- I. Introduction
- II. The Current Structure of the Esports Industry
- III. Players Associations Are Not Unions
- IV. The Legal Framework for Antitrust Law in Professional Sports
- A. The Sherman Act Explained
- B. The Labor Exemption
- C. The Labor Exemption Cannot Apply to Independent Contractor Associations
- V. Antitrust Implications Within Esports Players Associations
- VI. Proposed Solution: Legislative Reform to Properly Recognize Esports Players as Employees
- VII. Conclusion
What used to be considered just “kids playing video games” is now an exponentially growing, soon-to-be-billion-dollar industry. Esports has taken sports entertainment to a new era that goes beyond a mere “hobby.” Just like in “old-fashioned” athletic sports, the esports scene consists of sophisticated professional players that spend hours on end every single day practicing and preparing for the tournaments that they will compete in. This attention and growth has attracted the sponsorship of well-known brands and investors such as the Pittsburgh Steelers, Yahoo co-founder Jerry Yang, and even world-famous recording artist Drake. To put this growth in perspective, esports prize winnings from tournaments have become larger than those of many athletic sports tournaments.
Despite the impressive growth and respectability, esports is lacking in sophistication. Particularly, the way esports organizations and teams treat their esports athletes has been the cause of uproar and investigation. The young esports players are subject to unfair contracts, player mistreatment, and arduous training for hours on end, even to the detriment of their health. This model of mistreatment is not new; it was this very mistreatment of workers in an industry that gave rise to labor law and unionization in the United States. Because of unionization, organizations exist in the better-known, “old-fashioned” sports industry that provide protections and benefits to their athletes. However, the same benefits have not been provided to esports players: “[m]any have already been forced into early retirement due to career-ending injuries from gaming” with very little financial and medical support. Problems with player burnout, player misconduct, arduous training schedules, and lack of personal autonomy have caused individuals in the community to call for the formation of “player unions.” In response, major game developers have created “players associations” that mimic the structure and purpose of unions in order to provide the employment rights that unions typically offer.
Despite game developers’ efforts to give their players employment-like benefits, these “players associations” are not unions that we see in typical “old-fashioned” sports. These esports players associations do not provide protection and worker benefits under the National Labor Relations Act (NLRA). Because esports players associations are not unions and are outside the bounds of the NLRA, they also do not receive the benefit of the labor exemption from antitrust law and, therefore, draw antitrust scrutiny. The antitrust liability with respect to the structure of these esports players associations is unclear because they are the first of their kind. If left unchecked, it is very likely that game developers will continue creating a façade for the public that esports players associations “provide worker rights” to their esports athletes. In reality, these players associations are actually a means to continue to exert strong-arm power over the esports players they employ.
This Comment explores the antitrust implications of game-developer-created players associations for esports athletes that are attempting to create a system akin to unionization and collective bargaining, but are dangerously under fire of antitrust law because they still do not recognize their players as employees or negotiate salaries among players, and thus create a restraint of trade. Part II introduces the esports industry and provides an overview of how the structure of its players associations may violate antitrust law. Part III introduces the current structure of the esports industry, the unfair treatment to its players, and its emerging players associations. Part IV provides the appropriate legal context for this discussion and examines how the structure of esports players associations are incorrectly described as unions. Part V introduces antitrust law, the labor exemption of antitrust law, and concludes that the labor exemption does not apply to esports players associations. Because the labor exemption does not apply to players associations, Part VI applies the Sherman Antitrust Act to the structure of the esports players associations and analyzes the possible ways these players associations, and even its own players, potentially violate antitrust law. Finally, Part VII concludes by presenting legislative reform of the work classification of an esports player as a solution to the antitrust issue.
II. The Current Structure of the Esports Industry
A. The Participants in the Esports Industry
Esports is considered video gaming at a professional level. Unlike the typical structure of the old-fashioned sports industry, there are multiple participants in the esports industry that wear “multiple hats.” First, there are publishers and developers. Publishers are those responsible for marketing and selling video games whereas the developers are responsible for creating the video game itself. It is not uncommon for a video game developer to also be its publisher. Within esports, publishers and developers have the incentive to turn their video game into a competitive esport for the exposure and “cascading revenue” that results. There are also esports Tournament and League Organizers (Tournament Organizers). Similar to leagues in old-fashioned sports, Tournament Organizers run competitions along with the planning and production work that comes with organizing an esports competition. It is not uncommon for an esports publisher to also be its own Tournament Organizer. Finally, there are the players and esports teams. Players and teams are the old-fashioned sports equivalent of athletes and their respective teams; players participate competitively against other teams with hopes to advance within a certain competition. Also, like athletes, players must treat their craft like a job, must practice for hours on end, and must meet contractual obligations. The difference, however, is that players do not have a voice at the negotiating table.
B. Esports Is Dominated by Developers, and Players Need Worker Protections
Despite the fact that players are very similar to athletes, the players have been subject to maltreatment and do not even receive any of the employee benefits that are usually granted to athletes. Players have been subject to extremely one-sided “slavery” contracts, in which the player agrees to make themselves available for any marketing events; grant the Tournament Organizer a royalty-free, exclusive, and irrevocable license for their likeness; and pay their own travel, visa, medical, and lodging costs. Players work themselves to the point of injury, but have no resource or employer to pay for any kind of work-related injury compensation. Players also worry about what they will do after being a professional, because retirement plans are not usually included in these agreements. Players have even faced situations where they do not receive compensation. Because players usually have no resource other than to boycott in protest, the public has caught wind of this treatment and has called for unionization in order for players to receive worker rights.
C. The Current “Solution” Is to Form “Players Associations”
Game developers and publishers have created players associations in order to give players a voice when it comes to salary and working conditions. For example, in 2017, Riot Games announced that it was revamping its North American League Championship Series (NALCS) which included Riot themselves funding and creating the NALCS Players’ Association, providing players “a seat at the table in league decisions,” including “access to resources such as lawyers, financial advisers and agents.” Riot Games is only the beginning. Blizzard Entertainment, game developer of the popular esports game Overwatch, has also moved to form a “union” for Overwatch players. Earlier in 2018, players of the game Counter-Strike became members of the newly formed Counter-Strike Professional Players’ Association (CSPPA). As esports continue to grow and the esports player profession becomes more common, game developers are following suit and creating these players associations in an attempt to provide rights to their athletes. However, the fatal flaw is that these players associations are “dummy unions,” and the athletes that participate in them do not have any “employee rights” after all.
III. Players Associations Are Not Unions
A. A Brief Primer on Unions
In order to analyze why it is difficult for players in esports to unionize, the applicability of the relevant federal statute merits discussion. The NLRA governs the rights of employees to organize and bargain collectively with their employers and also governs the formation of labor unions. The NLRA grants employees the right to collectively bargain, the right to join or form unions, and the right to refrain from engaging in such activities. These rights and protections do not extend to independent contractors. Creating a labor union is already a difficult process, and, in addition to the time commitment, the creation of a legitimate union requires the approval of the National Labor Relations Board (NLRB). An “association” that consists of independent contractors cannot be considered a union by the NLRB.
A mere players association does not have the legal binding effects of a federally recognized union. An association is merely a tax-exempt status under the Internal Revenue Code. None of the necessary requirements in the Internal Revenue Code include the legal requirement that unions impose to employers which is to bargain with employees in good faith about terms of employment. Thus, a players association that is not a recognized union does not legally require employers to collectively bargain with employees.
B. Players Associations Are Not the Solution to Workers’ Rights
While, on the surface, the creation of players associations by game developers looks like a step towards giving players a voice in esports, these associations are not unions that protect employees and, thus, are not legally required to provide workers’ rights to their players. An individual can be classified by one of two types of ways when working for another: as an employee or as an independent contractor, and the decision is determined by federal or state law. Under one federal test, an “employee” is one who “is economically dependent upon the employer for continued employment.” An “independent contractor,” on the other hand, is “dependent on multiple sources of income or employment relationships rather than a single employer” providing a sole stream of income. While the correct legal classification of esports athletes is still up for debate, these athletes are currently treated as and are considered independent contractors, though they are arguably employees. The NLRA explicitly does not extend employee rights to independent contractors. But this does extend to athletes in old-fashioned sports because they are employees. The reason players associations in sports such as basketball and football are recognized unions is because the athletes are classified as employees. Due to this (mis)classification of esports athletes, players associations are not federally recognized unions and as a result players do not have the same rights that employees do under such a union.
