Sports Law Blog
All things legal relating
to the sports world...
Wednesday, May 14, 2008
Why is this necessary

Senator Arlen Specter has called for an independent investigation (a la the Mitchell Commission) into the New England Patriots' videotaping practices, apparently dissatisfied with the inquiry conducted by Commissioner Roger Goodell. Specter is particularly upset with the fact that an attorney for the Patriots sat-in on Tuesday's meeting between Goodeel and former Patriots video assistant Matt Walsh and that Goodell's prior investigation was not candid or complete, was marred by a conflict of interest, and did not serve the public interest. Specter issued a Floor Statement on the matter.

I have asked this before and I will ask it again: Why does the NFL owe the public anything, other than what it believes is in its best business interests? And why does or should a member of the United States Senate care how a private entity conducts its business, so long as it is not violating any actual laws or any laws that Congress believes ought to be enacted? Reading the statement, Specter talks about sports as big business, the league's antitrust exemption, and the role-model status of professional athletes. But none of that justifies congressional involvement simply to ensure that the league is abiding by its own internal rules. And it certainly does not justify Congress trying to tell the NFL how to run its business--again, absent some actual law or legislative proposal.


I agree completely with your statement. I think this a feeble attempt on the part of Spector to get on SportsCenter like those of Congress who took part in the steroids investigation.

Anonymous Steve -- 5/14/2008 7:40 PM  

I respectfully disagree with Mr. Wasserman's legal analysis on this issue.

I am a lawyer. I do not specialize in Constitutional Law, but this is basic stuff you learn in law school. I personally hope Congress stays out of it, but ...

Legally, Sen. Specter has every right and authority to be interested in the matter, as does Congress to investigate if it wishes to do so. The fact is that the NFL is a huge business throughout the US (therefore having a fairly substantial effect ecomonically, which triggers the Commerce Clause of the US Constitution) -- and taxpayers in cities with stadiums, or in cities which lose teams, often get royally screwed over by the league -- and the league has a special antitrust exemption which allows them to violate basic federal law and use their monopoly power to reap huge profits. So yeah, the basis for Congressional jurisdiction / investigation does exist. (and Specter had a career as a prosecutor prior to becoming Senator).

If Congress has a reasonable belief that systematic cheating by one or more teams exists in the NFL -- especially (but not necessarily) if it believed that the NFL owners, or the Commissioner, may have known of this cheating and did not take all steps to immediately stop it, or even covered it up -- or that Goodell, at least in part, covered this matter up, and improperly destroyed evidence -- Congress would have every right to hold hearings under its US Const. right to regulate Interstate Commerce -- or by using the special Antitrust exemption as an excuse.

Anonymous Brian B. -- 5/14/2008 7:42 PM  

If Goodell has any sense, he will hire his own Independent Invesigator ASAP - so that Congress will not see the need to do so. It needs to be someone who understands law, who is not on the side of NFL management, and who has good judgment and ethic.

I vote for Steve Young.

Anonymous Brian B. -- 5/14/2008 7:46 PM  

Would you have a problem if the independent investigator was the fbi? a federal prosecutor? It's possible Specter could be considering this an economic espionage act violation.

Anonymous George -- 5/14/2008 8:06 PM  

It was cheating! yes, it was bad! yes, there should have been harsher punishment handed out...BY THE LEAGUE!!!

this another feable attempt by specter to get some TV time and look like he's doing something to the masses that sadly enough only gets to see politicians in action when it involves sport. This is a waste of our tax dollars! plain and simple!

Blogger Jimmy H -- 5/14/2008 9:03 PM  

Brian B.,

What federal law was violated (as you suggest)? And what antitrust exemption are you talking about? --the Sports Broadcasting Act? And how does that have any relevance?

There is no law against stealing another team's signals. Integrity of the game, or what's in the best interest of the game, is solely for the league to determine because it goes to the quality of its product. Would you be o.k. if Specter investigated the decision of Coca-Cola to switch to a black can?

Blogger Rick Karcher -- 5/14/2008 10:01 PM  

Brian B (not to pile on):

I was not making a constitutional argument. Yes, it is pretty clear that Congress could, if it chose, regulate professional sports (although it would show how unbelievavly broad the Commerce power has become).

