Bloomberg LawAntitrust law expert Harry First, a professor at NYU Law School, discusses top tennis players suing the sport’s governing bodies for antitrust violations. Constitutional law expert Harold Krent, a professor at the Chicago-Kent College of Law, discusses President Trump firing two Democratic FTC commissioners. June Grasso hosts.
This is Bloomberg Law with June Grosso from Bloomberg Radio.
You know, I think things needed to change. So it's a big day for.
Tennis, and not because of a big tournament, but because of a big lawsuit. Nick Carrios is one of the Name plaintiffs suing tennis's governing bodies, alleging they run a cartel that CAP's earnings, restricts competition from rival tournaments, and forces players to endure grueling schedules. He spoke to Sky News.
I felt like people knew that something was going on behind the scenes for a long time, and I think that, you know, myself, Paspasil Djokovic, we all wanted to do something like this, you know, for the future of tennis. You know. I know the players and myself and many other players aren't happy with the structures and everything that's going on in tennis at.
The moments, and their dissatisfaction is apparent from the one hundred and fifty nine page class action antitrust lawsuit filed by the Name Players and the Professional Tennis Players Association. My guest is anti trust law professor Harry First, a professor at NYU Law School. Harry can you give us the basics of this very long complaint.
Well, the basic idea is sort of similar to other suits that have been brought. Basically players complaining that those owners who are running the sport are getting a lot of the benefits and they're not getting their due, and mainly because the owners are suppressing the market for the player's services in various ways, and one of the ways being trying to exclude competitors that might be willing to hire the talent these players in competing leagues, competing races, competing tournaments, things like that. So there's exclusion, there's price fixing, and the talent, the players, the laborers, if you will, not getting their due.
They accuse the sports governing bodies of running a cartel and say professional tennis players are stuck in a rig game, not on the court, but off it, where players are forced to endure grueling schedules, capped earnings, abusive and invasive investigations and discipline, and have limited control over their own careers and brands. Of course, money is one of the top issues, and you have to make a distinction between the top players who are making millions and millions of dollars and the lower ranked players. The gap with low ranked players is the widest of any major professional sport. In other professional sports, about half the gross revenue goes to players, but tennis shares less than twenty percent. But is this an antitrust issue?
Well, that's a really great question. It's sort of a no, yes.
No, Let me think about that.
Okay, how's that for good wishy washiness. So, really low prices for the things you are buying, or what economists would call the inputs, that in itself I don't think is an any trust violation, just like charging really high prices for what you sell is not really an anti trust violation. You have to have exclusion of competition for there to be an anti trust violation, and an agreement among competitors. So sometimes an agreement among competitors to buy things for a low price that could be an anti trust violation, or an agreement among competitors to sell things at a higher price that could be an anti trust violation technically, because you have competitors who might otherwise either compete the price down if they're sellers, or compete the price up if they're buyers, like buyers of labor, if they were acting independently, you might have different prices, different outcomes, better for the party that's selling their goods or services or better for us consumers who are buying them. So that's in a technical sense no, as an individual seller setting your price, that's okay, it's bad if you do it in collusion, or a more graphic way is to call them a cartel, that's bad. And then there's a slight sort of twist on it. Although it is not bad in itself. If you're a single seller, to pay too much or pay too little, that's often a sign that you do have monopoly power. And so in a lot of cases that we're seeing, the parties are litigating the idea that prices are either too high or in the case of labor, too low, and it will form the basis for a damage's claim.
So Harry, there's a price fixing claim. And according to the lawsuit, a key method used by the tennis governing bodies to keep player pay low is locking them into this clothes system of tournaments. And Larry Ellison, the billionaire, wanted to increase the total prize money at his tournament by one point six million dollars, but the ATP and the WTA wouldn't allow that because they didn't want one event to be paying more prize money than the sports for Marquee Grand Slam events. That does sound like price fixing.