Even if we were to briefly assume that esports players associations do classify their athletes as employees, like leagues in basketball and football do, this does not automatically entitle the players associations to union certification. Game developers are the ones creating some of these associations for their athletes; the athletes are not “unionizing” independently. Riot Games stated that it would initially fund the proposed NALCS Players’ Association, but it intends for the player members to take on the financial responsibility and, as a result, turn the association into a “fully independent players’ union.” The NLRA actually prohibits interfering, dominating, or contributing financial or other support for the formation or administration of any labor organization. The practice that game developers are undertaking is very similar to the formation of a “company union,” an organization dominated or influenced by an employer and is therefore not an independent trade union. If game developers recognized their athletes as employees and tried to create a union the same way as they are creating these players associations, it would be considered unlawful interference with a labor association in violation of the NLRA. Perhaps game developers think that they have dodged the labor bullet by not recognizing their athletes as employees, but this lands them in front of the antitrust barrage.
Due to the current independent contractor treatment and classification of esports athletes, these misnamed “player unions” are merely associations that give esports athletes a voice at the negotiating table if the employer feels like granting it to them. The very limited amount of protection is not the only implication that arises from these players associations. If federal law does not recognize these associations as unions, then the game developers that create these associations, and even the negotiating esports athletes themselves are potentially violating antitrust law.
IV. The Legal Framework for Antitrust Law in Professional Sports
A. The Sherman Act Explained
Antitrust is used to describe any agreements or conspiracies that illegally restrain trade and promote anticompetitive behavior. The federal law that governs violations of antitrust is the Sherman Antitrust Act (Sherman Act). The Sherman Act prohibits monopolies and the restraint of trade, which is a contract between a buyer and seller or employee and employer that prevents a party’s opportunity or ability to carry on in a business. Read literally, it seems that the Sherman Act deems any agreement between two parties as illegal. However, businesses cooperate with each other in various ways such as in partnerships, joint ventures, mergers, and other cooperative efforts. Almost every contract essentially binds parties to an agreed course of conduct, thus almost every contract is “a restraint of trade.” This does not mean that every contract is in violation of the Sherman Act; the standard is that only “unreasonable restraints of trade” are prohibited under the Act.
The Sherman Act tackles two types of contractual arrangements: vertical and horizontal. Horizontal arrangements are between competing sellers of the same product, at the same level of distribution, and are essentially between business entities with similar positions in the chain of business. On the other hand, vertical arrangements are between entities who are at different levels in a chain of business, such as a buyer and supplier relationship. Horizontal agreements are treated more harshly than vertical agreements because competitors rarely have any reason to cooperate with each other because their relationship is an adversarial one, whereas it makes sense for buyers and sellers to contract with each other for goods and services. Therefore, within the esports industry, a horizontal agreement would be between two developers or publishers, two players, or two Tournament Organizers. A vertical agreement would be between a player and developer-publisher or a player and Tournament Organizer.
There are two different approaches used to determine whether a defendant’s agreement unreasonably restrains trade: the per se rule and the rule of reason. The per se rule is the theory that there are certain practices that so harshly restrain trade that a court does not need to examine the practice’s impact on the market or any defenses the defendant may raise in order to find a violation of antitrust law. Horizontal restraints are almost always considered per se illegal and fall under the per se analysis in order to determine whether the agreement is prohibited by antitrust laws. On the other hand, the rule of reason requires a court to analyze the practice’s impact on competition. Under an analysis of the rule of reason, a court must first (1) determine whether the practice has a “substantially adverse effect on competition” and (2) whether the “procompetitive virtues of the alleged wrongful [practice] justifies the otherwise anticompetitive effects.” After the Supreme Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., all vertical restraints are subject to the rule of reason. The vertical and horizontal agreements are not limited to the sale of goods in a particular market; these agreements can also apply to the sale of services, specifically, labor.
B. The Labor Exemption
1. Collectively Bargaining Would Violate Antitrust but for the Labor Exception.
When the Sherman Act was enacted in 1890, it only took eighteen years for the courts to apply it to shut down union activity. An example of agreements that restrain trade are collective bargaining agreements. The action of individuals organizing for decent wages or working conditions is classified as horizontal “price-fixing” which is a per se violation of the Sherman Act. Concerted refusals to deal, or group boycotts, are also per se violations of antitrust laws. Group boycotts are concerted actions where colluders exclude a person or group from a market or try to accomplish some other anticompetitive objective, or both. Again, this does not mean that every boycott and protest is in violation of antitrust laws; the standard is that if a group boycott is lacking an “expressive component,” then it is subject to the per se rule of antitrust law.
However, the Clayton Act and the Norris-LaGuardia Act granted immunity to union activity such as strikes from antitrust violations. Congress established a compromise between federal labor and antitrust interests by granting an exemption to unilateral union activity. Labor is exempt from antitrust attack as long as it falls under the Norris-LaGuardia Act’s definition of a labor dispute. Despite the horizontal and vertical agreements at play, controversies over employer-union negotiations concerning wages, hours, and other terms and conditions of employment are exempt from antitrust attack.
2. The Labor Exemption Applied to the Old-Fashioned Sports Industry.
The labor exemption was implemented to give effect to federal labor laws and to allow effective collective bargaining to occur. The exemption shields the restraints on competition imposed through collective bargaining. In order for the exemption to apply, it must apply to both employers and employees. In other words, a party seeking to apply the labor exemption “must be a bona fide labor organization, and not an independent contractor or entrepreneur” association. Courts have successfully extended the labor exemption to professional sports players and professional sports leagues. For example, in Brown v. Pro Football, Inc., professional football players (in a recognized union) brought an antitrust claim against their professional league, and the court was able to extend the exemption because there was a bona fide labor dispute. Unfortunately, the exemption is a labor exemption and does not apply in situations where a group of individuals are not part of a federally recognized union. There is no recognized “labor dispute” under the definition of the Norris-LaGuardia Act, and thus, the labor exemption does not apply in these situations.
C. The Labor Exemption Cannot Apply to Independent Contractor Associations
1. Case Analysis: The Failed Attempts for Independent Contractors to Collectively Bargain.
Because the NLRA excludes independent contractors from its coverage, the labor exemption also does not apply. The theory has been that independent contractors have more autonomy over the manner and means by which they accomplish their job and do not need the protections that the NLRA provides. The NLRA was enacted in 1935, and as Section III.B introduced, there are emerging industries where “independent contractors” do not have as much autonomy as it was assumed almost a century ago. Due to this lack of autonomy, independent contractors have tried to create professional associations in order to have some sort of bargaining power against their employers, but these efforts have been shut down by antitrust law.
For example, in FTC v. Superior Court Trial Lawyers Ass’n, the Supreme Court shut down a collective action of independent criminal attorneys that were conducting a boycott in order to raise their compensation rates. If this were a collective bargaining effort in an organized union, this action would have been protected by the NLRA, and the labor exemption would have applied. Because this wasn’t the case, the FTC was quick to shut down this effort under antitrust law.
This shutdown is also reflected in a stream of cases between independent physicians who engaged in collective bargaining efforts with health care insurers. Again, if the physicians were conducting protected actions under the NLRA then these causes of action would not have succeeded due to the labor exemption.
In Churchill Downs, Inc. v. Thoroughbred Horsemen’s Group, LLC, racetrack operators brought an antitrust action against horsemen’s groups in light of a statutory scheme that established rules for marketing and horse race wagering. Because the defendants constituted groups of individuals, the defendants in the case tried to claim that the labor exemption applied. However, the court refused to extend the labor exemption because the actions that the individual horsemen were taking were not considered collective action. There have even been associations that look, act, and even call themselves a union, but still are denied the protection of the labor exemption in light of an antitrust claim because they do not fall under the protection of the NLRA.
