at any time during the said term of his
employment as aforesaid, without the written consent of said party of the
first part, leave the service, or perform or agree at any future time to
perform services for any other club or organization whatever, or if he
shall be guilty of offering, agreeing, conspiring or attempting to lose any
game of ball, or if he shall be interested in any pool or wager thereon, he
may be expelled by said party of the first part from its club. Or, if said
party of the first part shall so elect, it may institute and prosecute
proceedings in any court of competent jurisdiction, either in law or
equity, to obtain damages for any breach of this contract, or to enforce
the specific performance thereof by the said party of the second part, or
to enjoin the said party of the second part from performing services for
any other person or organization during the period of service herein
contracted for, and nothing herein contained shall be construed to
prevent such remedy in the courts, in case of any breach of this
agreement by said party of the second part, as said party of the first part
may elect to invoke. 6. And it is further mutually agreed between the
parties hereto, that if the said party of the second part shall at any time
during the said term of his employment be guilty of any excessive
indulgence in malt or spirituous liquors, he shall be fined $25 for the first
offence, $50 for the second offence, and $100 for the third offence, and
that any subsequent offence shall be punished only by suspension for the
balance of the season, as aforesaid. And should the said party of the
second part at any time during the said term of his employment be guilty
of gambling in any form, insubordination, or any dishonorable or
disreputable conduct, he may be suspended by the party of the first part
from his said employment, or from the club for such definite period of
time as may be just and reasonable. 7. It is distinctly understood and
agreed by, and between the parties hereto, that should the said party of
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
the first part discipline the said party of the second part, or seek to
enforce any of the penalties herein provided for, the party hereto of the
first part, shall immediately thereafter serve upon the party hereto of the
second part, a notice in writing setting forth the character of the offence
charged, the time and place of its alleged commission, or omission, and
the character of the penalty. But should the said party of the first part fail
or decline to serve the notice above described, within three days after a
demand that such notice be served, then and in that event shall the
penalty or penalties sought to be charged against the said party of the
second part hereto be deemed waived and abandoned. 8. It is understood
and agreed that should the said party of the second part become ill from
natural causes at any time during the time herein prescribed, the said
party of the first part may deduct from the amount then due or to become
due under this contract such proportion of the consideration money
herein prescribed, as the number of days on which he fails to perform the
services required of him under this contract may bear to the number of
days covered by the term herein prescribed, but no deduction from the
consideration herein prescribed shall be made by or allowed to the said
party of the first part as against the said party of the second part, should
the latter, during the term herein prescribed, meet with any accident or
injury while in the service of, or performing any duty for the club, and be
incapacitated thereby from staying; and the said party of the first part
shall have the right and privilege, should the said party of the second part
meet with any accident or injury as last hereinbefore referred to, to
release and discharge the said party of the second part, in which event the
said release must be absolute, unrestricted, unconditional, complete and
without prejudice. 9. It is further understood and agreed that should the
said party of the second part become ill from natural causes, as provided
in the former portion of the last preceding paragraph, he, whenever, and
as often as may be requested so to do by the party of the first part, shall
submit himself to medical examination and treatment by a regular
physician or surgeon in good standing, to be selected by the party of the
first part. Such examination shall be at the expense of the said party of
the second part. 10. It is further expressly understood and agreed that the
said party of the first part shall have the right for any disobedience or
violation of rules, on the part of the said party of the second part, or of
any clause of this contract, or for any insubordination or neglect of duty,
to deduct, withhold and keep from the wages due or to become due to
him, and he shall forfeit from his wages a sum not exceeding fifty dollars
for each offence, except as hereinbefore provided, without suspending or
excusing him from any duty under this contract. 11. It is further
understood and agreed that if the party of the first part shall be, at any
time, in accordance with the Playing Rules of the National League,
required to transmit to the Secretary of the League any fine or fines
9
10
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
inflicted upon said party of the second part by the umpire, in any game of
ball, or if any fine imposed upon the player by any other authority under
League rules, shall be paid by said party of the first part, or withheld by
any other club or association from its share of gate receipts in any game,
the amount of any such fine or fines shall be deducted and withheld by
said party of the first part from the wages due, or to become due, to the
said party of the second part under this contract, in like manner, as such
forfeitures as he may incur under paragraph 10 of the contract are to be
deducted and withheld by said party of the first part from his wages
accrued or to accrue. 12. It is further understood and agreed that said
party of the second part undertakes to and will keep himself informed
fully concerning all Playing Rules and Regulations of the National
League of Professional Base Ball Clubs now published or heretofore
during his term of employment to be published and in force, and will, in
like manner, inform himself concerning all rules and regulations at any
time published, adopted or enforced by said party of the first part during
his term of employment, for the government of its employers and
employees. 13. It is further understood and agreed that in all matters of
discipline and at all times on the ball field, in practice or play, the said
party of the second part shall be subject to the control and direction of
the captain of the “nine” for the time being, and shall cheerfully and
promptly obey his directions and requests, and recognize and respect his
authority in the management and control of the “nine.” And in no event
shall the party of the second part refuse to play in any game of ball,
whether it be a league game or an exhibition game, in which the “nine”
of the club takes part unless excused therefrom by the captain of the nine
or incapacitated by reason of any bodily infirmity, illness, or lack of any
sound physical condition, or suffering from any accident or injury, as
provided in paragraphs 8 and 9 of this contract, but shall, at all times,
during the period covered by this contract, hold himself in readiness to
play, on all week days, whenever the management of the club or the
captain may require, except as aforesaid. 14. It is mutually understood
and agreed that should the said party of the second part violate any of the
material conditions, covenants or agreements on his part in this contract
contained, the said party of the first part shall have the right to terminate
this contract on reasonable notice, and no further payments shall
thereafter be due or payable to said party of the second part, under this
contract, or otherwise, except as stated in paragraph 17 of this agreement.
And if the said party of the second part shall be expelled by said party of
the first part, as herein provided, he shall thereupon forfeit all claim for
wages from and after the time of such expulsion. 15. It is mutually
understood and agreed that should the said party of the first part violate
any of the material conditions, covenants or agreements on its part in this
contract contained, the said party of the second part shall have the right
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
to terminate this contract on reasonable notice, or should the party of the
first part lose its membership, or cease to be a member of the National
League of Professional Base Ball Clubs, either by expulsion, retirement,
disbandonment or otherwise, at any time, then in such event the said
party of the second part shall, if the right of reservation be transferred to
any other club or association, receive from said other club or association,
at least the same amount in salary as herein prescribed. Otherwise said
right of reservation shall forthwith cease and determine. 16. And it is
further understood and agreed that the said party of the first part shall
furnish the said party of the second part with the usual playing uniforms
and necessary outfit for which the said party of the first part shall be
allowed the sum of $30 to be deducted from the consideration herein.
And the said party of the first part shall provide and furnish the said party
of the second part, while “abroad” or travelling with the nine in other
cities, with proper board and lodging, and pay all proper and necessary
traveling expenses. 17. It is further understood and agreed that the party
of the first part expressly reserves the right, at any time prior to the
completion of the period when this contract, by its terms, is to end, by
giving the party of the second part ten days’ notice of its option and
intention so to do, to end and determine all its liabilities and obligations
under this contract, in which event, upon the expiration of said ten days,
all liabilities and obligations undertaken by said party of the first part in
this contract shall at once cease and determine, and said party of the
second part shall thereupon be also freed from his obligations hereunder,
and shall have no claim for wages for any period after said ten days. But
if this contract shall be so ended and determined by said party of the first
part before the end of the term of employment specified in paragraph 2,
without any fault or neglect of duty on the part of the party of the second
part, then the said party of the second part shall be entitled to wages at
the contract rate for said ten days in addition to the sum earned and due,
and unpaid to him at the time of the giving of notice of termination as
aforesaid, whether during said ten days the party of the second part shall
be required to perform services or not, but he may be required to perform
services under this contract during said ten days at the option of said
party of the first part, without affecting the validity or force of such
notice. 18. It is further understood and agreed that the said party of the
first part shall have the right to “reserve” the said party of the second part
for the season next ensuing the term mentioned in paragraph 2, herein
provided, and said right and privilege is hereby accorded the said party
of the first part upon the following conditions, which are to be taken and
construed as conditions precedent to the exercise of such extraordinary
right or privilege, viz.: I. That the said party of the second part shall not
be reserved at a salary less than that mentioned in the 20th paragraph
herein except by consent of the party of the second part. II. That the said
11
12
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
party of the second part, if he be reserved by the said party of the first
part for the next ensuing season, shall be one of not more than fourteen
players then under contract; that is, that the right of reservation be
limited to that number of players and no more. 19. And it is further
expressly understood and agreed that the rights, duties, privileges and
powers of the respective parties hereto are to be governed, limited and
determined by the covenants and conditions herein, and the express
terms of this contract, and not in any wise by the terms and covenants or
conditions of any foreign or other document or instrument to which
either party hereto may be a party, except as provided by the 11th and
12th paragraphs of this contract. 20. And in consideration of the faithful
performance of the conditions and covenants herein by the said party of
the second part, the said party of the first part hereby agrees to pay to
him for his services for said term, the sum of two thousand ($2,000)
payable as follows: (beginning not earlier than April 1, semi-monthly,
from April 15). 21. In witness whereof, etc.