I was making a political argument. Congress should not care about the internal workings of a private enterprise and whether the private enterprise abides by its own internal rules, *in the absence of any apparent violations of federal law* (and as Rick and Jimmy H both note, no federal laws were broken) or in the absence of any legislative or regulatory initiative (which Specter does not seem to be talking about). Such regulation of an entity's internal operations is unheard of.

Blogger Howard Wasserman -- 5/14/2008 10:15 PM  

Specter is truly making this a No Fun League. So they cheated, big deal. I would hate to be one of his kids and get caught cheating on a test in school. He would probably hold a press conference to tells us what we already know.

Anonymous Anonymous -- 5/14/2008 10:35 PM  

Howard and Rick, I don't agree. It does not come down to whether federal law was violated. This is the legislative branch we are talking about. Seperation of powers would require the executive branch to prosecute and the judical branch to convict. Congress could be looking at whether current law offers enough protection for the public - since this involves interstate commerce. If you want a legal violatin, the issue comes down to whether the signals were a trade secret -- which can not be stolen. (1) The jets and NFL took reasonable efforts to keep them secret. The NFL has very strict rules regarding cameras angles and the Jets had to use them in the game. Under the circumstances, the efforts they took were proper - the only way the patriots could get them was by violating rules. (2) economic value - apparently the filming became very advanced by the patriots - which shows it was of sufficient value to them. However, that may not be "economic" value; certaintly I believe the issue is enough to survive 12(b) motions to dimiss and summary judgment motions.

18 usc 1839 (3) the term “trade secret” means all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—
(A) the owner thereof has taken reasonable measures to keep such information secret; and
(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public; and
18 USC 1832
(a) Whoever, with intent to convert a trade secret, that is related to or included in a product that is produced for or placed in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly—
(1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains such information;
(2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys such information;
(3) receives, buys, or possesses such information, knowing the same to have been stolen or appropriated, obtained, or converted without authorization;
(4) attempts to commit any offense described in paragraphs (1) through (3); or
(5) conspires with one or more other persons to commit any offense described in paragraphs (1) through (3), and one or more of such persons do any act to effect the object of the conspiracy,
shall, except as provided in subsection (b), be fined under this title or imprisoned not more than 10 years, or both.
(b) Any organization that commits any offense described in subsection (a) shall be fined not more than $5,000,000.

Anonymous Anonymous -- 5/14/2008 10:36 PM  

Specter does not have any particular law in mind--not trade secrets, not economic espionage. If he did, he would have been that specific in his floor statement. All he talked about in the floor statement was athletes-as-role-models, public trust, the antitrust exemption, and Judge Landis after the Black Sox Scandal (which, by the way, was inaposite, because throwing games constitutes fraud, which is against actual laws).

The only reason stealing signals via video is a problem is because the NFL made it so through its internal rules. If the NFL were to rescind that rule and allow videotaping of sidelines, there would not be any problem and I have not heard anyone suggest there would be.

So are all signals in all sports a trade secret, because teams try to keep them secret? So if one baseball team figures out the other team's signals by watching the third-base coach or if the batter sneaks a peak back at the catcher (which is considered, basically, a breach of etiquette), that is a violation of federal trade secret law?

Blogger Howard Wasserman -- 5/14/2008 11:07 PM  

Like it or not (I don’t) sports has become part of the political world – the Olympics, baseball, spygate, etc.
I agree that Specter just wants face time and I think he's wasting time (but maybe he should be given credit for not talking about specific offenses because that would make it seem like he believes the Patriots broke the law – which the media would fly with. Our media is all about soap operas today. Specter also may just be broadly looking into enacting federal unfair competition laws or expanding trade secret protection to ensure this does not happen in the future. In order to properly due so, Congress needs to investigate what happened) ; however, I disagree with you and Rick's right for Congress to do this. A previous violation has no role, because this is Congress and separation of powers exists. Furthermore, I do not believe the NFL has been honest. Goodell may be part of this crime for intentionally destroying the evidence. There are some flaws in the Commissioner’s explanations that make me believe there is more involved. I also believe it’s much more questionable about the criminal violation than you believe.
Yes, the NFL rule is not a criminal law. The NFL rule goes to show that the information was a trade secret and the Patriots improperly stole it. In your MLB hypo, it’s not a trade secret when the third base coach gives signs and people visibly steal it – there’s just no reasonable expectation of privacy. However, when teams put cameras in the CF wall to steal the catcher’s signs, that is more questionable. If the runner on second steals the sign, no it’s not a trade secret.

