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Monday, November 10, 2008

Retired NFL Players Win Suit Against NFLPA

According to an AP report, the jury awarded the class of retired NFL players $28.1 million in damages—including $21 million in punitive damages— in its suit against the NFL Players Association.

As the report notes:

Hall of Fame cornerback Herb Adderley filed the lawsuit last year on behalf of 2,056 retired players who contend the union failed to actively pursue marketing deals on their behalf with video games, trading cards and others sports products.
…
Lawyers representing Adderley and the retired players told the jury during the nearly three-week trial that the union actively sought to cut them out of licensing deals so active players could receive bigger royalty payments. As proof, the retirees pointed to a 2001 letter from an NFLPA executive telling Electronic Arts Inc. executives to scramble the images of retired players in the company's popular ''Madden NFL'' video game, otherwise the company would have to pay them.

More on this to come…

-- Posted by Gabe Feldman @ 11/10/2008 08:39:00 PM -- Comments (60) -- Post a Comment

60 Comments:

I never understood how the 2001 letter from the NFLPA to EA serves as proof of the retirees' claim. My first question, and this may sound like a stupid question, is what does it mean to "scramble images"? To me the relevant question is simply, did EA use the images of retired players or not? My second question is, if EA did use their images, isn't a reasonable interpretation of the NFLPA's letter to EA that the NFLPA is actually supporting the retired players by telling EA that, if you want to use their images then you must pay them?

Also, a punitive damages award in a contract dispute equal to 4X actual damages? Are you kidding me? The judge will most likely be reversed on appeal if he doesn't remit the verdict.

Rick Karcher -- 11/11/2008 9:13 AM

Correction: 3X

Rick Karcher -- 11/11/2008 9:52 AM

Rick—

In this case, “scrambling” just means that EA changed or mixed up the images of the retired players so that they could not be identified in the game. The retired NFL players are complaining that the NFLPA failed to properly represent them in their negotiations with EA Sports. According to the retired players, they should have—pursuant to group licensing agreements that they signed—received a share of the royalty payments generated by the licensing agreement with EA Sports. Instead of negotiating on behalf of the retired players to include them in the game, the NFLPA advised EA Sports to scramble the images of the retired players to avoid paying them so that all of the royalty payments would go to the active players.

Gabe Feldman -- 11/11/2008 12:06 PM

I have read the same complaints from the retired players that Gabe just mentioned. In addition, I have heard that NFLPA advised retired players to sign individual licensing agreements with EA for amounts that were insanly low (between $1,000 and $2,000 fixed), and they then turned around and told EA to sign them up as quickly as they could before the players realized what they should be getting. Supposedly there are even documents from NFLPA to EA supporting this claim, but I haven't seen any. Of course this is only one side of the argument, and I would take it with a grain of salt.

Jimmy H -- 11/11/2008 1:12 PM

I don't understand why NFLPA's lawyers took this case to court when there was an email showing the Players Inc. advised its customers to the detriment of its clients. That email was a smoking gun. The NFLPA cearly had fiduciary responsibilities to its clients -- the retired players who signed the GLA -- and yet they actively worked against those clients. And the email is just one part -- it looks like they also structured licensing deals on behalf of retired players as one-offs so they would have to pay out on the GLA. Shameful.

And EA's not off the hook either. The retired players have right of publicity claims against EA to the extent a jury finds that the scrambled images are still identifiable. The first test of this should be the Jim Brown case.

As for the punitive damages award, I don't think 3x actual damages is grossly disproportionate (especially in California). I doubt it will get reversed on appeal.

john -- 11/11/2008 1:26 PM

And to add to what John just posted, it is not only the image here, but the likeness. So even if the player "image" is scrambled, if the player is still readily identifiable by its characteristics, jersey number, years played in the league, team, height weight, etc, the likeness is still being used and I would argue that ROP still applies. I believe we went through all the steps in more detail when discussing the Jim Brown case earlier this year…

Jimmy H -- 11/11/2008 1:42 PM

But this is nothing more than a contract case between the NFLPA and the retired players pursuant to the GLA. The Order Denying the NFLPA's Motion for Summary Judgment states the language from the GLA in its entirety (which is not very lengthy) and it merely grants the NFLPA the non-exclusive right to license 6 or more retired players' images, and if the NFLPA does enter such a license, then the moneys generated would be divided between the retired player and an escrow account for all eligible NFLPA members who have signed a GLA. It does not contain any language whatsoever, expressly or impliedly, that requires the NFLPA to obtain licensing deals for the retired players or to even use good faith or best faith efforts to do so (and also the union does not owe a fiduciary duty to retired players). The reasonable interpretation of the GLA is that the retired player will get paid IF the NFLPA enters a license agreement with a third party for the use of the retired player's image.

