Rejecting the National Football League’s claim that it has across-the-board immunity to antitrust law when its teams join in a commercial activity, the Supreme Court unanimously cleared the way Monday for trial of a lawsuit against the joint marketing of the right to use the teams’ logos and trademarks on consumer goods.  The ruling applied only to that specific joint venture, and did not cover any other collective action that the NFL — or any other pro sports league — might carry out.  The Court also did not decide whether the NFL did in fact act illegally in this specific marketing effort; that will be decided at a trial, with the legality weighed under a “rule of reason” standard.

The ruling was issued on a busy morning at the Court, with the release of six decisions and the grant of review in five new cases.  Among the more noteworthy new grants were a pair of cases from Arizona on the constitutionality of a state program of providing state tax credits to parents to cover tuition when they send their children to private schools, including church-run elementary and secondary schools.  The Court will reach the constitutional issue in that case only if it first decides that state taxpayers had a right to file their challenge in court — a separate question in the cases.

Although major league baseball has been exempt from the antitrust laws since 1922, under a Supreme Court decision that year, the other pro leagues have not shared that immunity, and Monday’s ruling in the NFL case re-opened them to court challenge on at least some of their collective commercial efforts.  The Court, however, sought to ease the anxiety that its ruling might create, saying “Football teams that need to cooperate are not trapped by antitrust law.”  In an opinion by Justice John Paul Stevens, the Court went on to say that pro teams “share an interest in making the entire league successful and profitable,” and in pursuing that they may need to make “a host of collective decisions” that would be beyond antitrust challenge.  The particular activity at issue, though, is “concerted activity” of the kind that is subject to challenge under the Sherman Act’s Section 1, the Court concluded.

The ruling was at least a temporary victory for a modest-sized company in Buffalo Grove, Ill. — American Needle, Inc., a maker of sports hats, uniforms and other apparel.  It formerly was one of the consumer goods makers whose products were allowed to carry NFL trademarks and identifiers.  But, in 2001, it was shut out, when the NFL’s 32 teams decided to solicit bids for an exclusive license to use those marks on headgear, and Reebok International Ltd., won the bidding contest, and got an exclusive license.  Now, American Needle, whose claim was thrown out by the Seventh Circuit Court, now gets a chance to try to prove that the joint marketing was an illegal “restraint of trade.”  The Court ruled in American Needle v. N.F.L. (08-661)

Among the other rulings Monday on the merits in decided cases perhaps the most significant was a decision that allows minority job applicants to pursue a claim that a hiring test discriminated on the basis of race, even if they did not challenge the test when first adopted, so long as they make their claim in court when the test results are actually used to make actual hiring decisions.  Even though a worker missed a filing deadline to challenge when it was first put into effect, the Court made clear in the unanimous decision, the worker is still free to file a challenge when the test is actually used, claiming that that is a new violation of federal civil rights law.  The ruling came in the case of Lewis v. Chicago (08-974), involving minority applicants for firefighting jobs in Chicago.  To take advantage of the new right to sue for a continuing violation, workers must file their complaint with federal officials within 300 days after an actual hiring decision is made, in order to be on time for such a claim.

The Arizona tuition tax credit cases that the Court agreed to review — with the hearing and decision to come during the next Term, which opens Oct. 4 — involves a so-called “school choice” program that has been under constitutional challenge since it was first enacted in 1997.  The Supreme Court has twice issued rulings in the dispute, but so far has not yet made a final decision on its constitutionality.  In this third review, it may not do so again, if it accepts the view of supporters of the program that the state taxpayers who challenged it did not have a right to be in court, so their challenge should not have been allowed to go forward.

That “standing to sue” issue is the only one raised in Arizona Christian School Tuition Organization v. Winn, et al. (09-987).   The Organization argues that the taxpayers cannot show that they were personally harmed by the tuition tax credit, because the money to fund the tuition scholarships is private money, made by those who support a private school alternative.  But the constitutionality of the program is raised as a separate question, in an appeal by Arizona state officials — Garriott v. Winn, et al. (09-991), which the Court also granted.  The cases were consolidated, and will get a one-hour hearing together.  The appeals in the two cases are supported by eight other states; only one of those — Pennsylvania — actually has a school choice program like Arizona’s.