QUESTION
2. Article 3 obligates the player to “cheerful obedience to all directions that
may be given to him by any officer, manager, or field captain,” while
Article 4 subjects him to reasonable rules and regulations. Suppose the
league or team mimicked many other employers of the period by having
a “yellow dog” rule or contract, meaning that an employee would be
fired and blacklisted for joining or supporting a union. Today, this type
of contract expressly violates the Norris-LaGuardia Act (1932), and
implicitly violates the anti-discrimination provisions of the National
Labor Relations Act (1935). Nonetheless, argue that a “no-union” rule
would be a reasonable exercise of managerial authority under Articles 3
and 4 (and maybe others) in the contract that John Ward signed. In
particular, consider union goals and activities that would be potentially
inimical to baseball’s interests.
***
The Sherman Antitrust Act of 1890: Do Uniform Player Contracts
Violate Antitrust Law?
Congress passed the Sherman Antitrust Act in 1890 to combat monopolies used
by large corporate trusts to raise prices and drive off competition. Writing in
1909, Gilbert Holland Montague observed: “For nearly twenty years, it has been
a crime against the United States to make a contract which shall in any degree
restrain trade among the several States. For nearly thirteen years, the
interpretation of this law by the courts has tended to show that two-thirds of the
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
business of the country is carried on in defiance of law, and that a strict
enforcement of the law would prohibit the normal growth of almost every
commercial enterprise.”1
The following case illustrates Montague’s point. Section 1 of the Sherman Act
declared: “Every contract, combination in the form of trust or otherwise, or
conspiracy, in restraint of trade or commerce among the several States, or with
foreign nations, is declared to be illegal.” Section 2 said that any monopolization
would be treated as a felony. Enforcement of the Sherman Act is put in the hands
of the federal government—specifically, the Department of Justice.
Roscoe Steffan summarized the intent of the Sherman Act:
The several ensuing debates leave no question of the intent and purpose
of Senator Sherman’s bill. The country had become alarmed at the great
dangers, real or supposed, which were taken to be inherent in large
combinations, particularly of capital. The fear was not so much that
prices would become higher, by the elimination of price competition, but
the much deeper fear, as Senator Sherman said in introducing his bill,
that men might be deprived of their right “to work, labor, and produce in
any lawful vocation.” Senator Sherman’s bill—though poorly drawn for
the purpose—was in his opinion to save consumer, workman, and small
businessman from the sinister power of the large combination, that is, to
make secure the “industrial liberty of the citizens.” And it was to do this,
moreover, by supplementing “the enforcement of the established rules of
the common and statute law by the courts of the several States.”2
Senator Sherman’s intent was frustrated early on. The definitional predicates for
an illegal monopoly—a contract, a combination in the form of trust, or a
conspiracy in restraint of trade or commerce—caused corporate lawyers to dodge
the law by a simple device: mergers and acquisitions, where two competitors,
instead of conspiring to fix prices, simply became one wholly owned corporation.
This was Montague’s view in 1909:
If contracts, associations and loose combinations restraining trade in the
slightest degree were illegal—the corporation lawyers reasoned—then
contracts, associations and loose combinations should be abandoned for
consolidation under single ownership in “holding corporations.” Gigantic
1
Gilbert Holland Montague, The Defects of the Sherman Anti-Trust Law, 19 YALE L. J.
88 (1909), at 88.
2
Roscoe Steffen, The Labor Activities in Restraint of Trade: The Apex Case, 50 YALE L.
J. 788 (1941), at 88.
13
14
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
“holding corporations,” designed to concentrate in single control power
which previously had been diffused among groups of concerns, were
formed on every hand. Before 1897 there existed scarcely sixty concerns
that were dominant in their respective trades. During the next three years
183 such corporations were organized—seventy-nine in the year 1899
alone—with a total capitalization of over four billions of dollars. These
enormous combinations comprised one-seventh of the manufacturing
industry of the United States, one-twentieth of the total wealth of the
nation, nearly twice the amount of money in circulation in the country,
and more than four times the capitalization of all the manufacturing
consolidations that were organized between 1860 and 1893. In rapid
succession various concerns in the steel business combined, until in 1901
the United States Steel Corporation was organized with a capitalization
of one billion four million dollars, for the purpose of acquiring the stock
of ten of the largest corporations in the world. The consolidation among
the railroads was still more remarkable. Ninety per cent, of the total
railroad mileage fell into the control of fifty-seven railroad systems,
which together represented ninety-two per cent, of the total capital stock
and ninety-eight per cent, of the total capitalization, including stock and
bonds, of all the railroads of the country. 3
A short time after Montague wrote on the state of antitrust law, this topic was
raised in another “contract jumping” case. In a now-familiar pattern, a good
baseball player, named Harold Chase, jumped to a team that offered to pay more
money. The first team sued to enjoin the player from jumping and won the first
round of litigation when a court issued a preliminary injunction (referred to as
“pendent lite”). On appeal, the court below dissolved the injunction, ruling that
the common law principle entitles every person to employ his labor and capital as
he pleases for any lawful purpose. What makes American League Baseball Club
of Chicago v. Chase a notable case is its explicit attention to the monopoly
organization of the baseball industry.
The Chase court, on the one hand, ruled that baseball did not violate the Sherman
Act because management’s control of players through the reserve clause did not
conform to the definition of “commerce” in that statute. But, applying common
law principles of antitrust, the court found that the reserve clause was part of an
oppressive monopoly—that is, an unlawful combination—and for this reason, the
court lifted the injunction against the player. The court also determined that the
reserve clause was unenforceable because it lacked consideration. While Chase
sharply condemned baseball’s use of the reserve clause, its state-law antitrust
3
Montague, op cit., 90-91.
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
ruling was effectively abrogated eight years later by a Supreme Court ruling, in
Federal Base Ball, that baseball was not an activity in interstate commerce.
American League Baseball Club of Chicago v. Chase,
86 Misc. 441 (N.Y. Sup. 1914)
BISSELL, J.
The defendant moves for an order dissolving the temporary injunction, pendente
lite, heretofore and on the 25th day of June, 1914, granted in this action, which
has been brought by the plaintiff to restrain the defendant from playing baseball
for anyone other than the plaintiff during the period of defendant’s contract with
the plaintiff. . . . The defendant, Chase, signed with the plaintiff the ‘player’s
contract,’ as prescribed for the American League of Professional Baseball Clubs
by the national commission; and on the 15th day of June, 1914, gave notice in
writing to the plaintiff of his intention to avoid, cancel and annul the agreement
entered into by him with the plaintiff on the 26th day of March, 1914. Thereafter
and on the 20th day of June, 1914, he entered into a contract to play baseball for
a rival club, to wit, the Buffalo Club of the Federal League.
[On the first issue, the court concluded that the reserve clause lacked
consideration to support it and therefore was unenforceable by injunction. The
court continued as follows:]
The question has also been raised on this motion as to whether the national
agreement (so-called), and the rules and regulations adopted pursuant thereto,
violate the Sherman Act. The novel argument is presented with much earnestness
by the learned counsel for the defendant that the combination formed by the
operation of the national agreement and the rules and regulations of the national
commission thereunder, with which the defendant is connected through his
contract with the plaintiff, is in direct violation of ‘an act to protect trade and
commerce against unlawful restraints and monopolies,’ in force July 2, 1890, and
popularly known as ‘The Sherman Anti-Trust Law.’
It is apparent from the analysis already set forth of the agreement and rules
forming the combination of the baseball business, referred to as ‘organized
baseball,’ that a monopoly of baseball as a business has been ingeniously devised
and created in so far as a monopoly can be created among free men; but I cannot
agree to the proposition that the business of baseball for profit is interstate trade
or commerce, and therefore subject to the provisions of the Sherman Act.
An examination of the cases cited by the defendant confirms rather than changes
my conclusion.
15
16
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
Commerce is defined by the Century Dictionary as an ‘interchange of goods;
merchandise or property of any kind; trade; traffic; used more especially of trade
on a large scale carried on by transportation of merchandise between different
countries, or between different parts of the same country, distinguished as foreign
commerce and internal commerce.’