In Fifth Circuit has held (E.I. DuPont DeNemours & Company, Inc. v. Christopher) that just because a party could have discovered another’s trade secret via reverse engineering r independent research, they may not steal the information via improper means. Simply put, looking at a third base coach is not improper. Systematically and intentionally violating rules designed to keep information private is an improper way. The Patriots said they did not know they were breaking the rules.

Here are the common law factors that states use to determine what is a trade secret – but under federal law, the definition in the previous posts only needs to be met. In addition, most state now have statutes that have a different definition. (1) extent to which the info is known outside the Plaintiff’s business; (2) extent to which the info is known by employees and others involved in the Plaintiff’s business;(3) extent of measures taken by Plaintiff to guard secrecy of info; (4) value of the information to the Plaintiff’s business & competition; (5) amount of time, effort, and money expended by Plaintiff in developing the information; (6) ease of difficulty w/ which the information could be properly acquired or duplicated by others
P.S. In correction to the previous post, 12(b) wouldn’t apply - this is the 1832 is a criminal statute.

Anonymous Anon 10:36pm -- 5/15/2008 9:40 AM  

Hard to believe this needs to be said, but when the country is at war all over the globe and the economy is in the toilet, our Congress may have better things to do than sniff jockstraps.

Anonymous Anonymous -- 5/15/2008 9:45 AM  

Trade secrets are about the furthest thing from Specter's mind; I doubt it even crossed into his mind.

I do not see why the third-base coach has any lesser expectation of privacy in the signals than the coaches on the Jets sideline. The only difference is the manner of breaking the signals--watching live during the game, v. videotape or watching practice. But that difference is solely one of the league's internal regulations and could be changed--if the NFL allowed videotaping or if MLB allowed cameras in the centerfield scoreboard, those practices would be as permissible as watching the coach.

So what do we mean by saying Specter's goal is to "ensure this does not happen in the future"? If the "this" is all sign-stealing, then Specter is functionally telling the NFL what rules it must create and how it must enforce them. If the "this" is the NFL being lax in enforcing its own rules, then Specter is functionally telling the NFL how it must conduct its private business--which again, is unheard of.

Besides, if there were a trade-secret violation at issue her, that is between the Jets and the Patriots; let the Jets sue the Patriots and we can see how things shake out.

Blogger Howard Wasserman -- 5/15/2008 11:03 AM  

How you can have any expectancy of privacy in front of 65,000 people is beyond me.

Blogger Jimmy H -- 5/15/2008 12:22 PM  

Trade secret matters are not solely an issue between the Jets and Patriots. The EEA is a criminal statute.
The manner in stealing (I like how you used “breaking” to avoid saying stole) the signals is decisive. Private regulations do matter. There is no question of “if the league . . .”, they didn’t and they haven’t. The private entities have decided such protections are needed. “If” companies did not have employees sign confidentiality agreements or take other protections against employees accessing/leaking proprietary information, the information would not be trade secrets. But the fact of the matter is that they do. The E.I. DuPont case noted the following: (1) the fact that industrial espionage has become popular in some industries; does not force courts to accept the law of the jungle as the standard of morality expected in commercial relations; (2) not everything in plain view is protected, nor is the info obtained through every extra optical extension forbidden, but to protect a trade secret, a party is not required to guard against unanticipated, undetectable, or the unpreventable methods of espionage. In addition, our legal system uses internal standards for stuff such as products liability or negligence against manufacturers.
By “this” I meant ensuring that the public is not defrauded again. People wanted to watch a fair game and they were cheated from this. NFL is big business. This is just like consumer fraud. The Buffalo Bills radio station announcers replayed a clip of an old game where they commented “It’s like they know what play we’re going to run.” This discussion was referring to Tom Brady calling many audibles. With the special antitrust status that at least baseball enjoys, what are consumers left to do?
Congress telling private businesses how to operate is not unheard of. Congress regulates a lot of industries. Unfortunately, Congress will not let the law of the marketplace govern. Our society has become soft and there is a reliance our political leaders to “protect us.”
I think the actual issue --- which I do not expect a criminal action to actually be instituted -- would come down to whether the signals had “economic value.” The fact that winning means money and fans and that the Patriots developed an elaborate system is evidence that they do have such value.