Despite all the efforts for independent contractors to collectively bargain, even when a city passes an ordinance in an attempt to allow independent contractors to legally collectively bargain, those efforts still have ultimately failed due to antitrust scrutiny. In Chamber of Commerce v. City of Seattle, the City of Seattle passed a city ordinance that allowed for-hire vehicle drivers to collectively bargain “with the entities that hire, direct, arrange, or manage their work.” Seattle was attempting to give these “independent contractors” the ability to negotiate wages and working conditions like employees under the NLRA. The Chamber of Commerce of the United States filed suit, claiming that the ordinance constituted horizontal price fixing and was a per se violation of antitrust. Despite the City of Seattle’s attempts to claim that antitrust law did not apply, the district court ultimately held that the “collusion between independent economic actors to set the prices they will accept for their services in the market is a per se antitrust violation.” Regardless of the means, if the end consists of independent contractors conducting collective action, then those attempts will be shut down by antitrust law.
2. Esports Players Associations Are Not Shielded by the Labor Exemption.
The common factor in Superior Court Trial Lawyers Ass’n, the physician cases, Churchill Downs, Indiana Federation of Dentists, and Chamber of Commerce, is that the participants were independent contractors and that their efforts to collectively bargain and attempt to have employee rights granted by the NLRA were considered anticompetitive and in restraint of trade. The esports players associations that are forming are no different. While many claim that the game-developer-founded players associations are “the beginning on unionization,” the players that comprise them are considered independent contractors and the associations are not recognized unions to begin with. While they may be a “group” like in Churchill Downs, their efforts are not NLRA-protected collective action. These players are considered independent economic actors and thus their actions, along with the actions of the associations are not shielded by the labor exemption.
This Comment assumes that no litigation concerning the classification of esports players is pending. If esports players are considered employees rather than contractors, then they would be able to collectively bargain freely, and any antitrust claims would fall under the labor exemption, followed by any possible labor law litigation. Because it has been established that there is no way that the labor exemption will apply, a different analysis is merited in order to find the potential antitrust violations of these esports players associations.
V. Antitrust Implications Within Esports Players Associations
A. Independent Attempts to “Unionize” Are Horizontal Restraints of Trade
Without the labor exemption provided by the Clayton Act and the Norris-LaGuardia Act, if independent contractors attempt to obtain higher prices for their services and refuse services until the price demands are met, then their actions “constitute a classic restraint of trade within the meaning of Section 1 of the Sherman Act.” In order for a plaintiff to prevail in a Section 1 Sherman Act claim, a plaintiff must show that (1) the defendant “participated in an agreement that (2) unreasonably restrained trade in the relevant market.” If a horizontal agreement exists, then all the plaintiff needs to do is prove that a horizonal agreement existed because a horizontal agreement is per se prohibited by the Sherman Act.
The danger of independently created esports players associations is that agreements among the participating players may be a violation of antitrust. The actions that specifically come under fire are collectively bargaining for certain wages and work conditions, and boycotting against the Tournament Organizer or developer that hires these players to compete. This action is not unheard of nor implausible, because teams have already commenced boycotts against Tournament Organizers that have failed to pay tournament winnings. It is reasonable to believe that players will undertake a boycott in the instance that “collective bargaining” for a certain wage or working condition falls through. The danger is that esports players may fall for the illusion that game developers are trying to create and believe that they have a right to start a boycott in order to raise their compensation rates or improve working conditions—something completely legal under the NLRA if done by employees, but not if conducted by independent contractors. By doing so, the outcome will be just the same as the previously discussed cases. If players “collectively bargain” for a certain wage or earnings, then players within a players’ single association are agreeing among themselves to obtain higher prices for their services. While it may seem that these discussions are simple, bona fide salary negotiations, the anticompetitive nature of this agreement is that the “constriction of supply is the essence of ‘price-fixing.’” Because this agreement is between players, it would be considered a horizontal restraint of trade and a per se violation of the Sherman Act. The same result would apply if players participated in a boycott for higher wages or better working conditions. The purpose of these independent players associations like CSPPA is to “assist players with legal advice and in negotiating and signing contracts.” By asking for better pay and working conditions, players and independent players associations expose themselves to possible antitrust suits from developers or Tournament Organizers and even complete shut-downs like in Superior Court Trial Lawyers Ass’n. This ironically frustrates the purpose of independent players associations to begin with. In order to stop players from demanding certain wages or work conditions, all plaintiff-developers or Tournament Organizers would need to do is show that the players are involved in a horizontal agreement against fair trade.
B. Developer-Created Players Associations Create Vertical Restraints of Trade
The probability of a successful antitrust claim for concerted action against players within developer-created players associations such as the NALCS is high. While the founders of the developer-created associations are different than independent players associations, the implications are no different. Developer-created associations like the NALCS negotiate salaries and attempt to give players a voice at the negotiating table. These negotiations include wage and work condition discussions and, as discussed in the independent player-association scenario, these actions violate the Sherman Act. If a player colludes with other players in order to boycott and protest against the game developers or leagues that employ them, these efforts can be shut down because (1) the labor exemption does not apply; (2) their efforts are predominantly commercial rather than expressive; and (3) this is a horizontal agreement that falls under the per se rule of antitrust. Esports players are already walking on thin ice because they have already conducted boycotts in response to poor working agreements with their game developers. Players are merely one bad dealing away from their respective game developers bringing an antitrust claim against them for collectively agreeing to set a minimum price for their services. The most unpleasant part of this arrangement is that players have no choice. The developers who created the game (and own the intellectual property of said game) are the ones who host the tournaments that hire the players and are also the ones who are creating and funding these players associations. Players are placed in a position where they believe they have workers’ rights, but only at the discretion of the same individuals who provided those same rights.
C. Antitrust Recourse for Players Themselves Will Not Likely Prevail
It is possible for players to bring a claim against their own players association for violations of the Sherman Act and anticompetitive behavior. This potential anticompetitive behavior would include the negotiation of contractual agreements between the player and the players association (which consist of salary and exclusivity provisions) and “lockouts.” A court would classify these agreements as vertical agreements, because they are between a player and a players association, and would, thus, look at it under the lens of the rule of reason. A rule of reason analysis permits a “case-by-case evaluation of [the restraint’s] effect on competition.” The prima facie case under the rule of reason requires sufficient evidence that finds, first, that a defendant entered into an agreement. Developer-created associations discuss salaries and exclusivity agreements at the negotiating table, so this already meets the first requirement. Second, the plaintiff must show that the agreement produced adverse, anticompetitive effects within the relevant market. This prong alone is actually in favor of the players. What makes these esports players associations distinct from the associations in Superior Court Trial Lawyers Ass’n and Chamber of Commerce is that the game developers themselves are creating the associations and not the athletes independently. At first glance, this vertical agreement may seem similar to any work-for-hire agreement that does not create an anticompetitive effect on the market, but it is the structure itself that is anticompetitive. What distinguishes game-developer leagues and professional leagues in football and baseball is that anyone can play football and baseball; game developers own their intellectual property of the game they created and can technically exclude players from professionally playing certain “sports” (which are the games that they own). If an esports athlete becomes skilled at a certain game, then the only way the player can make a living off of this skill, given the structure of esports leagues, is to negotiate agreements with the developer-created associations and no one else. A game developer has a monopoly over its own game, which constitutes a relevant market under the rule of reason. Third, it must be shown that the conduct was unreasonable and, thus, illegal; this prong is largely in favor of developer-created players associations. It has been established that exclusivity agreements are actually procompetitive and encouraged. Game developers can offer a procompetitive justification for the creation of these player-funded associations and claim that the conduct of the agreements are not unreasonable or anticompetitive. Game developers can claim that these vertical agreements enable the developers to create a uniform system beneficial to the professional play of not only their game, but esports as a whole, and that they incentivize constant game and tournament improvements. The developer that created the game is best suited to run the leagues, organize tournaments, and hire the adequate players to properly represent its game. As a result, negotiating salaries with potential players is part of the procompetitive scheme and will also likely be considered procompetitive. These wage negotiations are necessary in order to establish a standard going rate for the unique services players provide, and this cannot be established through less restrictive means because the developers themselves are the ones with the intellectual property rights to their own games. Finally, the plaintiff must show that he or she was injured as a result of the agreement. Due to this case-by-case process to find an antitrust violation, it is likely that developers can claim that their agreements with their players are not directly anticompetitive.
Players associations can make these arguments against anticompetitive claims because they are in the realm of the rule of reason. Ironically, the purpose of the dichotomy between the rule of reason and the per se rule is to harshly scrutinize those that have more power in the market. Players associations mock this purpose, because it is the ones who have a monopoly over their own game who can enjoy the rule of reason, and it is the players who do not have a voice that are subject to the harsh per se rule; no arguments can be made about their “anticompetitive behavior.”