Which brings me back to my original question. Did EA, pursuant to a licensing deal that the NFLPA entered with EA, use the images of the retired players or not? The supposed 2001 "smoking gun" letter to EA has no bearing on that question. And I'm not sure how the letter can be dated 2001 when the NFLPA's (Players Inc.'s) agreement with EA was in 2005.

Rick Karcher -- 11/11/2008 1:44 PM

It's not disputed that the NFLPA was acting as agent for the retired players. As such, a fact finder could (and apparently did) find a fiduciary duty that the agent owed to his client. And the fact-finder could also find that the agent breached that duty by not only not seeking deals for the client, but advising others how to avoid using the retired players so that the NFLPA's other clients could receive more.

Add to this the "non-interference" language in Players Inc.'s contracts with its licensees which prevented these licensees from contracting directly wth the retired players, and they were shut out.

The other question is whether the NFLPA breached the agreement by engaging in ad hoc agreements instead of group licensing. The purpose of this was so the NFLPA would not have to include the retired players in the distribution of proceeds. The jury apparently found that this was a breach.

The question of whether EA actually used the players is another issue. If the jury found that EA did, then the NFLPA breached the GLAs by not compensating the retired players for their inclusion in the program.

As for the relevance of the email, the summary judgment decision clearly states that an employee at Players Inc. sent the email advising EA to scramble the images of retired players "even though those players had signed GLAs." That goes right to the heart of the issue. Was the NFLPA working against its own clients? This email suggests that it was. That's the bearing it has on the issue.

john -- 11/11/2008 2:03 PM

To anyone who has ever played an EA Sports NFL game, it is pretty clear who the players are, even when they are identified by RB#34 and no picture... again, it doesnt have to be a name or a photo, as long as you can identify who the player is from all the little things. Let's use one of Rick's examples from the past... no matter how scrambled the picture was, would the be any doubt as to who QB#15, Florida Gators, 6-3, 240lbs, and 55 TDs his Sophomore year is? The same applies to Jim Brown and many other retirees!

Jimmy H -- 11/11/2008 2:12 PM

John,

Whether there is a fiduciary relationship is a legal question, not a factual issue for the jury. It seems strange to me that you refer to the retired players as the NFLPA's "clients". Are you saying that anytime a party is granted a non-exclusive licensing right, it automatically creates a fiduciary responsibility to look after the licensor's interest and make the licensor money? The rights and obligations of the parties are governed by the language in the licensing agreement (in this case the GLA).

Regarding the email, why would the NFLPA have any incentive for EA NOT to use retired players' images. Why isn't the email being construed such that, "if you want to use their images then you will have to pay for it"? If EA uses their images, then EA would presumably pay more and the NFLPA would be obligated to set that aside. If EA doesn't use their images, then there is no money to be set aside. Why is the NFLPA being blamed for EA's decision whether to use the retired players' images?

Rick Karcher -- 11/11/2008 2:25 PM

Jimmy,

Your last comment is essentially why I asked what "scrambling" means. If it means what Gabe says it means, then the retired players are really not even capable of being identified in the manner you suggested.

Rick Karcher -- 11/11/2008 2:39 PM

Rick --

The NFLPA would have an interest in ciphoning money away from retirees, because it means more money to active players who are the ones voting for NFLPA management. The email shows the NFLPA giving EA advice on how to construct the game so teh NFLPA can make the argument that retired players weren't included in the game. That argument lets the NFLPA limit the number of recepients who receive money under the GLA.

Jimmy H is correct -- the use of the retired players by EA is clear. They just leave off the actual names of the retired players. Other than that all characteristics of the retired players are used (#34 from Cleveland Browns, a black HOF RB).

