The company, American Needle, seemed to provide the justices with a framework a majority of the justices could accept. The company, which used to produce hats and other merchandise bearing team logos, sued the N.F.L. after the league entered into an exclusive deal with Reebok.
Gregg H. Levy, a lawyer for the league, ran into trouble when Justice Antonin Scalia asked just how far the teams’ ability to act collectively extends.
“So does that mean they can agree to fix the price at which their franchises will be sold, by concerted agreement, because, after all, they are worthless apart from the N.F.L.?” Scalia asked.
Levy said yes.
“Ooh,” Scalia responded, surprised. “I thought I was reducing it to the absurd.”
Glen D. Nager, representing American Needle, refused to concede that the league was a single entity even for purposes directly related to sports competition.
Asked by Justice Anthony M. Kennedy whether an antitrust suit over a rule change giving passers more protection could be dismissed on the theory that the league is a single unit, Nager said no. But he added that the suit would probably be dismissed after it was scrutinized under other antitrust principles.
Several justices suggested that they might rule against the league on the narrow question in the case — whether it was entirely immune from antitrust scrutiny because it is a single entity.
It may well be, these justices indicated, that the league will eventually prevail in the lawsuit by showing that its licensing practices did not harm competition. But that is a different proposition from saying that an inquiry under what antitrust lawyers call the “rule of reason” ought not be undertaken at all.
“If the reasonableness of this decision, that T-shirts promote the game, is so self-evident, then why wouldn’t the rule of reason control completely?” Justice Sonia Sotomayor asked Levy. “Why do we need to even go to the single-entity question?”
A unanimous three-judge panel of the United States Court of Appeals for the Seventh Circuit, in Chicago, ruled for the N.F.L. in 2008 on the ground that the league is a single entity.
Levy, the lawyer for the league, asserted Wednesday that merchandising deals are made only to promote the sport — “to get more people interested in watching the games on television, to get more people interested in buying tickets to the game.”
That met with a skeptical response from Scalia.
“The purpose is to make money,” Scalia said. “I don’t think that they care whether the sale of the helmet or the T-shirt promotes the game. They sell it to make money from the sale.”
When Levy disagreed, Scalia said the issue, being at least debatable, should be resolved at trial.
Justice Stephen G. Breyer also said he thought playing football games and manufacturing hats were different things. One requires two teams, the other but one. “I thought we were talking about T-shirts and helmets,” he said. “I thought it’s the simplest thing in the world. You pick up the phone and say: ‘Hello, Shanghai, do you have a helmet?’ ”
Justice Breyer probed Nager’s position with questions about another sport. (“I know baseball better,” the justice said.)
“You want the Red Sox to compete in selling T-shirts with the Yankees, is that right?” Breyer asked.
Nager said yes.
That sort of competition would be pointless, Breyer responded. “I don’t
know a Red Sox fan who would take a Yankees sweatshirt if you gave it away,”
he said.