VI. Proposed Solution: Legislative Reform to Properly Recognize Esports Players as Employees
The proper next step in solving potential antitrust litigation within players associations is for game developers and Tournament Organizers to recognize players as employees. This can be accomplished through legislative reform of the classification of an organization’s workers. As alluded to before, the swiftest solution to the antitrust issues is if these players associations and players could apply the labor exemption as a defense. Players associations cannot do this because they are not unions, nor can players do this because they are not part of a union. And, the reason why players associations are not federally recognized unions is because the developers and Tournament Organizers that hire them do not consider or classify their players as employees, but rather, as independent contractors. Passing legislation in order to redefine worker classification would naturally trigger employee benefits and protections. The proper worker classification of esports players has been a current topic of debate, all leading to the conclusion that players are likely to be considered employees once taken to court. As a practical matter, potential misclassification of employees is not determined until a suit takes place. Given the age group of players, it is unlikely that they are aware of their rights or even have the means to request legal advice. Worker classification is a question under the prerogative of state and federal law. But many workers, not just players, are incorrectly classified as independent contractors so the current legislation is not pushing organizations enough for them to classify their workers correctly. However, California has recently made strides toward addressing this issue.
At the turn of the year 2020, a California bill went into effect that will redefine the meaning of independent contractor and create legislation to help the state’s “gig economy.” Under this proposed law, workers will be classified as and presumed to be “employees” unless proven that they are otherwise independent contractors. This implies that players will automatically be considered employees of those who hire them. Then the players associations can move forward to unionization, receive NLRA protections, and thus enjoy the benefits of the labor exemption. However, a players association turning into a federally recognized union will probably bring labor litigation against the game developers that created the players associations because the game developers have been unlawfully interfering with the labor organization. The game developers that created and funded these players associations expressed intent to eventually leave the association solely under the independent control of the athletes. Employers do not usually fund associations for their employees because this action is illegal under the NLRA. It is in the game developers’ best interest to recognize their players as employees and correctly unionize and collectively bargain in order to avoid litigation from both labor and antitrust law. Legislative reform is the first step in doing so.
Riot Games and other game developers hold enormous power in the esports industry and may feel that they are currently in a safe position by creating players associations and granting their players the illusion of “workers’ rights.” The players associations create a platform that allows players to have a voice but only to the extent that their employers allow. These players associations are not unions in any sense of the word and provide no workers’ rights or benefits to its member players. Without any labor law recognition, any possible anticompetitive conduct by the players, such as wage and working condition discussions, violates antitrust law. This exposes players to possible litigation for doing what players associations purported to accomplish. Litigation against concerted action between players will be a guaranteed win because these horizontal agreements are per se illegal. Ironically, any litigation against the players associations themselves will likely not prevail because the agreements will be looked at on a case-by-case basis and players associations, especially developer-created associations, have many procompetitive arguments in their favor in order to avoid said antitrust litigation. Players are in a hard place but nothing is being done because the players are young individuals who are not properly represented or aware of their rights. Game developers may not see any antitrust nor labor lawsuits anytime soon. However, the lack of controversy is starting to change, and there is more call to action than ever to grant esports players workers’ rights correctly.
The struggle for unionization in a professional sport is not a matter of first impression. History is doomed to repeat itself unless game developers, either voluntarily or by force through legislative reform, properly classify their players as employees and can take advantage of the “labor exemption” under antitrust law. States should follow California’s example and pass legislation that will classify workers by default as employees and players will automatically receive worker rights and benefits, including the labor exemption. By doing so, players will be heard and protected by federal law without having an antitrust suit looming over their heads. Proper classification will be one of the first major steps in esports sophistication.
Mark Wilson, Texas Is Building a Huge Stadium for a Billion-Dollar Sport: Video Games, Fast Co. (Mar. 19, 2018), https://www.fastcompany.com/90164370/texas-is-building-a-huge-stadium-for-a-billion-dollar-sport-video-games [https://perma.cc/57UW-85CJ].
Luis Tirado, Jr., Breaking Down Why Esports Should Be Taken Seriously, App Trigger, https://apptrigger.com/2017/12/05/breaking-down-why-esports-should-be-taken-seriously/ [https://perma.cc/3D4C-RU3J] (last visited Oct. 12, 2019). See generally Roberta Anding et al., Houston Texans Strength & Conditioning Program, http://tomhayden3.com/data/texans_fitness.pdf [https://perma.cc/ZW5P-R6F6] (last visited Mar. 15, 2020) (delineating the arduous training regimen the Houston Texans go through in order to maintain peak athleticism). The hard work of professional esports players has not been in vain; since 2016, viewership of esports events has grown, with over 400 million viewers as of 2019. The Incredible Growth of eSports [+ eSports Statistics], Influencer Mktg. Hub, https://influencermarketinghub.com/growth-of-esports-in-2019-stats/ [https://perma.cc/7FL7-GMXM] (Nov. 2, 2020).
Adam Fitch, This Year in Esports: Investments, Sponsorships and Deals in 2018, Esports Insider (Dec. 28, 2018), https://esportsinsider.com/2018/12/this-year-in-esports-2018-roundup/ [https://perma.cc/MQ8M-F8XQ].
See Rob Marvin, Esports Prize Money Eclipses Some Traditional Sports, PC Mag. (June 22, 2018), https://www.pcmag.com/news/361978/esports-prize-money-eclipses-some-traditional-sports [https://perma.cc/V84G-BPM5] (“Last year’s Dota 2 International had a whopping prize pool of more than $24 million—a larger haul than either the 2017 FIFA Confederations Cup or the Masters 2017 golf tournament offered.”).
See eSports Market to Surpass US $6000 Million by 2028 on Back of Growing Popularity Among Enthusiasts, GlobeNewswire (Jan. 28, 2019, 8:00 AM), https://www.globenewswire.com/news-release/2019/01/28/1706082/0/en/eSports-Market-to-Surpass-US-6000-Million-by-2028-on-Back-of-Growing-Popularity-Among-Enthusiasts-Fact-MR.html [https://perma.cc/2D5W-KLSN] (“Although eSports challenges the traditional sports in terms of viewership, entertainment and monetization, the eSports market lacks legal governance. An absence of sophisticated approach is gradually quenching the true potential of eSports market against the backdrop of various legal and business issues.”).
Also known as “professional eSports players.” AJ Willingham, What Is eSports? A Look at an Explosive Billion-Dollar Industry, CNN (Aug. 27, 2018, 2:18 PM), https://www.cnn.com/2018/08/27/us/esports-what-is-video-game-professional-league-madden-trnd/index.html [https://perma.cc/H3CR-FP3K].
Kamil Malinowski, CSGO Pro Friberg Explains Why NiP CEO Hate 'Is Unjustified,’ Dexerto (Sept. 5, 2019, 10:16 AM), https://www.dexerto.com/csgo/csgo-pro-friberg-explains-why-nip-ceo-hate-is-unjustified-991413 [https://perma.cc/V2EZ-KWEM] (interviewing Friberg, a veteran competitive esports player of the game Counter-Strike, who claimed that his team, Ninjas in Pyjamas, unjustifiably did not pay Friberg’s prize winnings, used his likeness for brand promotions without his knowledge or consent, and was subject to player mistreatment); see also Joe O’Brien, Fifflaren Accuses Ninjas in Pyjamas of Mistreating Players in Tell-All Interview, Dexerto (Aug. 21, 2019, 8:42 AM), https://www.dexerto.com/csgo/fifflaren-accuses-ninjas-in-pyjamas-of-mistreating-players-in-tell-all-interview-838404 [https://perma.cc/Q67H-S4LL] (telling the story of Fifflaren, another well-known, Counter-Strike competitive player, who claimed that much of the team’s prize money never reached the players, “management made roster decisions without consulting the players, and that players’ contracts” subjected them to unfair, at-will employment agreements).