Well, it's sort of a colorful example because it shows what price fixers who agree on what they will pay for labor can affect the price of labor. You know, here's even Larry Ellison can't pay what he thinks is a market price to attract talent to his tournament and compete in other tournaments. So that sounds really bad. The little problem with that is that actually was what year was that?
Does that occur twenty twelve? A while ago?
Oh a while ago? Outside the statute of limitations technically, So it's nice to put in a complaint. Whether this is going to be even admissible a trial as another story, but it is an example. I sort of wish they had more recent examples. But presumably their argument is the tournament operators are actually sort of happy with this. You know, they're not Larry Ellison, They're not. Well, actually, some of the tournaments operators are the equivalent. But you know, they would just as soon pay the players less and rake in the money more. And not find themselves in the position of other wealthy owners of teams or in this case, tournaments that actually have to compete to put together the best. So the fact that we don't see more recent examples doesn't show that there isn't price fixing. But on the other hand, you don't have a nice example like you have in that case of a tournament operator that was trying to compete this way but couldn't.
The players also claim that the governing bodies limit sponsorship and endorsement deals in part by making players give up some name, image and likeness rights and also controlling the number of sponsors allowed to be displayed on a player's shirt, hat, towel, and bag, and it has to be brands that are ATP or WTA approved.
Well, I think that probably needs a little more elaborations to why they do it and what they get out of it. So, you know, it may be that their argument is that sponsorship is more valuable if you can actually see it on the player's uniform rather than it's one of a thousand things that players sport, so to speak, And so they might have a justification that overall it's better, it's a better way to compete. I don't know, so you know, on the face of it, that's a pause will claim the you know how it will fare in litigations and other story The ban on selling nil rights, name, image, and likeness struck me as an unusual, well not unusual, but you know, something that may be problematic from the point of view of the defendants. This is featured in other litigations. Really start out with the NCAA limiting the ability of so called amateur players to sell their nil rights. So I would look for that to play some part in this litigation. But you know, as I hear about the sponsorship, I think if do you remember the movie Talladega Knights, Yes, where they put a sponsor's logo over the windshield Will Ferrell couldn't see as he was driving. You know, that's sort of the outrageous idea of sponsors plastering everything. And they may have a legitimate argument that they do better and get better fan recognition and draw more fans to these if they don't look at this as just a plastered sponsor event. Remember all of this the tennis players come out of actually an amateur tradition. It's only fairly recently that the sports has been monetized this way, so this may play in it as well. But these sorts of justifications have yet to be seen, but they might play a role in the litigation as it.
Develops, coming up a jury trial or a settlement. This is Bloomberg. Some top tennis players are suing the sports governing bodies for allegedly running a cartel that caps prize money, limits off court earnings, and restricts competition from rival tournaments. I've been talking to anti trust law professor Harry First of NYU Law School. They also complained about the eleven month schedule, which is long, and that it damages players' bodies and also prevents them from competing in other events.
Well, I'm not sure this is any trust violation. Sounded more like a labor law complaint to me in a way. You know. I think it goes in there to show that what the public may see as sort of privileged, high class athletes turns out to be a rather grueling job. I mean, they're not coal miners. But there's an aspect to this that the public doesn't see, and I can understand the plaintiffs wanting to get that in front of the judge and eventually in front of a jury if they can. But whether this is actually an anti trust violation.
So what do you think is the strongest antitrust claim in the lawsuit?
Well, I think the strongest claim is the collusion or cartel claim that these are you know, competing parties, various tournaments that have gotten together to divide up markets geographically, to control the sport, to control the mobility of other tournaments, to enter and compete for talents, to control what they have to pay the talent, and you know, to run the sport in their favor. And these are there are a lot of competing tournaments amongst the defendants. You know, usually competitors have a problem when they get together and agree. Now there's a little different maybe for sports where there's an idea of a circuit or a league or you know, that's how you get fan interest. It's not everything's not a one off. So but the basic idea that this is a cartel and a cartel with power in the market because they've excluded other tournaments, very hard to become a sanctioned tournament. So you know, that core of the case I think certainly will survive any effort to dismiss the case outright, I think, but then we'll see what the justifications might be. And of course what the defendants response is, because they you hat to file anything in this litigation, right, so.