As for the fiduciary relationship, the question of fact is whether the NFLPA had a relationship with the players (principal/agent) that would create a fiduciary relationship. As the District Court said in the summary judgment denial: "Defendants argue that they were not in a fiduciary relationship with plaintiffs, but that is a question of fact to be determined by the jury based on the jury's interpretation of the agency relationship that did or did not exist between plaintiffs and defendants as dictated by the terms of the GLA."

john -- 11/11/2008 2:51 PM

John,

Then if Jimmy is correct, then EA didn't "scramble" their images, and EA didn't take the NFLPA's advice, as you call it.

Regarding the existence of a fiduciary relationship, I read the language you quoted from the district court order and I believe that is incorrect. A jury is not competent to make a determination whether a fiduciary relationship exists -- that is a legal issue, not a factual determination.

Rick Karcher -- 11/11/2008 3:00 PM

Rick --

You are wrong. A fiduciary relationship, under California law, can be a question of law or a question of fact. The California Surpeme Court as recently as this year has held that one party will be considered a fiduciary of another, if that party “either knowingly undertook to act on behalf and for the benefit of another, or entered into a relationship which imposed that undertaking as a matter of law.” The former is a question of fact; the latter a question of law.

john -- 11/11/2008 3:18 PM

Ok all, here is the language of the "smoking gun", at least if you can believe "NFL Retired Players United", who claims this was part of the discovery in this case, I will post it and you all can make of it what you will.

-Former Players Inc. Vice President of Multimedia LaShun Lawson, to Madden NFL Game producer Jeremy Strauser that was cc’d to Doug Allen, then President of Players Inc.
In the letter LaShun says:

For all retired players that are not listed in either Attachment A or B, their identity must be altered so that it cannot be recognized. Regarding paragraph 2 of the License Agreement between Electronic Arts and Players Inc, a player’s identity is defined as his name, likeness (including without limitation, number), picture, photograph, voice, facsimile signature and/or biographical information. Hence, any and all players not listed in Attachment A or B cannot be represented in Madden 2002 with the number that player actually wore, and must be scrambled.

The NFL Retired Players United further claim that in the 2007 version of Madden NFL alone, more than 600 retired players who signed GLA’s had their images scrambled. They are not identified in the game by their names and numbers, but the game lists their exact weight, height, years in the league, and position they played.

I'll also add that there was a competitor to EA Sports that had shown an interest in acquiring the license to the Hall of Fame players. The NFLPA and EA Sports supposedly conspired to keep the competitor off the market, to the detriment of the retired players.

here's another snippet that NFL Retired Players United offer as evidence of this, it is from an email sent from Players Inc. Senior Vice-President, Clay Walker:

Take Two [the EA competitor] went after retired players to create an “NFL” style video game after we gave the exclusive to EA. I was able to forge this deal with [the Pro Football Hall of Fame] that provides them with $400K per year (which is significantly below market rate) in exchange for the HOF player rights. EA owes me a huge favor because that threat was enough to persuade Take Two to back off its plans, leaving EA as the only professional football videogame manufacturer out there

and this February 22, 2007 email from NFLPA Executive Clay Walker to Players Inc. in-house attorney Joe Nahra:
We definitely aren’t going to require you to pay an additional price unless you choose to add players that didn’t sign off on the original deal. You have the existing HOF players that responded to our letter for several years with no increase in cost. The per player price for most of these guys was tens of thousands of dollars less than what they were guaranteed by Take Two Interactive so it’s a real coup that we were able to pull this off so cheaply. You have to remember that EA’s total cost is only $200,000 per year. We know that Take Two offered six figure deals to several former NFL players so the total cost is millions below market prices. That being said, we’ll continue to go after the new inductees for the same price per player (around $2,500) and I think we’ll be successful

Now, assuming the above is accurate, even if there was no good faith requirement, this comes dang close to bad faith, does it not? It is not that they are not trying to get the best deal for the retirees, they are actively pursuing bad ones! Perhaps there can be a suit against EA for inducing a breach of contract (assuming there was one, and that NFLPA breached its duty to the retired players.).

As to the likeness standard, I’m not convinced that weight, height, years in the league, and position they played is enough to reach a ROP violation in court, but I know I never had any problems figuring out who was who on Madden.