Aabicus Lee, The Dangers of Esports Contracts: Don’t Sign Before You Read This, Daily Esports (Apr. 21, 2019), https://www.dailyesports.gg/the-dangers-of-esports-contracts-dont-sign-before-you-read-this/ [https://perma.cc/6U95-6XGW]; see also Tyler Erzberger, Mental Health Issues Remain Pervasive Problem in Esports Scene, ESPN (Aug. 20, 2018), https://www.espn.com/esports/story/_/id/24427802/mental-health-issues-esports-remain-silent-very-real-threat-players [https://perma.cc/N8DQ-QJ3C].
Poor pay and working conditions in the 1890s led railroad and mine workers to lay down their tools in protest, but the protests were broken up by the government. 2 Philip S. Foner, History of the Labor Movement in the United States: From the Founding of the A.F. of L. to the Emergence of American Imperialism 132–33 (2d ed. 1975). However, with the emergence of unions such as the American Federation of Labor (AFL), unions were able to respond to worker problems by “successfully negotiating wage increases for its members and enhancing workplace safety for workers.” A Brief History of Unions, UnionPlus, https://www.unionplus.org/page/brief-history-unions [https://perma.cc/BNP8-48BU] (last visited Nov. 29, 2020). Unions, like the AFL and collective bargaining, were created in order to give workers a voice against their more powerful employers and to advocate for higher salaries, workplace benefits, and improved working conditions. Collective Bargaining, AFL-CIO, https://aflcio.org/what-unions-do/empower-workers/collective-bargaining [https://perma.cc/UF6D-4GUM] (last visited Jan. 10, 2020).
William Welser, Why eSports Players Need to Unionise in 2019, Wired (Jan. 6, 2019), https://www.wired.co.uk/article/esports-unions [https://perma.cc/W2S9-E4CM] (explaining how organizations such as the Major League Baseball Players Association exist and provide compensation to professional baseball players in the event of an injury, a luxury not typically offered to esports players).
Id. (“[M]ost notably, Hai ‘Hai’ Lam, a 25-year old pro known for his domination of the North American League of Legends championship series, who stepped back due to a strain-related wrist injury.”).
Aron Garst, What Would It Take for There to Be an Overwatch League Players’ Union?, Heroes Never Die (Feb. 28, 2019, 3:49 PM), https://www.heroesneverdie.com/2019/2/28/18243082/overwatch-league-union-requirements-logistics-planning [https://perma.cc/68VM-HVUG]. The use of the term “player union” is used in this Comment to define esports players associations created by game developers in order to give them the opportunity to collectively bargain, despite the fact that they are not a federally recognized union. Tim Lavalli, Has the Time Come for Esports Athletes to Form a Players Union?, OnlineGambling.com (July 9, 2019), https://www.onlinegambling.com/news/has-the-time-come-for-esports-athletes-to-form-a-players-union/ [https://perma.cc/HSR6-J9BU].
Jonathan Kogel, State of the eSports Player Union: Drawbacks and Legal Challenges, Esports Observer (May 8, 2018), https://esportsobserver.com/state-of-the-esports-union/ [https://perma.cc/LZQ3-XEPJ]; see also infra Section II.C.
See infra Part III; Timothy Heggem, “It’s Complicated”: Analyzing the Potential for Esports Players’ Unions, 6 Ariz. St. U. Sports & Ent. L.J. 447, 455 (2017) (explaining that because esports players are hired as independent contractors, the players do not enjoy federal worker protections). On the other hand, unions like the National Football League Players Association treat their football athletes like employees. See, e.g., About NFLPA Frequently Asked Questions, NFLPA, https://www.nflpa.com/about/faq [https://perma.cc/U5E2-SZMZ] (last visited Mar. 15, 2020).
29 U.S.C. § 152(3). In order for a union to be federally recognized as a union under the NLRA, the participants must be considered employees and not independent contractors. Id. § 157.
See infra Part V.
See Mallory Locklear, Two Major eSports Players Associations Are in the Works, Engadget (Mar. 15, 2018), https://www.engadget.com/2018/03/15/overwatch-counter-strike-players-associations-in-the-works/ [https://perma.cc/W8V7-NSMJ] (explaining how, as of March of 2018, the creation of esports players associations was underway); Garst, supra note 12.
Tirado, supra note 2.
An Introduction to the Esports Ecosystem, Esports Observer, https://esportsobserver.com/the-esports-eco-system/ [https://perma.cc/Z47V-YHNE] (last visited Mar. 15, 2020).
Paul Trowe, The Difference Between a Video Game Developer and Publisher, Medium (June 16, 2018), https://medium.com/@PaulTrowe/the-difference-between-a-video-game-developer-and-publisher-c6038324ee56 [https://perma.cc/UE8X-KBXH]. Esports itself would not exist if it were not for developers and publishers. Id.
See, e.g., Riot Games Chooses to Build Next Games in League of Legends Franchise on Unity, Bus. Wire (Feb. 25, 2020, 8:00 AM), https://www.businesswire.com/news/home/20200225005134/en/Riot-Games-Chooses-Build-Games-League-Legends [https://perma.cc/6CTU-ZNN4] (Riot Games is the developer and publisher of League of Legends).
An Introduction to the Esports Ecosystem, supra note 19 (video games gain exposure through esports because the competitions are broadcasted through streaming platforms).
See, e.g., Thiemo Bräutigam, A Profitable Business: Why Game Publishers Count on eSports, Esports Observer (July 13, 2015), https://esportsobserver.com/a-profitable-business-why-game-publishers-and-developers-count-on-esports/ [https://perma.cc/559X-SSYF]; Esports Game Developers & Publishers, GamblingSites.com, https://www.gamblingsites.com/esports-betting/game-developers-publishers/ [https://perma.cc/6SCC-U4XR] (last visited Jan. 18, 2021) (Blizzard Entertainment is another developer and publisher of competitive games such as Overwatch, Hearthstone, and StarCraft).
An Introduction to the Esports Ecosystem, supra note 19.
See sources cited supra note 2 and accompanying text.
See infra Section III.B.
See supra note 10 and accompanying text.
See supra note 8 and accompanying text.
Doctors Raise the Alarm About Esports Injuries, CBS News (Mar. 29, 2019, 2:44 PM), https://www.cbsnews.com/news/esports-video-game-players-injuries-can-be-serious/ [https://perma.cc/VS6K-XQ2V].
Welser, supra note 10; see also supra text accompanying note 11.
Noah Smith, ‘It’s Not as Awesome as People Imagine’: Esports Players Say ‘Dream Job’ Is More than Fun and Games, Wash. Post (Dec. 13, 2018, 8:53 AM), https://www.washingtonpost.com/sports/2018/12/13/its-not-awesome-people-imagine-esports-players-say-dream-job-is-more-than-fun-games/ [https://perma.cc/LK28-9SYK].
See supra note 8 and accompanying text.
For example, in 2007 the Team G7 initiated a tournament boycott in response to Tournament Organizers’ failure to pay prize winnings. G7 Teams Not to Attend CPL, SK Gaming, https://www.sk-gaming.com/content/12657-g7-teams-not-to-attend-cpl-update [https://perma.cc/ECN9-Q28Y] (last visited Nov. 6, 2020); T.L. Taylor, Raising the Stakes: E-Sports and the Professionalization of Computer Gaming 177 (2012).
See sources cited supra note 12 and accompanying text.
Richard Scott-Jones, League of Legends Pros Getting a Union and $75k Salary, PCGamesN, https://www.pcgamesn.com/league-of-legends/lol-esports-lcs-2018 [https://perma.cc/6XQP-SQB7] (June 1, 2017).
Keiran Darcy, Riot’s Players’ Association Lays Groundwork for Unionization, ESPN (June 12, 2017), https://www.espn.com/esports/story/_/id/19617991/riot-players-association-lays-groundwork-unionization [https://perma.cc/VS22-42AY].
Imad Khan, Riot Releases Details on NA LCS Franchising with $10M Flat-Fee Buy-in, ESPN (June 1, 2017), https://www.espn.com/esports/story/_/id/19511222/riot-releases-details-na-lcs-franchising-10m-flat-fee-buy-in [https://perma.cc/M8NH-W4Q2].
Liz Mullen, Two Groups Vie to Establish Esports Players Associations, Sports Bus. J. (Mar. 12, 2018), https://www.sportsbusinessdaily.com/Journal/Issues/2018/03/12/Esports/PAs.aspx [https://perma.cc/4397-UE85] (explaining that the intent is to create an association similar to other North American sports unions such as the National Football League (NFL) and the Major League Baseball (MLB) Players Associations).