They've disputed the claims, say they work to expand compensation for players. I mean, do you see what the defense might be.
I think that you know, their basic defense is the defense of you know, all of these organized sports. You know, we can't play tennis individually. You know, you need competitors, and that means you have to deal with others. So to put together a league of circuit tournaments, you know, to appeal to fans requires some joint effort. And remember, you know, a lot of this money is broadcasting money. People don't have to watch tennis, they watch golf. They always argue that there are lots of substitutes. Not sure that's a great argument, but they'll argue that. But basically they'll argue they are good justifications for what they do, for how they come together, and that gives them certain ability to manage the sport in a way that attracts capital, that serves the fans consumers after all, consumer interests, and also is in the interest of the players except for the two hundred and fifty has claimed players who don't seem to like what's going on or just simply want more money.
Does it make a difference that the top players in the sport are not among the plaintiffs.
Yeah, that's very interesting. I mean, legally it doesn't make a difference. This is a suit. It's styles as a class action, meaning they're bringing on behalf of all tennis players, which they claim are sort of similarly situated, all have similar interests, So in that sense, it really doesn't matter. On the optics of it, it's sort of good and bad. I mean, it does serve to highlight the disparities in this industry, in this sport between the you know, the very top people who are relatively pretty well paid and the majority of people you know who they claim are living out of their cars, So that's good. On the other hand, the public loves to see the names they know behind this, so Michael Jordan's name features prominently, and you know all the stories about the NASCAR litigation, But I don't see that similar sort of marquee name among the plaintiffs in the class. Of course, I don't know tennis, so maybe I'm missing something.
They're seeking a jury trial. Do you think that this will get to trial or you know they'll negotiate, there'll be a settlement.
Well, the most cases settle, Most lawsuits, and certainly most lawsuits in federal courts settle. So if you want to predict in an actuarial sense, you would predict settlement whether this case will settle. I have no real idea, but certainly it might be in the sense that I'm not sure the players want to blow up the system because I'm not sure what would really be in its place. They do benefit from not having every tournament be a one off. I think, you know, if there's some ATP tournament, some sort of circuit that you build up points that you know, everything's not individual. So I'm not sure that they would want to blow this up, but I don't really know. So that might indicate that some sort of settlement would be what the plaintiffs might like. But you know, now, as a class action, well we're a long way from That's how we say, if it is certified by the judge as a class then they have to have a settlement that the judge approves as being in the interest of the class, so it becomes a little more complicated.
And Harry, why do you think they filed in New York City, London and Brussels.
It's sort of smart actually, So generally it's harder to bring private litigation in Europe or the UK. The rules are different, discoveries, different class action status. Bringing on behalf collectively is harder. On the other hand, the law may be a little more favorable to them because competition law in the UK and in Europe tends to recognize more of abuse of dominance, which is sort of a little more in tune with exploitation that they're talking about exploiting the workers, and may be a little more willing to entertain collective dominance, which is a group of competitors exercising dominance together. So it's interesting they filed there as well. Or some of the tournaments in Europe are really quite important and in England it is really an international sport.
Always a pleasure to talk to you, Harry, thanks so much. That's Professor Harry First of NYU Law School. President Donald Trump I hired the two Democratic members of the Federal Trade Commission, risking dismantling the image the one hundred and ten year old agency has cultivated as an independent regulator, and also setting up a likely showdown at the Supreme Court over his ability to fire agency leaders at will. The emails firing Rebecca Kelly Slaughter and Alvaro Bedoya said quote, your continued service on the FTC is inconsistent with my administration's priorities. Accordingly, I am removing you from office. Both have vowed to fight their dismissals in court. Slaughter told Bloomberg that the firings are illegal.