The defendant urges that under the national agreement baseball players are
bought and sold and dealt in among the several states, and are thus reduced and
commercialized into commodities. A commodity is defined as ‘that which is
useful; anything that is useful or serviceable; particularly an article of
merchandise; anything movable that is a subject of trade or of acquisition.’ We
are not dealing with the bodies of the players as commodities or articles of
merchandise, but with their services as retained or transferred by contract. The
foundation of the national agreement is the game of baseball conducted as a
profitable business and if this game were a commodity or an article of
merchandise and transported from state to state, then, the argument of the
defendant’s counsel might be applicable.
Another question to be determined upon this motion is whether so-called
‘organized baseball,’ operating under the provisions of the national agreement
and the rules and contracts subsidiary thereto, is an illegal combination or
monopoly in contravention of the common law. The affidavits read on the
hearing of this motion show that a combination of forty leagues, major and
minor, has been formed under the terms of the national agreement controlling for
profit the services of 10,000 players of professional baseball, practically all of the
good or skillful players in the country. The analysis of the national agreement
and the rules of the commission, controlling the services of these skilled laborers,
and providing for their purchase, sale, exchange, draft, reduction, discharge and
blacklisting would seem to establish a species of quasi peonage unlawfully
controlling and interfering with the personal freedom of the men employed.
It appears that there is only one league of any importance operating
independently of the national commission and that is the newly organized
Federal League which comprises eight clubs in eight cities. ‘Organized baseball’
is now as complete a monopoly of the baseball business for profit as any
monopoly can be made. It is in contravention of the common law in that it
invades the right to labor as a property right; in that it invades the right to
contract as a property right; and in that it is a combination to restrain and control
the exercise of a profession or calling.
‘The right to labor is a property right, entitled to the same protection as capital,
and it is said that labor is the poor man’s capital.’ 3 Elliott Cont. 13, p. 863, §
2698. ‘The right of a workman to freely use his hands and to use them for just
whom he pleases, is his property, and so in no less degree is a man’s business in
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
which he has invested his capital. The right of each—employer and employee—
is an absolute one, inherent and indefeasible, of which neither can be deprived,
not even by the legislature itself. The protection of it, though as old as the
common law, has been re-guaranteed in our bill of rights. ‘All men are born
equally free and independent, and have certain inherent and indefeasible rights,
among which are those of enjoying and defending life and liberty, of acquiring,
possessing and protecting property and reputation, and of pursuing their own
happiness.’ (Const. Art. 1, Sec. 1).
‘The principle upon which the cases, English and American, proceed, is, that
every man has the right to employ his talents, industry and capital as he pleases,
free from the dictation of others; and if two or more persons combine to coerce
his choice in this behalf, it is a criminal conspiracy. The labor and skill of the
workman, be it of high or low degree, the plant of the manufacturer, the
equipment of the farmer, the investments of commerce are all, in equal sense,
property.’ Purvis v. United Brotherhood of Carpenters & Joiners, 214 Pa. St. 348
(1906); State v. Cadigan, 73 Vt. 245, 251; Erdman v. Mitchell, 207 Pa. 79.
In Black on Constitutional Law (3d ed.), page 574, section 217, the author says:
‘Everything which the law recognizes as property is within the protection of the
Constitution. Thus the liberty of making contracts is property or at least a
property right, and labor is property.’
‘The relation of master and servant is purely voluntary, resting upon the contract
of the parties, and as a general proposition it must ever remain voluntary. The
relation ordinarily cannot rest upon compulsion. Every man has a natural right to
hire his services to any one he pleases, or refrain from such hiring; and so,
likewise, it is the right of everyone to determine whose services he will hire. ‘It is
a part of every man’s civil rights,’ says Mr. Cooley, ‘that he be left at liberty to
refuse business relations with any person whomsoever, whether the refusal rest
upon reason, or as the result of whim, caprice, prejudice or malice. With his
reasons neither the public nor third person have any legal concern.’ 2 Tied. State
& Fed. Control of Persons & Property (1900) pp. 938, 939, § 204. See also
Gillespie v. People, 188 Ill. 176 (1900); State v. Julow, 129 Mo. 163.
In Metropolitan Exhibition Co. v. Ewing, 42 Fed. Repr. 198, 24 Abb. N. C. 419,
the national agreement here under consideration was in the earlier years of its
operation considered and condemned. The court (Wallace, J.) said: ‘Inasmuch as
the parties to the national agreement comprise all, or substantially all, of the
clubs in the country which employ professional players, this national agreement,
by indirection, but practically, affects every professional player, and subordinates
his privilege of engaging as he chooses, to the option of the club by which he is
under reservation. * * * As a coercive condition which places the player
practically, or at least measurably, in a situation where he must contract with the
17
18
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
club that has reserved him, or face the probabilities of losing any engagement for
the ensuing season, it is operative and valuable to the club. * * * The players
were not in a position to act independently and if they refused to consent to the
terms proposed by the clubs, they would have done so at the peril of losing any
engagement.’
If a baseball player like the defendant, who has made baseball playing his
profession and means of earning a livelihood, desires to be employed at the work
for which he is qualified and is entitled to earn his best compensation, he must
submit to dominion over his personal freedom and the control of his services by
sale, transfer or exchange, without his consent, or abandon his vocation and seek
employment at some other kind of labor.
While the services of these baseball players are ostensibly secured by voluntary
contracts a study of the system as hereinabove set forth, and as practiced under
the plan of the national agreement, reveals the involuntary character of the
servitude which is imposed upon players by the strength of the combination
controlling the labor of practically all of the players in the country. This is so
great as to make it necessary for the player either to take the contract prescribed
by the commission or abandon baseball as a profession and seek some other
mode of earning a livelihood.
There is no difference in principle between the system of servitude built up by
the operation of this national agreement, which, as has been shown, provides for
the purchase, sale, barter and exchange of the services of baseball players—
skilled laborers—without their consent, and the system of peonage brought into
the United States from Mexico and thereafter existing for a time within the
territory of New Mexico. The quasi peonage of baseball players under the
operations of this plan and agreement is contrary to the spirit of American
institutions, and is contrary to the spirit of the Constitution of the United States.
The system created by ‘organized baseball’ in recent years presents the question
of the establishment of a scheme by which the personal freedom, the right to
contract for their labor wherever they will, of 10,000 skilled laborers, is placed
under the dominion of a benevolent despotism through the operation of the
monopoly established by the national agreement. This case does not present the
simple question of a laborer who has entered into a fair contract for his personal
services.
The court will not assist in enforcing an agreement which is a part of a general
plan having for its object the maintenance of a monopoly, interference with the
personal liberty of a citizen and the control of his free right to labor wherever and
for whom he pleases; and will not extend its aid to further the purposes and
practices of an unlawful combination, by restraining the defendant from working
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
for any one but the plaintiff. The motion to vacate the preliminary injunction,
pendente lite, is, therefore, granted, with $10 costs to the defendant.
Motion granted, with costs.
QUESTIONS
3. In American League Baseball Club of Chicago, why did the court reject
the “novel” antitrust argument under the Sherman Act? Using one or
more facts from the case, how would you argue that baseball is an
activity in interstate commerce?
4. While American League Baseball Club of Chicago rejected the
defendant’s Sherman Act argument, it used a state common law theory of
antitrust, and also concepts from peonage, to rule for the player. Explain
one or both of these reasons for dissolving the injunction.
***
Trading a Player for Cash: Assignment of Contract or Peonage?
In baseball (and other team sports), a player is sometimes traded for cash.
Occasionally, one team will trade a player to another team simply to have the
other team pick up the remainder of the player’s contract. In both cases, the team
that parts with the player assigns its contractual obligations to the new team. The
bylaws of baseball allow a player’s contract to be reassigned in this manner. The
player is obligated to give the same effort for the new team and has no say in the
matter (unless, in more recent times, he has negotiated restrictions of this nature).
At times, players and teams have wondered aloud if this is another type of
peonage. Their questions have been prompted by the fact that players are treated
like property in trades. For a better grasp of this comparison, consider the facts in
Jamison v. Wimbish, 130 F. 351 (D.C.Ga. 1904):
The petitioner, Henry Jamison, is a respectable colored man, between
fifty-five and sixty years of age. It appeared that he was working for
many of the reputable people of Macon in house cleaning, laying carpets,
and like work. On the night of the 13th day of March of this year, he was
arrested by two policemen of the city, carried immediately to the city
prison, and placed in a cell. The next morning he was brought before the
recorder. He was immediately put upon his trial for certain offenses.