Counter-Strike Professional Players’ Association Forms Board of Top Players, Esports Observer (June 29, 2018), https://esportsobserver.com/csgo-players-association-board/ [https://perma.cc/7QCJ-CT5N]. This players association, unlike its developer-created counterparts, is independently created by the players. Id. The CSPPA is “[a] player-driver independent and democratic association of professional CS:GO players.” Counter-Strike Professional Players’ Association, CSPPA, https://www.csppa.gg/ [https://perma.cc/UBJ7-VLXW] (last visited Nov. 10, 2020).
Kogel, supra note 13.
Despite these seemingly altruistic efforts, the individuals who formed the CSPPA are not looking for the creation of a union under U.S. law and are not signing the formal “authorization cards” that are needed to form a union. See infra Section III.B; Mullen, supra note 42.
29 U.S.C. §§ 151–169. A collective bargaining agreement is one where a union and employer bargain in good faith about wages, hours, working conditions, benefits, vacation, paid leave, and other terms of employment. See Collective Bargaining Rights, Nat’l Lab. Rels. Bd., https://www.nlrb.gov/rights-we-protect/whats-law/employees/i-am-represented-union/collective-bargaining-rights [https://perma.cc/75MT-93NN] (last visited Nov. 10, 2019).
29 U.S.C. §§ 151–169.
Id. §§ 151, 152(3).
For a brief description of the union creation process, see Heggem, supra note 14, at 450–51.
See 29 U.S.C. § 152(3), (5).
Kogel, supra note 13.
26 U.S.C. § 501(c)(6); see also Heggem, supra note 14, at 452. This status is granted if the organization claiming the tax exempt status is an organization that is: (1) “an association of persons having some common business interest;” (2) a membership organization; (3) not organized for profit; (4) not using part of its net earnings to benefit any private shareholder or individual; (5) directing its activities to the improvement of business conditions of one or more lines of business (6) not primarily performing particular services for individual persons; and (7) is not “engage[d] in a regular business of a kind ordinarily carried on for profit.” See 26 C.F.R. § 1.501(c)(6)-1 (2020); Heggem, supra note 14, at 452–53.
See 26 C.F.R. § 1.501(c)(6)-1.
See 29 U.S.C. § 152(3).
See John T. Holden & Thomas A. Baker III, The Econtractor? Defining the Esports Employment Relationship, 56 Am. Bus. L.J. 391, 419–22 (2019).
Id. at 419.
It is likely that these workers are misclassified as independent contractors and should be considered employees because esports athletes depend on their employers for continued employment, the game developers that contract with them “control the manner and means by which the [service] is accomplished,” and the athletes’ work is not an “independently established trade.” Id. at 419–22; see also Yifan Wu, Booming E-Sports Industry Faces Contract Challenges, Medill Reps. Chi. (Mar. 14, 2017), https://news.medill.northwestern.edu/chicago/booming-e-sports-industry-faces-contract-challenges/ [https://perma.cc/35WE-57B2] (explaining that in order to avoid an employer-employee relationship, esports contracts have gone as far as to pay only one dollar a month in compensation).
Wu, supra note 59 (“There are players-as-independent-contractors contracts, and then there are employee contracts. . . . ‘They get a 1099 as opposed to a W2. That means no benefits. Employees are entitled to more benefits, like health care and sick days.’”); see also Welser, supra note 10 and accompanying text.
See Holden & Baker, supra note 56, at 425–35 (arguing that it is likely that a court would classify esports players as employees rather than independent contractors).
29 U.S.C. § 152(3).
See Richard T. Karcher, Big-Time College Athletes’ Status as Employees, 33 A.B.A. J. Lab. & Emp. L. 31, 34–35 (2017).
Id. at 33–34.
Khan, supra note 41.
Id.; see also Darcy, supra note 40 (Riot Games’ league operations lead Chris Greeley said that the reason this association cannot be a union yet is due to the fact that the players association is “taking Riot’s money.”).
29 U.S.C. § 158(a)(2).
See NLRB v. Pa. Greyhound Lines, Inc., 303 U.S. 261, 266–68 (1938) (holding that company unions, which are “dominated by the employer,” are merely a “ready and effective means of obstructing self-organization of employees and their choice of their own representatives for the purpose of collective bargaining;” this is putting the employer on both sides of the bargaining table); Minnie Che, Is Riot Games in Violation of the NLRA for Funding Its Own Union?, OnLabor (May 1, 2019), https://onlabor.org/is-riot-games-in-violation-of-the-nlra-for-funding-its-own-union/ [https://perma.cc/4GH2-VNYV] (“[T]he [Riot Games’ players] association has representatives [provided by Riot Games] who answer directly to players to negotiate for them on matters related to working conditions, sponsors, salary, and anything else job related.”).
Che, supra note 68.
See infra Part V.
See 15 U.S.C. § 1.
Id. (“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.”).
Restraint of Trade, Black’s Law Dictionary (11th ed. 2019).
For example, when two lawyers enter into a partnership and agree to charge the same price they would not have otherwise charged if they worked independently, it is a restraint of trade. See id.
Nat’l Collegiate Athletic Ass’n v. Bd. of Regents, 468 U.S. 85, 98 (1984) (emphasis added).
Ohio v. Am. Express Co., 138 S. Ct. 2274, 2283–84 (2018).
Id. (defining the meaning of horizontal restraints). Because horizontal agreements always or almost always tend to restrict competition and decrease output, the Sherman Act treats horizontal agreements more harshly than vertical ones. See id.; Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723 (1988).
Am. Express Co., 138 S. Ct. at 2284 (defining vertical restraints).
Kenneth Glazer et al., Antitrust Implications of Category Management: Resolving the Horizontal/Vertical Characterization Debate, in Antitrust Source, July 2004, at 1, 4, https://www.americanbar.org/content/dam/aba/publishing/antitrust_source/Jul04_FullSource.pdf [https://perma.cc/92AU-Z3CJ].
See Am. Express Co., 138 S. Ct. at 2283–84 (defining horizontal restraints).
See id. at 2284 (defining vertical restraints).
See SCFC ILC, Inc. v. Visa USA, Inc., 36 F.3d 958, 963 (10th Cir. 1994).
Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752, 768 (1984); see also Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643, 647, 650 (1980) (per curiam) (holding that horizontal minimum price fixing, which is where an agreement sets a pricing floor in which conspirators will not reduce their prices, is per se illegal).
Am. Express Co., 138 S. Ct. at 2283–84.
See Nat’l Soc’y of Pro. Eng’rs v. United States, 435 U.S. 679, 695 (1978).
Law v. Nat’l Collegiate Athletic Ass’n, 134 F.3d 1010, 1016–17 (10th Cir. 1998).
Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 907 (2007).
See Loewe v. Lawlor, 208 U.S. 274, 303, 306–09 (1908), superseded by statute, Clayton Act, Pub. L. No. 63-212, 38 Stat. 730, as recognized in Am. Steel Erectors, Inc. v. Local Union No. 7, Int’l Ass’n of Bridge, Structural, Ornamental & Reinforcing Iron Workers, 480 F. Supp. 2d 471 (D. Mass. 2007), rev’d and remanded, 536 F.3d 68 (1st Cir. 2008) (holding that the act of boycotting fur manufacturers in order to make them unionize their shops was considered in restraint or trade within the meaning of the Sherman Act); United States v. Workingmen’s Amalgamated Council of New Orleans, 54 F. 994, 999 (E.D. La. 1893), superseded by statute, Clayton Act, Pub. L. No. 63-212, 38 Stat. 730, as recognized in Conn. Ironworkers Emps. Ass’n, Inc. v. New England Regional Council of Carpenters, 869 F.3d 92 (2d Cir. 2017) (holding that union workers coming together to compel and secure employment was prohibited under the Sherman Act).
Price fixing is described as a restrictive agreement among competitors to raise, fix, or otherwise maintain the price at which their goods and services are sold. Price fixing can take on many forms, such as competitors conspiring to sell their goods and services at a minimum price. See Chamber of Com. v. City of Seattle, 890 F.3d 769, 777, 780–81 (9th Cir. 2018) (holding that an ordinance that allowed for-hire drivers to collectively bargain and to agree on the amount of the minimum payments to be made by their employer was prohibited by Section 1 of the Sherman Act).