Jimmy H
If the Patriots stole the signals from the sidelines by watching or via a “fan” in the crowd that this would be an open and shut case. However, just like a product could be reversed engineered and, hence, no privacy, going into a factory and stealing the signal does not mean a trade secret was not stolen.

Anonymous Anonymous -- 5/15/2008 1:47 PM  

Excellent discussion. Here is another 2 cents worth: The commerce clause clearly gives Congress power to hold formal hearings and issue subpoenae is they wish. The antitrust law (1890 Sherman Act)violation or other creative arguments do not need to be made. The worst would be RICO, if it was eventually determined that this cheating was a league wide activity, done with knowledge and concealment by the commissioner, done in part to defraud the public, and in the big picture, increase league-wide revenue -- mainly via tv ratings (I have to say that it is somewhat interesting that Walsh's tapings were done just after 9/11 and that the Patriots won the Super Bowl in that year of frenzied patriotism).

Specter can easily claim that he has a "reasonable basis" (which means almost anything) to believe that such evidence may exist, that Goodell has apparently engaged in cover-up activity, and that therefore a potential threat exists which concerns the league, the public's trust, and which has not insubstantial economic implications, at least for many cities whose taxpayers have paid hundreds of millions for stadiums.

Also, it seems that the long-standing history of Congress either investigating baseball, or threatening to investigate baseball, does provide some precedence (although no such precedence is really required).

So..., this could potentially turn into a real nightmare, real quick, for the entire NFL, unless Goodell quickly appoints his own "independent investigator" (one more vote for former player/lawyer Steve Young) and thus keeps this from blowing up with Congress.

Anonymous Brian B. -- 5/15/2008 6:14 PM  

I think I saw this commerce clause argument on Boston Legal once...

anyone else?


hmmm, could have swore I did....

Blogger Jimmy H -- 5/15/2008 6:53 PM  

To follow up a little on Specter's "nuclear bomb" that he could try to threaten the NFL with:

The Racketeer Influenced and Corrupt Organizations Act (commonly referred to as RICO Act or RICO) is a US federal law that provides for severe penalties for crimes performed as part of an ongoing criminal organization. RICO was intended to make it easier to prosecute organized crime figures, but has been applied in other cases as well:

In 2002, the former minority owners of the Montreal Expos baseball team filed charges under the RICO Act against Major League Baseball commissioner Bud Selig and former Expos owner Jeffrey Loria, claiming that Selig and Loria deliberately conspired to devalue the team for personal benefit in preparation for a move. If found guilty, Major League Baseball could have been found liable for up to $300 million in punitive damages. The case lasted for two years, successfully stalling the Expos' move to Washington or contraction during that time. It was eventually sent to arbitration and settled for an undisclosed sum, permitting the move to Washington to take place.

Under RICO, a person or group who commits any two of 35 crimes--27 federal crimes and 8 state crimes--within a 10-year period (including theft or fraud), can be charged with racketeering. Those found guilty can be fined up to $25,000 and/or sentenced to 20 years in prison per racketeering count. And, the racketeer must forfeit all ill-gotten gains and interest in any business gained.

Anonymous Brian B. -- 5/15/2008 9:18 PM  

The thing I remember most about Sen. Specter is how terribly and rudely he treated Anita Hill, while he was on the Senate Judiciary Committee during the Clarence Thomas US Supreme Court confirmation hearings, when she had been subpoenaed (against her will) to testify as to sexual harassment from Thomas, when she had worked for him as head of the EEOC office in Seattle. For history buffs, here is a link to a portion of Anita Hill's famous testimony during that hearing in 1991(the good stuff starts about 2:30 in): .com/videoplay?docid =-818338901963982370 0&q=clarence+tho mas+confirmation+hea rings&ei=FNssSID CMqTeqwP4k7SgCQ& hl=en

Anonymous Brian B. -- 5/15/2008 9:21 PM  

Yeah, Jimmy H., its in this little-known document that we seem to have lost behind the sofa for the last few years ... I remember now -- its called THE CONSTITUTION.