He was immediately convicted, and an aggregate fine imposed of $60,
and an alternative penalty for both cases of seven months at hard labor
19
20
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
on the chain gang. For a poor day laborer like this man to pay a fine of
$60 was wholly impossible. At noon the same day, he was sent to the
chain gang, was at once clothed in the stripes of a convict, heavy iron
manacles connected by a chain were riveted on each leg, and he was
immediately put to work on the public road with other convicts from the
recorder’s and the city court, and from the State Penitentiary, at manual
labor as severe, perhaps, as any of which the human frame is capable.
Often, African Americans were arrested on bogus charges, or for violating race
codes such as walking in public after curfew. They would be convicted and fined.
To pay their fine, a local government would lease out the convict to work under
oppressive conditions; or a private individual would post a bond for their
“freedom,” and lease out the worker for profit and extreme exploitation.
Contracts were drawn for the performance of this labor. A peon’s labor could be
assigned from one person to another until the debt was paid. He had no power to
bargain terms of the agreement.
Compare this arrangement to the following case, Augusta Baseball Association v.
Thomasville Baseball Club, 93 S.E. 208 (1917). A player named P. M. Davenport
was in the middle of this dispute, but he was not a litigant. Following the rules of
the National Association of Professional Baseball Leagues, two teams entered
into a standard agreement to sell Davenport’s contract.
The Thomasville Baseball Club agreed to assign Davenport’s contract to the
Augusta Baseball Club for $200, payable at a later time and secured by a
promissory note for that value. Later, Augusta refused to pay on the note, and
Thomasville sued. Augusta argued that the sales contract was illegal because it
violated federal laws that prohibit peonage and involuntary servitude. If the
contract was illegal, reasoned Augusta, their promissory note was null and void.
In this brief excerpt, the court refused to analogize a sales agreement for a
player’s services to peonage.
Augusta Baseball Association v. Thomasville Baseball Club,
93 S.E. 208 (1917)
It was perfectly legal for the Thomasville club to contract with Davenport to play
baseball as a member of its team. Such a contract is one to perform service as a
ball player. The right of the Thomasville club to assign its contract without the
consent of Davenport is not a question in this case. So far as the record discloses,
Davenport, upon being released from the Thomasville club, rendered acceptable
service to the Augusta club. Although the language of the contract of release,
which is the consideration of the note, may be a little confusing and
contradictory, enough appears from the instrument to establish its true character.
The manifest purpose and intent of the two baseball clubs was that one should
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
release to the other its right of contract to the services of one of its players. If the
ball player consented to this arrangement and contracted with the Augusta ball
club to perform services for it, we do not think the contract of release violative of
the mandate against involuntary servitude in the federal and state Constitutions.
This case is unlike that of Pitts v. Allen, 72 Ga. 69, where it appeared that one of
the parties paid the fine of a negro man convicted of a misdemeanor, and hired
him to the other party to the contract in consideration of the note sued on. The
court held that this transaction was violative of constitutional prohibitions against
imprisonment for debt and against involuntary servitude. The contract between
the parties contemplated the sale of the services of the negro man for the purpose
of collecting a debt which the negro owed the payee of the promissory note.
In the present case the consideration of the contract is not to reimburse the
releasing club for any indebtedness due to it by the ball player. The releasing
club relinquishes its contractual right to the services of a player in its
employment to the other club, in consideration of a certain sum. We do not think
such a transaction illegal as being against public policy or as being a contract of
involuntary servitude.
Judgment affirmed. All the Justices concur.
QUESTION
5. How did the Augusta Baseball Ass’n court differentiate the playerassignment feature of the Uniform Player Contract from peonage?
The Performing Arts as a Monopoly
Employer Monopoly of Artistic Performers Who Have Unique and
Extraordinary Talent
What does a 26 year-old virtuoso in 1851 have in common with today’s movie
and TV stars and great professional athletes? She was an entertainer who had
unique and extraordinary talents. And like baseball players in the late 1800s and
early 1900s, Johanna Wagner was a “contract jumper”—that is, after she was
under a contract to perform exclusively for one employer, she entered into a more
lucrative contract to perform for a direct competitor to her first employer.
The following case is the source of the classic exposition of the Lumley doctrine.
The canon is thus stated: “Wherever this Court has not proper jurisdiction to
enforce specific performance, it operates to bind men’s consciences, as far as
they can be bound, to a true and literal performance of their agreements; and it
will not suffer them to depart from their contracts at their pleasure, leaving the
21
22
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
party with whom they have contracted to the mere chance of any damages which
a jury may give.” To put this in practical terms, the Lord Chancellor St. Leonards
said: “It is true that I have not the means of compelling her to sing, but she has no
cause of complaint if I compel her to abstain from the commission of an act
which she has bound herself not to do, and thus possibly cause her to fulfill her
engagement.” This enduring doctrine has not only contemporary implications for
holding professional athletes and entertainers to their personal service
agreements; but it also relates to issues in collective bargaining such as reserve
clauses and free agency.
Lumley v. Wagner, 42 Eng. Rep. 687 (Ch. 1852)
Before the Lord Chancellor Lord St. Leonards. May 22, 26, 1852.
The bill in this suit was filed on the 22d April 1852, by Benjamin Lumley, the
lessee of Her Majesty’s Theatre, against Johanna Wagner, Albert Wagner, her
father, and Frederick Gye, the lessee of Covent Garden Theatre: it stated that in
November 1851 Joseph Bacher, as the agent of the Defendants Albert Wagner
and Johanna Wagner, came to and concluded at Berlin an agreement in writing in
the French language, bearing date the 9th November 1851, and which agreement,
being translated into English, was as follows:—
“The undersigned Mr. Benjamin Lumley, possessor of Her Majesty’s
Theatre at London, and of the Italian Opera at Paris, of the one part, and
Mademoiselle Johanna Wagner, cantatrice of the Court of His Majesty
the King of Prussia, with the consent of her father, Mr. A. Wagner,
residing at Berlin, of the other part, have concerted and concluded the
following contract:—First, Mademoiselle Johanna Wagner binds herself
to sing three months at the theatre of Mr. Lumley, Her Majesty’s, at
London, to date from the 1st of April 1852 (the time necessary for the
journey comprised therein), and to give the parts following: 1st, Romeo,
Montecchi; 2d, Fides, Prophète; 3d, Valentine, Huguenots; 4th, Anna,
Don Juan; 5th, Alice, Robert le Diable; 6th, an opera chosen by common
accord.—
...
Third, These six parts belong exclusively to Mademoiselle Wagner, and
any other cantatrice shall not presume to sing them during the three
months of her engagement. If Mr. Lumley happens to be prevented by
any cause soever from giving these operas, he is, nevertheless, held to
pay Mademoiselle Johanna Wagner the salary stipulated lower down for
the number of her parts as if she had sung them.
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
Fourth, In the case where Mademoiselle Wagner should be prevented by
reason of illness from singing in the course of a month as often as it has
been stipulated, Mr. Lumley is bound to pay the salary only for the part
sung.
Fifth, Mademoiselle Johanna Wagner binds herself to sing twice a week
during the run of the three months; however, if she herself was hindered
from singing twice in any week whatever, she will have the right to give
at a later period the omitted representation.
Sixth, If Mademoiselle Wagner, fulfilling the wishes of the direction,
consent to sing more than twice a week in the course of three months,
this last will give to Mademoiselle Wagner £50 sterling for each
representation extra.
Seventh, Mr. Lumley engages to pay Mademoiselle Wagner a salary of
£400 sterling per month, and payment will take place in such manner that
she will receive £100 sterling each week.
Eighth, Mr. Lumley will pay, by letters of exchange, to Mademoiselle
Wagner at Berlin, the 15th of March 1852, the sum of £300 sterling, a
sum which will be deducted from her engagement in his retaining £100
each month.
Ninth, In all cases except that where a verified illness would place upon
her a hindrance, if Mademoiselle Wagner shall not arrive in London
eight days after that from whence dates her engagement, Mr. Lumley
will have the right to regard the non-appearance as a rupture of the
contract, and will be able to demand an indemnification.
. . . . Albert Wagner Berlin, the 9th November 1851.
The bill then stated that in November 1851 Joseph Bacher met the Plaintiff in
Paris, when the Plaintiff objected to the agreement as not containing an usual and
necessary clause, preventing the Defendant Johanna Wagner from exercising her
professional abilities in England without the consent of the Plaintiff, whereupon
Joseph Bacher, as the agent of the Defendants Johanna Wagner and Albert
Wagner, and being fully authorized by them for the purpose, added an article in
writing in the French language to the agreement, and which, being translated into
English, was as follows:—
“Mademoiselle Wagner engages herself not to use her talents at any
other theatre, nor in any concert or reunion, public or private, without the
23
24
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
written authorization of Mr. Lumley. Dr. Joseph Bacher, For
Mademoiselle Johanna Wagner, and authorized by her.