Malley-Duff & Assocs., Inc. v. Crown Life Ins. Co., 734 F.2d 133, 140 (3d Cir. 1984).
See NAACP v. Claiborne Hardware Co., 458 U.S. 886, 889, 911, 914–15 (1982) (holding that the NAACP boycotting retail stores in a Mississippi town was not prohibited by the Sherman Act because it was protected speech under the First Amendment).
See FTC v. Superior Ct. Trial Laws. Ass’n, 493 U.S. 411, 431–33 (1990) (rejecting the defendants’ argument that their boycott was protected speech under the First Amendment because the boycott was predominantly commercial).
15 U.S.C. § 17 (“The labor of a human being is not a commodity or article of commerce.”); see also Harris Peskin, Unionization in Esports, Esports Bar Ass’n, https://esportsbar.org/journals/2019/9/11/unionization-in-esports [https://perma.cc/Q3CV-F5RV] (last visited Jan. 19, 2021).
29 U.S.C. § 101 (“No court of the United States, as defined in this chapter, shall have jurisdiction to issue any restraining order or temporary or permanent injunction in a case involving or growing out of a labor dispute, except in a strict conformity with the provisions of this chapter; nor shall any such restraining order or temporary or permanent injunction be issued contrary to the public policy declared in this chapter.”).
15 U.S.C. § 17; see also 29 U.S.C. § 101. In order to bolster this policy, courts have recognized that “union-employer agreements” are also beyond the reach of the Sherman Act. See Amalgamated Meat Cutters & Butcher Workmen v. Jewel Tea Co., 381 U.S. 676, 689–90 (1965).
29 U.S.C. § 101. The Norris-LaGuardia Act prohibits the use of injunctions “in a case involving or growing out of a labor dispute.” Id.
United States v. Hutcheson, 312 U.S. 219, 232 (1940); see also 29 U.S.C. § 158(d).
Brown v. Pro Football, Inc., 518 U.S. 231, 237 (1996); see also Jewel Tea Co., 381 U.S. at 711.
Pro Football, Inc., 518 U.S. at 237.
H.A. Artists & Assocs., Inc. v. Actors’ Equity Ass’n, 451 U.S. 704, 717 n.20 (1981).
Pro Football, Inc., 518 U.S. at 248 (dismissing petitioner’s argument in an antitrust collective bargaining claim that the labor exemption should not apply because sports are “special”).
Id. at 238.
See, e.g., Chamber of Com. v. City of Seattle, 890 F.3d 769, 780–81 (9th Cir. 2018).
29 U.S.C. § 101.
Seth D. Harris & Alan B. Krueger, Hamilton Project, A Proposal for Modernizing Labor Laws for Twenty-First-Century Work: The “Independent Worker” 7 (2015), http://www.hamiltonproject.org/assets/files/modernizing_labor_laws_for_twenty_first_century_work_krueger_harris.pdf [https://perma.cc/QGA5-ZY92]. However, players are not treated as independent contractors with free reign and control, because they are subject to the decisions and control of the developers and Tournament Organizers. See supra Part II.
See supra Section III.B.
Marina Lao, Workers in the “Gig” Economy: The Case for Extending the Antitrust Labor Exemption, 51 U.C. Davis L. Rev. 1543, 1574 (2018).
FTC v. Superior Ct. Trial Laws. Ass’n, 493 U.S. 411, 431–36 (1990).
See, e.g., N. Lake Tahoe Med. Grp., Inc., 64 Fed. Reg. 14,730, 14,731 (Fed. Trade Comm’n Mar. 26, 1999) (proposed consent order) (ordering that a collective negotiation health plan by a group of independent physicians in order to have higher reimbursement rates was unlawful under antitrust law); Colegio de Optometras de P.R., 72 Fed. Reg. 44,144, 44,146 (Fed. Trade Comm’n Aug. 7, 2007) (proposed consent agreement) (ordering that price fixing and collective refusal to deal with vision plans by independent optometrists had anticompetitive effects and injunctive relief was ordered).
Churchill Downs, Inc. v. Thoroughbred Horsemen’s Grp., LLC, 605 F. Supp. 2d 870, 881 (W.D. Ky. 2009) (specifically, the controversy concerned contracts that constituted price-fixing under the meaning of the Sherman Act).
Id. at 883–84.
While the court does not address unions explicitly, the court found that the individual horsemen did not need immunity because the individuals were independent workers. Id. at 884–85.
FTC v. Ind. Fed’n of Dentists, 476 U.S. 447, 451 (1986) (finding that the attempt for a dentists’ association to label itself as a “union” was not enough to gain protection from the Clayton Act’s labor union exemption in light of evidence showing that the sole reason for the “union” classification was to avoid antitrust scrutiny).
See Chamber of Com. v. City of Seattle, 890 F.3d 769, 780–81 (9th Cir. 2018) (holding, without reaching the merits of the inquiry, that a Seattle ordinance allowing for-hire drivers to collectively bargain with their employers is considered horizontal price-fixing and possibly per se illegal under the Sherman Act).
Id. at 777.
Id. at 778–79.
Id. at 780–81 (emphasis added) (the case was remanded for a final decision on the merits on whether the ordinance authorizes a per se violation; the result is still pending as of Oct. 8, 2020).
FTC v. Superior Ct. Trial Laws. Ass’n, 493 U.S. 411, 431–36 (1990); N. Lake Tahoe Med. Grp., Inc., 64 Fed. Reg. 14,730 (Fed. Trade Comm’n Mar. 26, 1999) (proposed consent agreement); Churchill Downs, Inc. v. Thoroughbred Horsemen’s Grp., LLC., 605 F. Supp. 2d 870, 881 (W.D. Ky. 2009); FTC v. Ind. Fed’n of Dentists, 476 U.S. 447, 448, 461 (1986); Chamber of Com., 890 F.3d at 780–81.
See 29 U.S.C. § 152(3); Holden & Baker, supra note 56, at 418–19.
Churchill Downs, 605 F. Supp. 2d at 881.
See Lao, supra note 112, at 1574.
See, e.g., Brown v. Pro Football, Inc., 518 U.S. 231, 235, 237 (1996) (dismissing petitioner’s argument in an antitrust collective bargaining claim where the labor exemption should not apply).
See FTC v. Superior Ct. Trial Laws. Ass’n, 493 U.S. 411, 422–23 (1990) (holding that a group of lawyers who collectively agreed on demanding higher prices and boycotting until demands are met is considered price-fixing and a “classic restraint of trade”).
Law v. Nat’l Collegiate Athletic Ass’n, 134 F.3d 1010, 1016 (10th Cir. 1998). In other words, there needs to be a “contract, combination . . . or conspiracy” in order for the action to be considered a violation. Independent action is not prohibited. Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761 (1984) ( quoting 15 U.S.C. § 1) (internal quotations omitted).
Law, 134 F.3d at 1016.
Ohio v. Am. Express Co., 138 S. Ct. 2274, 2283–84 (2018).
Chamber of Com. v. City of Seattle, 890 F.3d 769, 780–82 (9th Cir. 2018).
See Taylor, supra note 37, at 177; Lao, supra note 112, at 1585–86.
See sources cited supra note 37.
The practice of using strikes in order to receive better pay and better working conditions is not unheard of. See, e.g., Sanjukta M. Paul, The Enduring Ambiguities of Antitrust Liability for Worker Collective Action, 47 Loy. U. Chi. L.J. 969, 980–81 (2016) (discussing that there were strikes in America’s ports by individual truck drivers in 1999 aimed at improving poor working conditions and low pay); FTC v. Superior Ct. Trial Laws. Ass’n, 493 U.S. 411, 422–23 (1990) (lawyers commenced a boycott in order to receive better pay). This result is not so far-fetched as a mere hypothetical; it was seen in the driver-for-hire industry, the independent physician industry, the equestrian industry, and even the industry of attorney representation. See supra Section IV.C.1 (discussing various cases where independent contractors decided to go on strike in order to receive equal pay and better working conditions).