The Supreme Court in 2002 upheld the constitutional of the only private school tuition aid program so far tested before it — a Cleveland, Ohio, voucher scholarship program.  The Arizona program differs in some significant details.  The taxpayers who challenged it contended that, the way the program actually operates in practice, the scholarship aid is open only to parents who opt to send their children to parochial schools.

Here, in summary, are the other issues the Court agreed to hear — all in the next Term:

** Whether state governments and state officials are immune to money damages lawsuits if they violate the religious freedom of prison inmates, protected by the 2000 federal law, the Religious Land Use and Institutionalized Persons Act.  The Court rewrote the question at issue; the U.S. Solicitor General, asked for the government’s views on the issue, urged the Court to hear that specific issue in Sossaman v. Texas (08-1438).

** When a federal regulation that gives auto makers the option of choosing what type of safety seatbelt to install in rear seats of passenger vehicles, does that bar a state court lawsuit claiming a failure to warn about safety hazards of one particular seat configuration.  The Court accepted the Solicitor General’s advice to hear the issue in Williamson v. Mazda Motor of America (08-1314).

** Whether a state inmate seeking access to evidence for DNA testing may pursue that claim in a federal civil rights lawsuits, or must do so only in a federal habeas plea.  That issue — one that the Court had agreed to hear last Term in the case of District Attorney’s Office v. Osborn (08-6) but ultimately did not decide — is raised in Skinner v. Switzer (09-9000).  That case involves a Texas death-row inmate, Henry S. Skinner, sentenced to death in the murders of his live-in girlfriend and her two adult sons.  For ten years, his lawyers have sought access to DNA evidence that they say was never tested by prosecutors.

** Whether it violates federal law for a state to nullify a contract requiring customers to arbitrate disputes one at a time, if that procedure would fully compensate the customer for any loss.  the issue arises in a long-running dispute over the method of settling disputes over the contracts that cellphone users enter when they obtain service from a wireless provider.  The appeal in AT&T Mobility v. Concepcion (09-983) contends that the issue over class-vs.-individual arbitration may affect the validity oif tens of millions of arbitration agreements across the nation.

In addition to agreeing to review those cases, the Court asked the U.S. Solicitor General to provide the federal government’s views on two other disputes.    The first is whether any health care provider or patient may sue to stop a state from cutting Medicaid payments for medical care to the needy, elderly or disabled — an issue that arises in the wake of the deep budget crisis in the state of California, where the legislature ordered a ten percent cut in most Medicaid benefits to try to save money.  The case is Maxwell-Jolly v. Independent Living Center, et al. (09-958).

The second is whether the manufacturers of generic drugs — the cheaper versions of brand-name, or “pioneer” drugs — have a legal duty to change the labels on the medicines to warn customers of a new threat of harmful side-effects.  The issue is a sequel to the Court’s decision last year in Wyeth v. Levine that federal law allows lawsuits against the brand-name manufacturers if they do not warn of such side-effects.  The issue arises in a pair of cases growing out of the same lawsuit: PLIVA Inc. v. Mensing (09-993) and
Actavis Elizabeth v. Mensing (09-1039).

There is no deadline for the Solicitor General to respond to the Court’s request.  Once the responses are filed, the Court will then decide whether to hear the cases, separately.

Among the cases the Court refused on Monday to hear were a test of the constitutional power of states to make state tax laws retroactive and in the process to wipe out pending refund claims under an invalid law (Johnson Controls, et al., v. Miller, 09-981), a plea by the giant software company, Microsoft Corp., to overturn a jury verdict that it contributed to violation of a patent on a method for entering information into a computerized form’s blanks (Microsoft v. Lucent Technologies, 09-1006), and a plea for the Court to clarify when an attorney’s internal working papers are protected from forced disclosure in a federal lawsuit (Textron, Inc., v. U.S., 09-750).  Justice Stephen G. Breyer did not take part in the order in the Johnson Controls case, and Chief Justice John G. Roberts, Jr., was not involved in the Microsoft order.

Posted in American Needle v. NFL, AZ Christian Sch. Tuition Org. v. Winn, Merits Cases