The bill then stated that J. and A. Wagner subsequently made another
engagement with the Defendant F. Gye, by which it was agreed that the
Defendant J. Wagner should, for a larger sum than that stipulated by the
agreement with the Plaintiff, sing at the Royal Italian Opera, Covent Garden, and
abandon the agreement with the Plaintiff. The bill then stated that the Defendant
F. Gye had full knowledge of the previous agreement with the Plaintiff, and that
the Plaintiff had received a protest from the Defendants J. and A. Wagner,
repudiating the agreement on the allegation that the Plaintiff had failed to fulfill
the pecuniary portion of the agreement.
The bill prayed that the Defendants Johanna Wagner and Albert Wagner might
be restrained from violating or committing any breach of the last article of the
agreement; that the Defendant Johanna Wagner might be restrained from singing
and performing or singing at the Royal Italian Opera, Covent Garden, or at any
other theatre or place without the sanction or permission in writing of the
Plaintiff during the existence of the agreement with the Plaintiff. . . . .
[After reviewing arguments presented to the court, the Lord Chancellor spoke as
follows:]
The question which I have to decide in the present case arises out of a very
simple contract, the effect of which is, that the Defendant Johanna Wagner
should sing at Her Majesty’s Theatre for a certain number of nights, and that she
should not sing elsewhere (for that is the true construction) during that period. As
I understand the points taken by the Defendants’ counsel in support of this appeal
they in effect come to this, namely, that a Court of Equity ought not to grant an
injunction except in cases connected with specific performance, or where the
injunction being to compel a party to forbear from committing an act (and not to
perform an act), that injunction will complete the whole of the agreement
remaining unexecuted.
At an early stage of the argument I adverted to the familiar cases of attorneys’
clerks, and surgeons’ and apothecaries’ apprentices, and the like, in which this
Court has constantly interfered, simply to prevent the violation of negative
covenants; but it was said that in such cases the Court only acted on the principle
that the clerk or apprentice had received all the benefit, and that the prohibition
operated upon a concluded contract, and that, therefore, the injunction fell within
one of the exceptional cases. I do not, however, apprehend that the jurisdiction of
the Court depends upon any such principle: it is obvious that in those cases the
negative covenant does not come into operation until the servitude is ended, and,
therefore, that the injunction cannot be required or applied for before that period.
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
....
The present is a mixed case, consisting not of two correlative acts to be done—
one by the Plaintiff, and the other by the Defendants, which state of facts may
have and in some cases has introduced a very important difference—but of an act
to be done by J. Wagner alone, to which is superadded a negative stipulation on
her part to abstain from the commission of any act which will break in upon her
affirmative covenant; the one being ancillary to, concurrent and operating
together with, the other. The agreement to sing for the Plaintiff during three
months at his theatre, and during that time not to sing for anybody else, is not a
correlative contract, it is in effect one contract; and though beyond all doubt this
Court could not interfere to enforce the specific performance of the whole of this
contract, yet in all sound construction, and according to the true spirit of the
agreement, the engagement to perform for three months at one theatre must
necessarily exclude the right to perform at the same time at another theatre. It
was clearly intended that J. Wagner was to exert her vocal abilities to the utmost
to aid the theatre to which she agreed to attach herself. I am of opinion that if she
had attempted, even in the absence of any negative stipulation, to perform at
another theatre, she would have broken the spirit and true meaning of the contract
as much as she would now do with reference to the contract into which she has
actually entered.
Wherever this Court has not proper jurisdiction to enforce specific performance,
it operates to bind men’s consciences, as far as they can be bound, to a true and
literal performance of their agreements; and it will not suffer them to depart from
their contracts at their pleasure, leaving the party with whom they have
contracted to the mere chance of any damages which a jury may give. The
exercise of this jurisdiction has, I believe, had a wholesome tendency towards the
maintenance of that good faith which exists in this country to a much greater
degree perhaps than in any other; and although the jurisdiction is not to be
extended, yet a Judge would desert his duty who did not act up to what his
predecessors have handed down as the rule for his guidance in the administration
of such an equity.
It was objected that the operation of the injunction in the present case was
mischievous, excluding the Defendant J. Wagner from performing at any other
theatre while this Court had no power to compel her to perform at Her Majesty’s
Theatre. It is true that I have not the means of compelling her to sing, but she has
no cause of complaint if I compel her to abstain from the commission of an act
which she has bound herself not to do, and thus possibly cause her to fulfill her
engagement. The jurisdiction which I now exercise is wholly within the power of
the Court, and being of opinion that it is a proper case for interfering, I shall
leave nothing unsatisfied by the judgment I pronounce. The effect, too, of the
injunction in restraining J. Wagner from singing elsewhere may, in the event of
25
26
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
an action being brought against her by the Plaintiff, prevent any such amount of
vindictive damages being given against her as a jury might probably be inclined
to give if she had carried her talents and exercised them at the rival theatre: the
injunction may also, as I have said, tend to the fulfillment of her engagement;
though, in continuing the injunction, I disclaim doing indirectly what I cannot do
directly. . . .
QUESTION
6. The Lumley court reasoned: “It is true that I have not the means of
compelling her to sing, but she has no cause of complaint if I compel her
to abstain from the commission of an act which she has bound herself not
to do, and thus possibly cause her to fulfill her engagement.” Is this a
sufficient deterrent to protect the first employer’s interests? Why are
damages not part of the order? Also, why is an injunction compelling
specific performance dismissed as a possibility?
The Lumley Doctrine Comes to America
American common law did not readily transplant the Lumley doctrine. Judges
keenly valued liberty. In employment, liberty meant the freedom to leave a job at
any time, for any reason or no reason. (Combined with this principle, the
common law doctrine of employment-at-will said that an employer could
terminate the employment relationship at any time, for any reason.) See Boyer v.
Western Union Tel. Co., 124 F. 246, 248 (C.C. Mo. 1903), stating that “in a free
country like ours every employe, in the absence of contractual relations binding
him to work for his employer a given length of time, has the legal right to quit the
service of his employer without notice, and either with or without cause, at any
time; and in the absence of such contractual relations any employer may legally
discharge his employee, with or without notice, at any time.”
This doctrine did not lead courts to view employment contracts as worthless
promises. Rather than issue an injunction to prevent a worker under contract
from quitting, courts preferred to order a breaching employee to pay damages.
Judges also wanted to see a contract contain an explicit “negative clause
forbidding the services sought to be enjoined.” But as American theater evolved
from its rustic roots, entertainment companies invested in magnificent theaters, as
well as star performers. Under these conditions, some owners and employers
tried to monopolize talent. In the following case, this was accomplished by
signing a star performer to a long-term contract.
But imagine if a theater company signed a star to this type of agreement simply
to keep her from performing for other theaters. Fanny Morant Smith believed this
was the case. After she was signed, she alleged that her employer gave her roles
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
that were beneath her status and abilities. Eventually, she signed on with a rival
theater, and her first employer sued to prevent her from fulfilling her contract.
The following case helped to introduce the Lumley doctrine to American
common law.
Daly v. Smith, 38 N.Y.Super.Ct. 158 (N.Y. 1874)
FREEDMAN, J.
This is a motion on the part of the plaintiff for the continuance, during the
pendency of the action, of an injunction, heretofore granted, preliminarily
restraining the defendant Fanny Morant Smith from performing as an actress
upon the stage of the Union Square theater.
The papers on which the motion is based show, among other things, that on the
11th of February, 1874, a contract, in writing, was entered into between the
plaintiff and Fanny Morant Smith by which the latter covenanted and agreed,
among other things, to act, to the best of her ability, in theatrical performances on
the stage of plaintiff’s theater, during the seasons of 1874, 1875 and 1876, all
such parts and characters as the plaintiff might direct, and that she would not act
at any other theater or place in the city of New York from the day of the date of
said contract until the determination thereof without the written consent of the
plaintiff.
The plaintiff then avers a breach of said contract on her part by accepting an
engagement to play during the ensuing season of the Union Square theater, and
allowing her appearance at that place to be publicly advertised; and after setting
forth various alleged equities which, it is claimed on his part, entitle him to an
injunction and which will be noticed hereafter, he prays that she may be enjoined
from continuing the breach. The sole object of the action, in which her husband
has been joined as a party defendant, is to have her thus restrained by the decree
of this court. . . .
So upon principle can I conceive of no reason why contracts for theatrical
performances should stand upon a different footing than other contracts involving
the exercise of intellectual faculties; why actors and actresses should, by the law
of contracts, be treated as a specially privileged class, or why theatrical
managers, who have to rely upon their contracts with performers of attractive
talents to carry on the business of their theaters, should, with the large capital
necessarily invested in their business, be left completely at the mercy of their
performers.