This illusion has already worked. In 2016, a group of twenty-five players who competed in the game “Counter-Strike” were promised transparency and a voice in major decisions by their own Professional Esports Association (PEA) but were ultimately misled when the PEA made the executive decision, without consulting its own players, that they could not compete in a major league competition. Scott Smith, An Open Letter to the Professional Esports Association, Its Member Teams, and the Counter-Strike Community, Medium (Dec. 21, 2016), https://medium.com/@sirscootscs/an-open-letter-to-the-professional-esports-association-its-member-teams-and-the-counter-strike-db2fb8b55f75 [https://perma.cc/WYE5-DZYC].
See, e.g., Chamber of Com., 890 F.3d at 780–81.
In other words, the players within the players association agree to not work for a certain developer or team organizer, unless they are paid a previously agreed-upon minimum wage.
See Superior Ct. Trial Laws. Ass’n, 493 U.S. at 422–23.
Id.; see also Chamber of Com., 890 F.3d at 781–82.
Jacob Wolf, Counter-Strike Pros Form the Counter-Strike Professional Players Association, ESPN (June 29, 2018), https://www.espn.com/esports/story/_/id/23947731/counter-strike-pros-form-counter-strike-professional-players-association [https://perma.cc/ZT2J-MZ7S].
Ohio v. Am. Express Co., 138 S. Ct. 2274, 2283–84 (2018).
Scott-Jones, supra note 39; Khan, supra note 41.
See supra Section V.A.
See supra Section IV.C.2.
Thus, the boycott is in restraint of trade. See FTC v. Superior Ct. Trial Laws. Ass’n, 493 U.S. 411, 422–23 (1990).
This implies that a court will not look at the nature of the transaction and immediately rule that the agreements are per se illegal. Am. Express Co., 138 S. Ct. at 2283–84.
In 2016, players of Counter-Strike actually threatened to boycott by not participating in competitions in response to the Professional Esports Association’s (PEA) unilateral decisions in competition games. Al Neal, The Esports Union Revolution Is Coming, Grandstand Cent. (Aug. 4, 2018), https://grandstandcentral.com/2018/sports/esports/esports-union-is-coming/ [https://perma.cc/ETW4-JXGQ].
See, e.g., Mackey v. Nat’l Football League, 543 F.2d 606, 609 (8th Cir. 1976) (consisting of a claim by NFL players against the NFL itself for conducting and participating in anticompetitive behavior).
See id.; Adam Fitch, Player Contract Illustrates Unfair and Unethical Conditions, Esports Insider (Dec. 17, 2019), https://esportsinsider.com/2019/12/unfair-player-contract/ [https://perma.cc/69X6-GTXC].
See, e.g., Brady v. Nat’l Football League, 644 F.3d 661, 663 (8th Cir. 2011). Plaintiff NFL players’ antitrust claim arose from the NFL’s desire to negotiate player benefits in a collective bargaining agreement. Id. The negotiations ended in a lockout, which then led plaintiffs to claim that the NFL’s planned lockout was an illegal, group boycott and a price-fixing arrangement that violated the Sherman Act. Id.
Ohio v. Am. Express Co., 138 S. Ct. 2274, 2283–84 (2018).
Bailey’s, Inc. v. Windsor Am., Inc., 948 F.2d 1018, 1027 (6th Cir. 1991).
See Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761 (1984).
See, e.g., Scott-Jones, supra note 39.
See Monsanto Co., 465 U.S. at 761.
For the second prong, a plaintiff bears the burden to show that the concerted action is producing an adverse, anticompetitive effect within the respective market, and this is shown by alleging that the restraint is “facially anticompetitive, or, that its enforcement reduce[s] output, raise[s] prices, or reduce[s] quantity.” Pennsylvania v. Nat’l Collegiate Athletic Ass’n, 948 F. Supp. 2d 416, 430–31 (M.D. Pa. 2013).
Neal, supra note 152.
Nat’l Collegiate Athletic Ass’n, 948 F. Supp. 2d at 430–31 (holding that the plaintiff did not meet its burden of proof to show that sanctions imposed by the NCAA would have anticompetitive effects in relevant markets).
See Max Miroff, Note, Tiebreaker: An Antitrust Analysis of Esports, 52 Colum. J.L. & Soc. Probs. 177, 180 (2019).
See id. at 207.
See, e.g., Sterling Merch., Inc. v. Nestle, S.A., 656 F.3d 112, 123 (1st Cir. 2011) (“Because vertical exclusive dealing agreements ‘can achieve legitimate economic benefits (reduced cost, stable long-term supply, predictable prices) no presumption [that exclusive dealing agreements impair competition] exists today.’” (quoting Stop & Shop Supermarket Co. v. Blue Cross & Blue Shield, 373 F.3d 57, 65 (1st Cir. 2004))); Major League Baseball Props., Inc. v. Salvino, Inc. 420 F. Supp. 2d 212, 219–21 (S.D.N.Y. 2005) (holding that the Major League Baseball Properties’ intellectual property exclusive licensing activities did not have an adverse effect on competition and, thus, did not violate antitrust law); Exclusive Dealing or Requirements Contracts, Fed. Trade Comm’n, https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-supply-chain/exclusive-dealing-or [https://perma.cc/25RB-TEMW] (last visited Mar. 15, 2020).
See Miroff, supra note 164, at 212–13.
Id. at 213.
Alan J. Meese, Price Theory, Competition, and the Rule of Reason, 2003 U. Ill. L. Rev. 77, 110–11 (2003).
Int’l Logistics Grp., Ltd. v. Chrysler Corp., 884 F.2d 904, 907 (6th Cir. 1989).
Ohio v. Am. Express Co., 138 S. Ct. 2274, 2283–84 (2018).
See supra Section IV.C.2.
See Lao, supra note 112, at 1552–53.
Id. at 1574.
See Holden & Baker, supra note 56, at 419–30.
See id. at 419–21.
See Michael Long, Playing the Game: An Insider’s Take on Esports Representation, SportsPro (July 21, 2017), https://www.sportspromedia.com/analysis/playing-the-game-an-insiders-take-on-esports-representation [https://perma.cc/YN7F-ZD49].
Holden & Baker, supra note 56, at 419–21.
Lao, supra note 112, at 1555–57.
Audrey Winn, League of Legends Gamers Could Become California’s Newest Workforce, Quartz (Jan. 9, 2020), https://qz.com/1781797/californias-ab5-protects-league-of-legends-gamer-work-rights/ [https://perma.cc/ST2W-8DJM].
A.B. 5, 2019–20 Leg., Reg. Sess. (Cal. 2019) (“For purposes of the provisions of this code and the Unemployment Insurance Code, and for the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor . . . .”).
29 U.S.C. § 158(a)(2).
Graham Ashton, NALCS Players Association Executive Director Reflects on First Year of Activity, Esports Observer (Jan. 9, 2019), https://esportsobserver.com/nalcspa-executive-director-interview/ [https://perma.cc/EUM6-HDGQ].
29 U.S.C. § 158(a)(2).
See Bobby Allyn, California Judge Orders Uber and Lyft to Consider All Drivers Employees, NPR (Aug. 10, 2020, 5:30 PM), https://www.npr.org/2020/08/10/901099643/california-judge-orders-uber-and-lyft-to-consider-all-drivers-employees [https://perma.cc/2244-ARFL] (while the aforementioned California law was challenged by Uber and Lyft, a judge ultimately ruled that Uber and Lyft drivers must be classified as employees, thus granting them employee benefits they were not entitled to before).
See supra Part III.
See supra Sections V.A–B.
See supra Section V.C.
See Long, supra note 182.
See sources cited supra note 12 and accompanying text.
In the mid-1950s, the National Football League Professional Association (NFLPA) members used antitrust as a way to threaten the NFLPA as a lever to gain workplace benefits; they were not technically legally entitled to do so because the NFLPA was simply run as a “grievance committee” rather than a federally recognized union. Michael Oriard, Brand NFL: Making and Selling America’s Favorite Sport 57 (2007).
See Wood v. Nat’l Basketball Ass’n, 809 F.2d 954, 956–59 (2d Cir. 1987) (affirming the dismissal of an antitrust claim and holding that the players association union’s collective bargaining agreement could not be challenged on antitrust grounds due to the labor exemption because “no one seriously contends that the antitrust laws may be used to subvert fundamental principles of our federal labor policy as set out in the National Labor Relations Act”).
See supra Part VI.