Well its all wrinkled up and has rat pee all over it, but I think we can get it restored.

Anonymous Brian B. -- 5/15/2008 9:29 PM  

Wasn't it Nero that played the fiddle while Rome burned? That in mind, I woud take this as evidence the good Senator is not musically inclined.

Anonymous Anonymous -- 5/16/2008 1:49 PM  

Well, in looking into things a little further, I just came across a CIVIL LAWSUIT THAT HAS ALREADY BEEN FILED against Belichick and the Patriots -- under RICO (see below), as well as other legal theories (fraud, interference with contract, etc.). It was filed in federal court, on 9/28/07, in Trenton, NJ, by a NJ lawyer named Carl Meyer, who is seeking through a class action jury trial, to collect over $61 Million dollars from Bellichick and the Patriots, as reimbursement for ticket cost for all ticket holders who bought tickets for 8 different games vs. the Patriots at Giants' Stadium from 2000 - 2007. The suit also seeks treble (triple) damages (for a total of over $184 Million).

I am not sure at this moment of the exact status of this case, the federal court has probably not yet certified whether the case qualifies as a class action (I would think it clearly does since all potential plaintiffs suffered the same injury).

The case is Mayer v. Bill Belichick and the New England Patriots, NJ Fed Ct (Trenton office) - case # 3:2007cv0467. Here is link to read the Complaint: http://dockets.just njdce/case_no-3:2007 cv04671/case_id-2069 33/

I am just a little stunned that I haven't heard anything about this yet though. It gives a whole different flavor to everything that is happening and being said now.

Can someone is on PACER federal court info. system (I am not), please find out if anything has happened in the case yet?

Anonymous Anonymous -- 5/17/2008 2:12 AM  

(last comment was mine also)

From the way the class action was written, and from the fact that every person who bought a ticket to any game that involved the Patriots from 2000 - 2007 can make the same fraud / racketeering claims as the NJ / NY plaintiffs, it is likely that the lawsuit will end up eventually being a nationwide class action. If the value of tickets for only 8 games in NJ came to $61 Million (as the lawsuit alleges) -- what would be owed to all ticketholders for all (102 regular season + postseason) Patriot games (not preseason) for 7 years?

Patriot's liability insurance probably would try to deny coverage based on the intentional-act exclusion (which makes Walsh's testimony so critical that Belichick knew he was beaking the rules). And the judgment if they lost in court would probably not be dischargeable in Bankruptcy (not for debts owed for fraud / racketeering / or for treble / or punitive damages).

I count 14 postseason games from 2000 - 2007 for the Patriots, + 112 reg. season games (preseason games aren't really expected to be competitive in the same sense so they shouldn't be counted) == so 126 games x $7.5 Million/game (based on the average per game stated in the lawsuit Complaint -- 8 games worth $61 Million) == that's $945 Million that the Patriots could owe if they lose (not counting treble damages, punitive damages, or attorney fees).

So NFL ticketholders across the US, might end up together owning the Patriots when its all said and done? Stranger than fiction.

Anonymous Brian B. -- 5/17/2008 4:50 AM  

I have to agree with the article. This whole fishing expedition should be close to the top of most embarrassing things congress has ever investigated. If what the league or the Pats did came even close to line of integrity of the game, the Vegas books would have stopped betting on Pats and/or NFL games.

Anonymous Jim -- 5/18/2008 1:19 AM  

Brian B,

The lawsuit you bring up was discussed on this blog when it came out, if you search the archives I'm sure you can find the discussion. I would look it up for you but I have too much work to get done at the moment.

Blogger Jimmy H -- 5/18/2008 2:08 PM  

Specter admitted on sports radio 850, WEEI out of Boston that he would not be pursuing this if his Eagles beat the Patriots. The only reason he is pursuing this is because he is an Eagles fan, and he's pissed they lost. I could see if he was doing it for the integrity of the league or something like that, but he's just a disgruntled fan

Blogger wallyjaz -- 5/19/2008 8:07 AM  

This comment has been removed by the author.

Blogger wallyjaz -- 5/19/2008 8:07 AM  

Post a Comment