On the contrary, I am of the opinion that actors and actresses, like all other
persons, should be held to a true and faithful performance of their engagements,
27
28
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
and that whenever the court has not proper jurisdiction to enforce the whole
engagement, it should, like in all other cases, operate to bind their consciences, at
least as far as they can be bound, to a true and faithful performance. As pointed
out by judge J. F. DALY, in Hayes agt. Willis (11 Abb. [ N. S.], 167, the resort to
actions at law for damages for a sudden desertion of the performers in the middle
of their season will, in most cases, fail to afford adequate compensation; and it is
not always that the manager is deprived of his means of carrying on his business,
but that his performers, by carrying their services to other establishments, deprive
him of the fruits of his diligence and enterprise, increase the rivalry against him,
and cause him irreparable injury.
If, therefore, such a manager comes to a court of equity and makes proofs of
these facts and circumstances, showing also that the contract upon which he
relies is a reasonable one, that he is in no wise to blame for its breach by the
defendant, and that he has no adequate remedy at law, upon what principle of
justice or of common sense is he to be told that he must, nevertheless, seek his
remedy at law, and take the chance of proving his damages by legal evidence
before a jury? Of what benefit would even a verdict be to him, in case the
defendant is wholly insolvent?
Is it not an old and firmly settled principle of equity jurisprudence that, just
because there is in such a case no adequate remedy at law, it is the office and the
duty of equity to step in to prevent a failure of justice? In the language of lord
chancellor ST. LEONARDS: A judge would desert his duty who did not act up to
what his predecessors have handed down as the rule for his guidance in the
administration of such an equity.
Suffice it, therefore, to say that upon principle, as well as upon authority, I am
fully persuaded that this court does possess the power and jurisdiction which has
been invoked by the plaintiff. At the same time, I am well aware that there is no
branch of equitable jurisdiction which requires more discretion in the exercise of
it than the one that has been here considered. It remains, therefore, to be seen
whether the plaintiff shall have the benefit of it on the merits of his case.
The plaintiff shows that the defendant Fanny Morant Smith is a distinguished
actress, and a great artistic acquisition, both in name and dramatic service, to any
theater; that therefore for several seasons past he considered it important to
secure her professional services for his theater, and did secure them; that the last
contract for such seasons expired in the month of June last; that before the
expiration of that contract—to wit, on the 11th day of February last—the new
contract was entered into, under which the present controversy has arisen; that
the last named contract covers the seasons of 1874, 1875 and 1876, each season
to commence on or about the first of September of each respective year, and to
terminate on or about the fifteenth of June of the following year, and that by it
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
Fanny Morant Smith, in consideration of a weekly salary of $130, to be paid to
her during the first season, and a like salary of $135, to be paid during the second
and third seasons, payment to be made on Monday, at noon, of each week, bound
herself to act, to the best of her ability, in the performances to be given during the
said seasons, all such parts and characters as the plaintiff might direct, and to
conform to and faithfully obey certain rules of plaintiff’s theater referred to in,
and made part of, said contract, and not to act at any other theater in the city of
New York from the date of said contract until the determination thereof without
the written consent of the plaintiff. The contract also shows that each week is to
include such rehearsals as may be ordered by the plaintiff, without any extra
payment therefor.
The plaintiff further shows that he made such contract, as the defendant Fanny
Morant Smith well understood at the time, because his desire, first, to secure her
dramatic service, secondly, her name, and thirdly, to prevent her acting elsewhere
in New York without his permission and obtaining eclat for a rival theater; that
the latter is always an essential reason with managers and is well understood by
every actor and actress as it was understood by the defendant; that relying on said
contract he announced her in all the daily papers in the city of New York and
widely through the United States as a member of his company for this year’s
season, to commence August twenty-fifth; that a rehearsal for the performance to
be given on that day was ordered for Saturday, the fifteenth of August; that she
was notified to attend the same, but that she refused; that he has substantially
selected and prepared those plays which are to be presented up to the close of the
said season, and in doing so has relied on her services, and has managerially
distributed and prepared many parts for her to perform therein; but that in
violation of her contract and against plaintiff’s express prohibition, she entered
into an engagement to play during the ensuing season at the Union Square
theater, a rival to plaintiff’s theater, and that, with her consent, she is publicly
announced to appear there.
And, finally, the plaintiff shows that it will be impossible to replace her by any
other artist at this date, inasmuch as engagements are made in the spring; that he
will therefore be irreparably damaged and injured in his business, not only by her
departure, but also by her appearance and performance at the rival establishment,
and that a computation of the damage thus resulting to him in loss of receipts and
otherwise will be utterly impossible in an action at law.
None of these allegations has been denied, or attempted to be denied, by the
defendant Fanny Morant Smith, except the allegation that the plaintiff has
selected parts for her, and in respect to that she only avers, generally, that she has
no knowledge and does not believe the fact to be as stated by the plaintiff, which
cannot be held to amount to a denial, especially as she admits to have been
29
30
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
summoned to a rehearsal and to have refused not only to attend, but even to look
at the role assigned to her.
When the contract is scrutinized in its entirety, and with due regard to its nature
and the situation and the prior dealings of the parties, nothing can be found in it
which could be construed into a hardship upon her.
It has been conceded by both sides that the defendant Fanny Morant Smith is not
only a great actress, but that she is also a shrewd lady of great business capacity
and mature age and judgment, and it is therefore safe to assume that, in the light
of her past experience with the plaintiff, she made the best bargain for herself
that could be got under the circumstances. Nor does she claim that the contract is
void on grounds of public policy, as being in restraint of trade. On the contrary,
the learned counsel who represents her admits that such is not the fact.
The plaintiff has, therefore, made a case as strong as Lumley [v.] Wagner in all
respects, and in some respects even stronger, and he is entitled to his injunction,
unless the defendant Fanny Morant Smith establishes an affirmative defense.
As such she alleges, in the first place, that the season of 1873–1874, for which
she was also engaged, as already shown, was summarily and unexpectedly closed
on the 3d of June, 1874, which was about four weeks earlier than the time
specified in the contract for that season; that at such close she had not received a
benefit, to which she was entitled and from which she expected to realize at least
$500; that she subsequently accepted $150 in lieu thereof, but that she was
unable to get any compensation for the said four weeks.
As the contract here referred to is not before me, I am unable to say whether her
claim for that period is well or ill founded. But at most it is only a claim for a
stipulated salary, for which she has not only her action, but an adequate remedy
at law, and having failed in her subsequent contract to reserve to herself the
option not to perform for the plaintiff as long as there should be arrears under the
old contract, she is not in a position to defeat plaintiff’s present equities by such
claim. For being reduced to writing, the contract for the season 1874–1875 must
be taken to be the repository and evidence of the final intention and
understanding of the parties. . . .
For a second defense she alleges, in substance, that under the former contract she
was not permitted to appear upon the stage on a sufficient number of occasions
during the season; that, when permitted, she was, as a rule, and in violation of
promises previously made, cast in parts entirely subordinate to the line of
business to which she was entitled; that at the time of the execution of her last
contract, namely in February last, she was not aware of plaintiff’s real intentions
toward her, and that she signed the contract in ignorance of such intentions, but
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
that since that time she was made aware that it was the policy of the plaintiff, in
inducing her to enter into said contract, not to produce her, but to prevent her
appearance on the stage, and thus to injure her professional standing and
reputation.
These charges she makes in general terms. But as particulars have been omitted,
and as in the absence of particulars, and of facts and circumstances tending to
establish a motive on the part of the plaintiff for such a course, it is impossible to
believe that they have any foundation in fact, it seems safe to assume that they
owe their origin to an afterthought, and that that was produced by a desire on her
part to find some excuse for breaking her engagement.
Upon full consideration of all the questions arising in this case, as presented by
the affidavits of the parties, I am entirely satisfied, not only that the plaintiff has
made out a case which calls strongly for the interposition of the equity powers of
this court, but also that the defendant Fanny Morant Smith has no defense on the
merits.
This brings me to the last question involved. The parties evidently foresaw that
differences might arise between them during the life of the contract, and so
careful were they that they provided even for the contingency which has arisen in
this case. The contract says that if the defendant Fanny Morant Smith should
refuse to fulfill her part, and should attempt to perform at any other theater before
the termination of her agreement with the plaintiff, the plaintiff may, by legal
process or otherwise, restrain her from so performing, on payment to her, during
such restraint, of a sum equal to one-quarter of the salary to be paid to her under
the contract, in lieu of the said, or any other salary under the agreement during
the period covered.
The motion of the plaintiff for the continuance of the injunction during the
pendency of the action is therefore granted with ten dollars [of] costs, but on
condition that the plaintiff pay to the defendant Fanny Morant Smith during such
continuance one-quarter of the salary to which she would be entitled under the
contract in case of performance, such payment to be made to her or her order, as
she may direct, in weekly installments, payable on Monday of each week; and
that he also pay to her or her order forthwith such sum as may have accrued since
the granting of the preliminary injunction contained in the order to show cause
herein.