There is no claim of cause, and the statute actually specifically says cause means neglect, malfeasan's or inefficiency, and there was no claim of any of those on the part of miss Commissioner Badoya or myself, just that the President had the right to fire us and was doing it. And to be clear, that statute is over one hundred years old, and only one time in history has a president attempted to remove an FTC commissioner over a policy disagreement. It was ninety years ago.
This is part of Trump's moves to assert control over US regulatory agencies. Since taking office, he's fired other members of independent agencies, including a Democratic commissioner from the National Labor Relations Board, two Democrats on the Equal Employment Opportunity Commission, and a Democratic member of the Privacy and Civil Liberties Oversight Board. Joining me is constitutional law expert Harold Krent, a professor at the Chicago Kent College of Law. The statute says that FTC commissioners can only be removed for cause, meaning neglect, malfeasance, or inefficiency. But the email sent to these two Democratic commissioners just said, your continued service on the FTC is inconsistent with my administration's priorities. So the administration isn't even making an attempt to comply with the statute.
Well, the administration has already been on record that it doesn't believe in the existence of independent agencies and that thinks the president needs to closely control all departments, agencies, and burrows within the executive branch. So it's really no surprise that the president's administration reached out between move the two Democratic commissioners. So the consistent with the world view of the administration that he needs to have his fingers in every pot in terms of the administration of the executive branch.
Ignoring the law for one minute, these commissioners. The Democratic commissioners are in a minority, so they're not going to influence the policy of the FTC. Why bother firing them.
This is not for control of the FTC per se. This is for making a statement as to control of the entire executive branch. Usually commissi are because it's a three to two split for the president's party, are pretty receptive to the President's views. But nonetheless there are sometimes when there's an internal dissension within the commission and therefore the minority members can play a more significant role. But I think here this is not so much reflection the fact that President Trump doesn't trust the FTC. This is reflection of the fact that the administration wants to make statement, wants to make a statement as to the expanse of articles to authority which they believe is devoloved into a single individual on top of the administration, namely the president.
So this involves one hundred year old statue. And the one time the president has attempted to remove a commissioner led to the Supreme Court case Humphrey's Executor in nineteen thirty five. So that's the precedent.
So President Roosevelt Franklin Roosevelt had a dispute with a right wing member of the Federal Trade Commission. He removed him from office. Unfortunately, the individual dies shortly thereafter, but his state brought a suit in order to claim that President Roosevelt lacked the ability to fire the individual without cause, and President Roosevelt did not delineate any specific cause for the ouster of the commissioner. Supreme Court ultimately took up the case and decided, in a surprise at the time, that Congress can, with respect to agencies that they said acted in a kind of quasi judicial or quasi legislative manner, that Congress could preserve those commissioners from the president's at well removal if it's so Desira. It doesn't have to. If Congress thinks that quasi independence is important for those officers performing what they suggested were quasi legislative the quasiti judicial functions, then that would be consistent with the separation of powers in the Constitution now. But those are kind of weird words, quasi legislative and quasi judicial. By that the Court really meant sort of from quasi legislative will make function, which FTC does, as does other agencies and by quasi judicial and meant some kind of sitting enforcement action, and of course the FTC does that, as does many other agencies as well.
The Justice Department said recently that it is going to push the Supreme Court to reverse that precedent. Now, the Supreme Court's conservative majority, as we've discussed before, has with a series of rulings, reigned in regulators independence, and in twenty twenty, Justices Clarence Thomas and Neil Gorsuch said they would have overturned Humphrey's Executor. Do you think Humphrey's Executor would survive at the Supreme Court? At this Supreme Court, it's.