Jimmy H -- 11/11/2008 3:33 PM

That's actually shocking.

john -- 11/11/2008 4:05 PM

John,

Assuming it's accurate, I think it's only "shocking" if one views the NFLPA as owing a fiduciary duty to the retired players. It would be shocking if the union acted in that manner towards existing union members. I personally don't read the GLA as imposing any fiduciary duty whatsoever. If that is an accurate statement of California law, the union is not a fiduciary because it does not "act on behalf of or for the benefit of" retired players -- nor does the GLA say that. This GLA should be viewed, from a legal standpoint, as any arm's-length transaction between two parties. Your reading of California law would seem to make all contractual parties fiduciaries with one another. While the retired players may have entered a bad deal with the NFLPA, a bad deal doesn't equate to a fiduciary breach.

Rick Karcher -- 11/11/2008 4:27 PM

Rick --

The NFLPA (through Players Inc.) is acting as the retired players' agent. Through the GLA, retired players are appointing the NFLPA as their agent to seek out licensing deals for the players. Given that, the NFLPA is clearly appointed to work "on behalf of or for the benefit of" retired players who are parties to the GLA. But not only is the NFLPA not living up to this obligation, it is actively working to prevent its own clients from receiving licensing income! And that, as the jury held, is a breach of the NFLPA's fiduciary duty.

I have a hard time seeing your point that if a court holds this agent-principal relationship as creating a fiduciary duty, all contracts will result in a fiduciary duty. If I enter into a contract to sell my house to you, how am I working on your behalf or for your benefit? What fiduciary relationship is created in that circumstance? Where's the slippery slope?

john -- 11/11/2008 4:42 PM

John,

You say that the NFLPA "is acting as the retired players' agent, and through the GLA, retired players are appointing the NFLPA as their agent to seek out licensing deals for the players". But that is simply not stated anywhere in the GLA, and I'm having a hard time even reading the GLA as implying it. The GLA should not be viewed as an "agency" agreement in which an agent has a fiduciary duty to serve the best interest of the principal; The GLA should be viewed as what it is: a licensing agreement. And it's a non-exclusive license, which makes it unlike a typical principal-agent relationship where a fiduciary duty exists -- the retired players can license their rights to whatever third parties they want (and the GLA doesn't prohibit them from doing it).

So the GLA doesn't say or imply that the union will act in the best interests of the retired players. What the GLA says is that the union will allocate moneys on whatever deals they enter into with third parties like EA. It sounds like you're making an argument that the union breached an implied obligation of good faith, which is a breach of contract claim but the jury awarded nothing on that claim.

Rick Karcher -- 11/11/2008 6:36 PM

http://www.nflplayers.com/user/template.aspx?fmid=181&lmid=238&pid=0&type=l#a8

This link would seem to indicate that the NFLPA does represent the retired players. That, plus the fact John has reported that the union did not contest the fact that it represented the retired players, makes a fiduciary relationship fairly apparent.

Anonymous -- 11/11/2008 6:43 PM

Anon,

That link doesn't establish a legal fiduciary relationship between the union and retired players. And why does the fact that "John reports that it's undisputed" make the fiduciary relationship fairly apparent?

Rick Karcher -- 11/11/2008 7:29 PM

Anon 6:43,

I'm not sure that the link you provided supports anything but a the fact that the PA has a retired players division. It says nothing of its obligations or responsibilities.
It says nothing about the GLA, or even what function the retired players division serves at all really...

Perhaps most telling is how the Plaintiffs worded its class action lawsuit.
http://docs.justia.com/cases/federal/district-courts/california/candce/3:2007cv00943/189286/81/0.pdf

Item 3e) under Factual and Legal Issues states:

Whether Defendant formed an,informal confidential relationship with the Plaintiffs that gave rise to fiduciary duties.

To me this means that plaintiffs concede that there was no formal relationship that would give rise to fiduciary duties, or it would have been alleged so in the complaint.

So in essence, whether the NFLPA represented the retired players that signed a GLA is not at issue, but the question becomes what duty, if any, that representation created. The GLA is very silent as to this point (on purpose I’m sure, but still).

The Court (The United States District Court for the Northern District of California) ruled that whether the GLAs guaranteed retired players something more than empty promises remains a issue of material fact and thus denied Summary Judgment sought by the defendants, Players, Inc.

For those of us who like legal mumbo jumbo (don’t we all), I recommend reading the Order, its quite interesting.

http://www.manatt.com/uploadedFiles/News_and_Events/Newsletters/ManattSports/Order%20denying%20SJ.pdf

Jimmy H -- 11/11/2008 9:09 PM

To add on to Jimmy's last comment, I'm not a California lawyer nor have I looked at California law regarding fiduciary relationships, but something doesn't seem right to me with John's characterization of California law. Just because somebody agrees to do something on behalf of another doesn't turn it into a fiduciary relationship that imposes a fiduciary duty to serve the best interests of the other.