QUESTION
7. Consider two scenarios. In the first, a theater signs a talented actress to a
long-term contract with the purpose of hoarding so much talent that a
competing theater is at a competitive disadvantage in casting marketable
31
32
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
actors. Under the facts in Daly v. Smith, should a court enjoin the actress
who is “hoarded” from signing a contract with the other theater? In the
second scenario, the theater begins the contract with good intentions, but
the actress says or does something to embitter the theater owner. In
retribution, he idles the actress or assigns her demeaning roles, but
without any reduction in pay. Does Lumley provide a basis to enjoin her
from jumping to another theater? Weigh the pros and cons in each
scenario.
Blacklisting by Theatrical Employers:
The Flip Side of Boycotting by Unions
In their pursuit to monopolize (or, at least limit competition in) labor markets,
unions and employers have turned to the public to communicate negative
messages about each other. Unions, for example, have asked not only their
members, but also the public, to boycott an employer who is perceived to be
unfair. Before the National Labor Relations Act (NLRA) was passed, many
employers retaliated against employees and interfered with union activities by
blacklisting employees. The NLRA makes it unlawful to discriminate against
employees for joining or participating in a union. But consider this historical
account: “leaders in labor union activities frequently find themselves barred for
life from an entire industry through the exchange of blacklists by employers.”4
Most courts, before enactment of the NLRA, found no violation of law where an
employer (a) discharged employee who joined a union, and (b) kept and
circulated a blacklist of their names. E.g., Boyer v. Western Union Tel. Co., 124
Fed. Rep. 246 (C.C. Mo. 1903). In the following case, a famous actor alleged that
his reputation was severely damaged by a message that amounted to a type of
blacklisting by a theater company. Notice, too, that the actor alleged that the
employer harmed his professional association with Actors’ Equity, the union that
represented the plaintiff.
Corrigan v. Macloon, 22 F.2d 520 (9th Cir. 1927)
By writ of error Corrigan asks reversal of a judgment of the District Court
sustaining a general demurrer to his complaint against L. O. and L. A. Macloon,
and dismissing action. The question is: Does the complaint state a cause of
action?
4
Jerome R. Hellerstein, Secondary Boycotts in Labor Disputes, 47 YALE L.J. 341, 355
(1938) (blacklisting is common notwithstanding laws that protect employees from the
practice).
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
Corrigan alleged: That he is an actor of well-known reputation, and in August,
1925, contracted in writing with defendants to act the character of ‘Captain
Flagg’ in a play known as ‘What Price Glory,’ at a salary of $675 per week. That
thereafter he appeared as required by the terms of the contract until February 12,
1926. That defendants, inspired by malice and hatred toward plaintiff, and for the
purpose of injuring him and holding him up to ridicule before his profession and
the public, composed and published the following telegram:
Denver, Colorado, January 30, 1926.
Manager New Crawford Theatre, Topeka, Kansas:
On account of sickness in company am forced to cancel What Price
Glory date February 12. Please forward bills incurred to Louis O.
Macloon, Play House, Los Angeles, California.
Louis O. Macloon.
That defendants owned and managed the Los Angeles Play House and are
engaged in promoting and organizing theatrical companies and in such activities,
producing before the public a play entitled ‘What Price Glory.’ That by the
telegram they intended to publish and advertise that cancellation of the contract
of defendants with the named theater in Topeka was caused by the illness of
plaintiff and that it was so understood, defendants well knowing that plaintiff was
not ill, and that the publication of the telegram would injure him. That defendants
were actuated in sending the telegram by malice and hatred toward plaintiff and a
desire to injure him, and did injure him, to his financial damage.
In a second cause of action plaintiff, after substantially repeating the more
general allegations as to his business, and that of defendants and as to the
contract made with them, all as set out in the first cause of action, alleged that
about February 15, 1926, defendants, intending to expose plaintiff to contempt
and ridicule, and to cause him to be shunned and avoided in his profession as an
actor, and actuated by spite and jealousy toward plaintiff, and for the purpose of
destroying his good name and reputation, and well knowing that plaintiff had
always borne a good reputation and was widely known particularly by the
Actors’ Equity Association, falsely and maliciously and for the purpose of
injuring plaintiff, printed, published, and circulated a letter of false, untrue, and
defamatory words as follows:
33
34
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
The Play House, Los Angeles
Office of Lillian Albertson, Actors’ Equity Association, Hollywood.
Dear Mr. Nowell:
Mrs. Wines has telephoned that you would like a written answer to your
telephone query and complaint on behalf of Mr. Corrigan of the What
Price Glory company now playing in Denver.
When Mr. Woods gave me your message, I at once wired Mr. Ellsler, our
company manager, to report to me by wire if the company were forced to
travel on trains on which there were no day coaches, and had in
consequence been obliged to pay for Pullman space. Here is his reply:
All actors were asked and took space from own choice except Corrigan
who was not asked, as I assumed he would want same. Complaint sent
through deputy no names mentioned, but have reason to feel sure it was
Corrigan.
From this wire I assume the actors traveled in Pullman, because they
wished to, and our manager naturally felt that Corrigan, being the star,
would feel slighted if no reservation were made for him, and that he
would scarcely wish to ride in a day coach while all the other members
rode in the Pullman.
As Mr. Corrigan is a notorious trouble maker, I had given Mr. Ellsler
instructions to do nothing whatever for him beyond the strictest
requirements of his contract, and if Mr. Ellsler had followed instructions,
and volunteered nothing at all for Mr. Corrigan’s comfort, there would
have been no opportunity for complaint; but it is difficult to make a man
as soft and courteous as Ellsler believe an actor could be so contemptible
as to complain of so small a matter. On the other hand, I can imagine
Corrigan’s rage, had he gone to the station and found no reservation
made for him, but that would have been nothing to take up with Equity.
Mr. Macloon has found a way to rid us of any further annoyance from
this man, who has been furious and unruly to a degree ever since we
appealed to Equity to force him to darken his white hair for the part of
Captain Flagg, as he had agreed to do before signing the contract, and
which he refused to do up to the time of Equity’s order, unless we would
pay him a thousand a week. The company will close, and we will give
Mr. Corrigan an opportunity—to find another ‘Terrible’ management.
Yours, Lillian A. Macloon
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
Plaintiff alleged that the Actors’ Equity Association is composed of actors and
employers of actors, and within its membership is a council of 50 leading actors
and employers of actors in the United States; that the business of the association
is to promote contracts and settle differences between producers and employees;
that defendants, intending to injure plaintiff and humiliate him, and expose him
to the ridicule and contempt of the council of 50, uttered and published the letter
sent to Nowell, then a member of the association and in charge thereof at
Hollywood, California; that the intent of the defendants was to have it understood
that plaintiff was guilty of some wrong and was a trouble maker, contemptible
and constantly complaining; that they meant to injure his character and to prevent
his obtaining employment with other theatrical companies and to injure his good
name; and that they wrote, uttered, and published the letter with malice for the
purpose of injuring plaintiff in his profession, and that he was damaged to the
extent of $100,000.
Before GILBERT, HUNT, and RUDKIN, Circuit Judges.
HUNT, Circuit Judge (after stating the facts as above).
We cannot see that the telegram set out in the first cause of action is libelous, or
of a libelous character. The sender of the message was one of the managers of a
corporation which had control and management of the play referred to. In the
exercise of his authority he telegraphed cancellation of the performance of the
play set for a named date. He gave illness—whether of himself or of plaintiff is
not important—as the reason for taking that action. The message made no
disparaging mention of plaintiff, directly or by implication; nor was any language
used which in any way exposed plaintiff to contempt, ridicule, or obloquy, or
tended to injure him in his profession as an actor. If, by the cancellation of the
contract for performance at Topeka, plaintiff was financially damaged, a right of
action may exist, but not in libel. Cal. C.C. Sec. 45.
The letter pleaded in the second cause of action is separable into two parts. After
the introductory paragraph, which merely states that the Equity Association
desired a written answer to its telephone inquiry on behalf of the plaintiff, then
playing in Denver, defendant Lillian Macloon states that she telegraphed for
information. The next paragraph is the answer to that telegram by defendants’
company manager. The fourth paragraph is a statement by the writer of the letter
that she assumes that the actors had traveled in cars of their own choice, and that
the company manager felt that plaintiff, being the star, would have been slighted
if no Pullman reservation had been made for him.
As the defendant writer of the letter and the Equity Association which received it,
had a common interest in any difference that may have arisen between the actor
and his employer, and as there is nothing in the paragraphs referred to evidencing
35
36
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
malice on the part of the writer, that part of the communication was privileged,
and if the letter had ended there, plaintiff would have been properly put out of
court.