Going to be a close call. And I think that if you look at the t leaves, the TVs are all suggesting that the Court is a firm believer in the unitary executive. And indeed, the distinction between a single member commission, which the Court previously is held cannot be shielded from that will removal, and a multi member commission is very thin. On the other hand, what these tip administration is a private court of is its ability to sort of go very slow and make these odd sort of distinctions and therefore not rush to judgment as to the makeup of the entire administrative state. And so President Trumpson will force the Court in the near future to make this call as to what does it mean to have the independent agencies. And there's a couple other factors involved. Theres not just all independents. It may mean how extensive is the authority issue. They may have to make the judgment. They may have to make a judgment about what kind of functions a agency is undertaking before Congress can decide to shield them from some kind of that will removal. And so you know, for instance, there are some agencies that principally adjudicate, and even recently the Supreme Court has said that Congress has the right to share yield those adjudicating agencies from that will removal. In the Colns case just a couple of years ago, the Court reaffirmed the validity of that decision. Will that go unclear, you know, And again even in the Special Council case where the Court remove the head of the whistle blowers within the government, you know, that doesn't seem like a traditional executive function either. And it's unclear though we're not going to see that case because the case died off. It's unclear whether Congress can shield whistleblowers from the will removal authority of the president. Logically, you would think that they could, because you wouldn't want to have a whistleblower against the president be able to be removed that will. But that's the kind of issues the Court will have to face. Whether anybody in the executive branch must be subject to at will removal or doesn't mean they have to have a certain amount authority, doesn't mean they have to have a certain type of authority. These are issues that the Court has died so far, and so wolves have to see what they come up with.
So then there could be different rules for different agencies, and.
Here has been right. There's been rules for some agencies which are deemed independent because they have these quasi judicial quasi legislative functions, as opposed to others like prosecutors, who must be subject to the atword mu authority. So that's a distinction that the Court has relied upon in the past, and so they may form other distinctions in the upcoming cases. I mean, and one of the things, you know, how broad is the authority? What type of authority? So in my mind. For instance, you can have scientific authority technological authority in the executive branch, but that doesn't really mean that you're a type of officer that the present needs to be at his or her Beck and Call.
Slaughter said on Bloomberg. If they can remove me, they can remove Jerome Powell, the head of the Federal Reserve.
And the Republicans for a long time have used power as an example of an officer who, at least at the time, many did not want to be removed at will. And the theory is that you don't want the money supply and inflation rates to be pegged upon a presence need to win an election. But you know, it's hard to separate monetary policy from foreign policy, or from health policy, or from the FTC itself. So I think that if the court decides that the FTC commissioners can be removed at will, then the next step would be logically that so could the head of the ped The.
FDC is an active litigation against corporate giants such as Amazon, Meta Platforms and three major pharmacy benefit managers. And here's what Padoya has said.
I'm worried that the only thing that's going to matter are which billionaire has the president's ear on this deal and what strings can he pull about it.
It is always possible for the administration to pressure agencies to side with friends. Doesn't happen very often, probably not, but I'm sure it's happened historically. And this will just be a more self evident case where the commissioners know and the Republican commissioners will know that if they go against a Tesla they're going to be in immediate trouble. They probably knew it anyway, but this will make it even more clear. And so that's the dangerous not just that it's the Democratic members of the Commission who might have gone against the business. It's also the Republican members of the Commission, and this will take away some of their security in going about their business without looking over their shoulder at what the political aid of the land might be.
The DC Circuit Court of Appeals appear a split over whether to sideline two independent agency officials as the Trump administration continues to fight for the legal right to fire them. Trump fired Gwyn Wilcox National Labor Relations Board and Kathy Harris at the Merit Systems Protection Board, but federal judges reinstated them. I've been talking to Professor Harold Krant of the Chicago Kent College of Law. It appeared like the court was split, with the Democratic appointee favoring the reinstatement and the Republican appointee favoring the administration's position, and then the third We're not sure where, because she didn't ask very many questions.