Take John's example if he enters a contract to sell his house to me. If our contract expressly states that he agrees to install a new garage door on my behalf, that doesn't mean there is a legal fiduciary relationship in which he owes me a fiduciary duty to look after my best interest in purchasing a door to install. My guess is that he would not even purchase the door that I would want.

Rick Karcher -- 11/12/2008 7:00 AM

Forgetting the NFLPA for a second, wouldn't the retired players have a direct ROP case against EA? I agree that the email is almost irrelevant. All that matters is what EA did or did not do. Either the retired player were presented in a way that makes them identifiable or they weren't.

Rick, a tangential question...is the question of whether or not the players were presented in a way that makes them identifiable a question to be decided by judge or jury?; and 2) assuming they are clearly identifiable, do you believe the 8th Circuit ruling in C.B.C. would carry any weight? Thanks!

- Alexander

TwoStep420 -- 11/12/2008 11:28 PM

Alexander,

Regarding your first question, there really is no consistency among the courts as to whether it's a factual or legal question. Some courts have decided the identification issue as a matter of law, and others have said it's a factual issue for the jury(usually when the identification element is not obvious as when the defendant is not using the plaintiff's actual names or photos). For example, in the CBC case the 8th Cir. decided as a matter of law that the identification element was met because the players' actual names are being used (yet the district court found that the identification element was lacking).

I don't think the CBC case would carry any weight. First, it's only one circuit's opinion and the court's holding, as well as the new standard it adopted and applied, is inconsistent with right of publicity/First Amendment law.

Rick Karcher -- 11/13/2008 2:32 PM

I think these insightful comments raise another interesting issue. Let's take the Super Bowl-winning 1984 San Francisco 49ers Assume EA truly "scrambled" everything related to all of the players on the team. That is, e.g., instead of using Joe Montana's face, body-type, etc., they used an image that looked nothing like him. And, let's say they changed all biographical data regarding him (different college, different weight and height, etc.) and gave him a different jersey number. But, he's still the QB of the 1984 49ers, so there's still no question that he is Joe Montana. Can Joe Montana make a colorable argument that EA is using his "identity," for purposes of a right of publicity claim? I think the answer has to be no, but I'm not sure...

Anonymous -- 11/13/2008 3:59 PM

Anon,

That is an interesting question. I wouldn't be so quick to think the answer is no. If EA is basically saying "This team is the 1984 49ers", then by inference one must assume the QB is Joe Montana. Otherwise it would not be the 1984 49ers.

Going further...is there then anything that legally prevents EA from claiming a team is a certain team, i.e. '84 49ers, and then using players that are clearly not the players from that team? Perhaps some sort of false advertising statute? What if it says on the box "play as your favorite classic team or superbowl winner" or something along those lines?

TwoStep420 -- 11/13/2008 4:25 PM

Twostep and Anon 3:59,

I think you raise an interesting point, and I am a passionate advocate of the players' ROP. But...

I really don't see how you could apply an ROP standard to that example. The whole key to the right of publicity is the unauthorized commercial use of an individual's name, likeness, or other recognizable aspects of the individual’s persona. The simple fact that you know who the QB was for the 1984 49ers does not give rise to a claim of ROP violation. We know the identity of the player, but there is no use of the player’s likeness.

As to the question of EA's use of any certain team from any certain year, I would have to assume that this would be licensed through the NFL, not the NFLPA. This is why the EA can have classic teams, but not classic players (without acquiring that right from the player).

Jimmy H -- 11/13/2008 5:30 PM

Rick --

Just because I agreed to do something on someone's behalf doesn't mean that it necessarily creates a fiduciary relationship; that's an issue that is up to the fact finder to decide. In this case, they decided that the relationship between the NFLPA and the retired players it represented did create a fiduciary relationship.

john -- 11/14/2008 12:54 PM

Why did the NFLPA have retired players sign GLA's? No one could remember who authored the GLA, who omitted the escrow account from subsequent GLA's or where they were located/stored in the building. "Intent"? How can you address intent without admissions from NFLPA principle mgrs. exclusive of their outside counsel?