But in the second part of the letter the writer voluntarily went beyond the
question asked and introduced matters not germane to the occasion and which
tended to injure plaintiff in his profession as an actor. For an employer of an
actor to write and publish of him that he is a notorious trouble maker,
contemptible, and that a way has been found to rid the employers of further
annoyance from the actor, that he has been furious and unruly to a degree, and
that the employing company of which she is a member will close, and give the
actor an opportunity to find another ‘terrible management,’ is, we think, to give
persons unacquainted with the actor fairly to understand that he is unfavorably
known as one who creates annoyances, is refractory, deserving of scorn, and is of
a turbulent and angry temper. It follows that the irrelevant and foreign matter in
the communication is not privileged.
In our opinion the language used is included in the California statutory definition
of libel (section 45, C.C.C.), which is: ‘Libel is a false and unprivileged
publication by writing, printing, picture, effigy, or other fixed representation to
the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, or
which cause him to be shunned or avoided, or which has a tendency to injure him
in his occupation.’ From libel per se, damage is implied by law.
The judgment is reversed, and the cause is remanded, with directions to proceed
in accordance with the views herein expressed.
Reversed and remanded.
QUESTION
8. Take a different perspective from the court’s analysis. Look for evidence
that the union (called Equity or Actors’ Equity Association) played a
role, formal or informal, in the contractual relationship with the
employer. Specify or infer the union’s role in the plaintiff’s relationship.
From there, build an argument that the employer’s negative
communication was privileged in the context of a labor-management
relationship.
Who Owns a Script? Exclusive Rights and Terms of Employment
Who owns a script? The U.S. Copyright Office explains that published or
unpublished dramatic works can be registered for a copyright. See
http://www.copyright.gov/fls/fl119.html. The medium for entertainment can
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
include choreography, pantomimes, plays, treatments, scripts, and similar
preparations for cinema, radio, and television. Scripts for dramatic works aired
on the radio or TV can be copyrighted. A dramatic work includes spoken text,
plot, and directions for action. What can’t be copyrighted? Generally, this
exclusion applies to concepts that are broad or generic, such as the title of a
program or a general idea or concept for a program.
With this background in mind, consider the importance of a script, musical
composition, or lyrics. The best actors and musicians cannot bring to life a boring
manuscript or dull score. The following case features two titans of the movie
industry, Jesse Lasky and his brother-in-law, Sam Goldfish (later Goldwyn).
Their company, Famous Players–Lasky Corporation, eventually grew into
Paramount Pictures. They produced one of the first great films, The Squaw Man
(1914). On the production side of the business, Lasky and Goldwyn acquired a
dozen other studios. On the distribution side, they purchased hundreds of movie
theaters. This business model mimicked vertically integrated industrial
producers—for example, steel companies who bought coal mines, shipping and
rail lines, and production plants. The goal was to become a monopoly in a
product market, and a monopsony in markets where the form was purchasing the
inputs for making and selling steel. That is what this company accomplished in
the movie industry, selling show tickets at a premium and buying as the services
of writers, actors, and other employees as a monopsony. Their monopoly came to
a crashing thud when the federal government used the Sherman Antitrust Act
successfully before the Supreme Court in United States v. Paramount Pictures,
Inc., 334 U.S. 131 (1948).
In the following case, a screenwriter named Mattie Thomas Thompson submitted
to the Famous Players–Lasky Corporation her adaption of a play for a movie. She
never heard from Lasky but believed that the filmmaker used her photoplay for a
commercial production. The case illustrates the lack of bargaining power—
indeed, the lack of any type of negotiation—for a screenwriter. Only by suing
after the fact did this writer have any hope of receiving compensation from this
budding monopoly.
Thompson v. Famous Players–Lasky Corporation,
3 F.2d 707 (D.C.Ga. 1925)
In Equity. Suit by Mrs. Mattie Thomas Thompson against the Famous Players–
Lasky Corporation and others. On motion by defendants to dismiss bill and
cancel bond given to prevent injunction. Denied.
SIBLEY, District Judge.
37
38
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
The bill was filed in the state court seeking to enjoin the production of a
photoplay to place the films thereof in the hands of a receiver, and for an
accounting of profits, on the ground that the photoplay was pirated from an
uncopyrighted scenario and synopsis written by the petitioner. A partial
injunction was granted ex parte, then a bond substituted without prejudice to any
right of defendant, and the case removed to this court.
A motion to dismiss and to dissolve the bond given has been made chiefly on the
ground of no equity in the bill. The main contention is that a scenario and
synopsis for a photoplay is not a finished literary production, protected by the
common law, and, if so, that the remedy here should be a suit for damages at law,
and not the relief sought. A brief, but satisfactory, treatment of literary property
at common law will be found in 25 Cyc. 1489. On both English, state, and
federal authority it is established that the products of intellectual labor, when
brought to a concrete, finished form, and not dedicated by publication to common
use, are at common law private property, and to be protected as such. This has
been adjudicated, among other things, of dramas and architect’s plans.
Of course, no photoplay scenario was known in olden days. But it requires time
and effort to produce them. They have value to the writers, because they are sold
by them, and to the producers of motion plays, because they buy them. Though
the scenario is not written to be directly presented to the public, the sentences
contained in and suggested by it are put upon the screen, and the remainder
constitutes the stage directions to the screen actors. It is thus closely like a
written drama, in which the action is as important as the words, and which
contains, not only the sentences to be spoken, but directions as to the scenes and
action. In the scenario the words are merely fewer, and the stage directions
preponderant; or, if the scenario be construed a mere plan for a photoplay, it then
has an analogy to the plans and specifications of an architect for a building,
which are his until sold to a client or published to the world.
The bill here discloses that petitioner sent her work by mail to defendants for
acceptance and purchase, and did not hear therefrom until this photoplay was
exhibited, having the same name and plot as hers, and incidents and characters so
closely resembling hers as to make it evidently not a mere coincidence. The bill
sets forth a cause of action, and will not be dismissed for lack thereof.
Injunction and an accounting in equity is a recognized form of relief in such
cases. If on trial it appears that there was a willful and intentional pirating of
petitioner’s work, relief of that character might be appropriate; or if it should
appear that more innocently the work which she sent has been put to the use that
she intended, apparently a more just remedy would be to decree such a payment
to her as she ought to have had, had her work been regularly accepted. Since she
has always intended the publication in this manner of her scenario, no cause
CHAPTER 1: BEFORE COLLECTIVE BARGAINING: LEGAL RESTRAINTS
appears to enjoin it, except to protect her pecuniary rights. She already has a
bond of $10,000 for this purpose.
The answer, which is to be considered on the motion to dissolve this bond, denies
many material allegations of the petition, but admits the production of a
photoplay of the kind complained of, with no explanation of how the scenario
followed was come by, though averring that it was not received from petitioner.
The bond ought to stand until the matter is fully heard. A receivership for the
films is not appropriate. The films do not belong to her, and accomplish no result
to which she can now object.
QUESTION
9. Visit the website of Writers Guild of America, West
(http://www.wga.org/). Look for a link to “Member Benefits.” Click on
options for services that could have protected the plaintiff’s interests in
this case. Explain the negotiation process that would be used today.
39
40
COLLECTIVE BARGAINING IN SPORTS AND ENTERTAINMENT
Chapter 1: Business Strategy—Exploiting Human Capital
Baseball
Entertainment
Young and/or International: In contrast to
the early years, when the reserve clause
allowed teams to keep their most successful
players, teams today pay big money for draft
picks—players who project to be elite
performers but are not yet major leaguers.
Teams are now allocated “slot money” via
the collective bargaining agreement. In
addition, teams bid strongly for foreign
players, often spending tens of millions of
dollars.
With the advent of digital and
Internet-based technologies, how
readily can screenwriters and
actors bypass Hollywood studios
to exploit their talents for
commercial success? Develop a
nontraditional concept for a TVtype show or movie that can be
produced on a low budget and
distributed for profit. In other
words, come up with a plan for
screenwriters and actors to
partner in a way that they are
something other than employees.
Also, assess their risks and
benefits in your concept.
Proven and Mature: There is still a robust
market for free agents who have glossy
performance records, and project to perform
well over the next several years.
Wins Above Replacement (WAR): This is a
highly detailed statistical measure to
determine whether a player adds value above
a baseline of projected wins using “average”
players. It provides a more nuanced measure
of a player’s value to a team—different from
prime measures of individual achievement.
Assume you are interviewing for a general
manager position for a team that finished
with an equal number of wins and losses, and
you are asked to rank these different
approaches to human capital investment.
How would you answer the question?