At the PC Circuit, there there was a fearing on basically the same issue we've been discussing about whether the president of Humphrey's Executor is still valid. I mean, the court recognized that under Humphrey's Executor that the President acted illegally in firing the members of the Merit System Protection Board and the National Labor Relations Board, because those two are engaged in both a kind of rulemaking power as well as an adjudication power, both more adjudication than the rulemaking, but still some kind of mixture. But at the same time, they also realized that the Supreme Court has been showing disfavor to Humphrey's Executive and showing more unease with the whole concept of independent agencies. So the discussion in the case was mixed because of the fact that there was a tension between the validity of the precedent at which the Court has reaffirmed on numerous occasions, that is Humphrey's Executor, but also the kind of again these tea leaves that the Court was laying out narrowing the Humphrey's Executor over and over again, most recently in the College case, in the Cello Law case involving the Consumer Financial Protection Board.
Yeah, the Trump appoint de judge Justin Walker said, the Court is bound by the Humphreys Executor case, but it's also bound by Supreme Court decisions that took a more skeptical view of restrictions on the president's removal power. But still, Humphrey's Executor is good law right now? How can they rule against it?
Well, And that was part of the discussion. I mean, it's not for the lower courts to finally take the step to overrule a Supreme Court precedent. It's traditionally been up to the Supreme Court. And that's certainly some of the arguments that were made in the DC case. My guess is that at the end of the day, the Court is going to stick with a narrow ground of Humphrey's Executor and allow the Supreme Court to make the change if indeed it's so desirous too, which is more likely not the debate, but not a Footgart conclusion.
The cases of the FTC commissioners will end up at the DC Circuit as well.
Yeah, I mean, we'll see.
You know.
Obviously, the Supreme Court's going have to rule on this relatively soon. There's no factional issues involved, so it can be a kind of easy case to go up to the Court of Appeals and then the Supreme Court, because you know, President Trump's administrations ask the Supreme Court to do this. There's all these cases floating around now, so it just makes sense for the Court to perhaps to take all of them together and to make a decision.
And this is all part of the unitary executive concept, all power in the president.
It absolutely is. I mean, most people think that Congress has at least a range of discretion to decide how best to construct offices, whether offices should be headed by three people, one person, five people, and whether officers need independence or quasi independence from the president in order to effectuate their job. I would think that the head of the whistleblowers would need some kind of independence. I would think that. Again, it's up to the Congress to determine whether complex organizations or agencies like the National Labor Relations Board or the Mayor Assistants Protection Board should deserve a little bit of independence as well as well as the head of the FAT. As we discussed before, many people think you need to isolate and insulate the head of the fat from political pressures. So that's really many people think up to Congress make that judgment. But under the minitary executive belief that all those kinds of measures of separating the executional law from the president is a violation of the Article too, So that's really the grand dispute, And the court has a variety of options of how to accommodate Congress's interest with the executive's interest, but right now it's been leaning towards the executive, so we'll have to see how this plays out. There is one other interesting compromise that the courts might take. The courts might suggest that the president has acted unconstitutionally, but nonetheless declined to order reinstatement, thinking that it would be too much of a imposition on the president to have to work with someone wholice try to fire so they can offer a declaratory judgment and require the government to pay money and say that the president acted illegally, but nonetheless not require the president to take back the officer. And now would be sort of an interesting compromise, but I could see some members of the court leaning to in order to again affirm a position that the president does not have the way to ignore Congress's decision to put restrictions on the removal power of a certain type of agency had and yet the same time be empathetic to the President and show respect by saying, we're not going to force you to rehire these individuals.
We'll see how fast this issue gets to the Supreme Court. Thanks so much, Hal. That's Professor Harold Krant of the Chicago Kent College of Law. And that's it for this edition of The Bloomberg Law Show. Remember you can always get the latest legal news on our Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify, and at www dot Bloomberg dot com, slash podcast Slash Law, and remember to tune into The Bloomberg Law Show every weeknight at ten pm Wall Street Time. I'm June Grosso, and you're listening to Bloomberg, m