BigFan

Anonymous -- 11/15/2008 12:31 AM

Jimmy,

I just don't see how you can separate the two. I agree that the license to use the team name comes from the NFL...however, when referencing a particular team from a particular year, how do you separate the players from it? Especially when the availability of that team is part of the marketing and appeal of the product. For example, for next years Madden...they wouldn't market the game by saying "now you can use classic teams such as the 2008 Lions." But teams like the 84 49ers, 93 Cowboys, etc. have an enhanced value directly attributable to the players on those teams...which in turn creates an economic benefit to EA.

- Alexander

TwoStep420 -- 11/15/2008 1:16 PM

Alexander,

I agree with you that the former players are not getting a fair shake, but I’m just not convinced that you can apply the ROP to the scenario we are discussing here.

The common law ROP involves the unauthorized commercial exploitation of an individual’s name, likeness, or persona. If you look at some individual state statutes, you can get even more specific, in some cases expanding “persona” to include gestures and mannerisms.

The problem with applying the ROP to our example is that we don’t have the likeness or persona to link to the commercial use. If we had a picture, name, or other identifiable character traits, then I think we would have a good argument. In our scenario, we are talking about applying the ROP simply because the player was a part of the team. Other than that, we have nothing that actually identifies the player. Who played what position on what team is in many cases (such as Joe Montana) common knowledge. You can’t apply the ROP based solely on common knowledge, you simply have to have a name, or some sort of likeness or distinctive appearance to attach to the commercial use.

Jimmy H -- 11/16/2008 1:02 AM

John,

It's not an issue for the fact finder. Whether a duty is owed (under ordinary negligence principles or a fiduciary duty) is a legal question for the court, and breach is a factual issue for the jury. See, e.g., Amtower v. Photon Dynamics, Inc., 158 Cal.App.4th 1582, 71 Cal.Rptr.3d 361
Cal.App. 6 Dist.,January 17, 2008: "The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 483, 80 Cal.Rptr.2d 329.) Whether a fiduciary duty exists is generally a question of law. (David Welch Co. v. Erskine & Tulley (1988) 203 Cal.App.3d 884, 890, 250 Cal.Rptr. 339.) Whether the defendant breached that duty towards the plaintiff is a question of fact. (Ibid.)"

I think the district court was wrong to the extent it allowed the jury to answer the legal question of whether the NFLPA owes the retired players a fiduciary duty. A jury is simply not competent to make such a determination as a matter of law. In my opinion, the union has a strong case for reversal.

Rick Karcher -- 11/16/2008 6:10 AM

Rick --

All this time you've been looking for cases that support your contention that the existence of a fiduciary relationship is a question of law, and the best you could come up with was a 10-year old lower court decision that says that it is "generally" a question of law?

And why is a jury not competent to make a determination about whether a fiduciary relationship exists? Why should this be different than any other issue a jury is asked to determine? The jury is given the elements of a fiduciary relationship, and it makes a decision.

You're wrong on this one, Rick, but we'll see how the appeal goes.

john -- 11/17/2008 9:30 AM

"We agree with the holding in Wolf, supra, 107 Cal.App.4th 25, that fiduciary obligations are not necessarily created when one party entrusts valuable intellectual property to another for commercial development in exchange for the payment of compensation contingent on commercial success. The secrecy of information provided by one party to another MAY BE CONSIDERED BY THE TRIER OF FACT IN DECIDING WHETHER A FIDUCIARY RELATIONSHIP EXISTS, but it does not compel the imposition of fiduciary duties by operation of law."

City of Hope National Medical Center v. Genentech, Inc., 43 Cal. 4th 375 (California Supreme Court, 2008).

john -- 11/17/2008 10:05 AM

John,

I didn't cite a case that is 10 years old. Look again, the one I cited was decided this year.

The language you quoted from City of Hope actually supports the union's position even MORE. The first sentence of the quote you provided states that a fiduciary relationhip is not typically created in the exact situation we have here (a license of I.P.), and that quote is entirely consistent with what I said earlier in the comments to this post. Secondly, there is no "secret information" involved here -- and even if there was, the language you quoted says that even THAT wouldn't necessarily compel the imposition of a fiduciary duty AS A MATTER OF LAW.

Can you provide any precedent which states that whether a fiduciary duty is owed is a question of fact for the jury?

Rick Karcher -- 11/17/2008 10:22 AM

Jimmy,

I guess my argument...and I agree it is a stretch...is that the use of the specific team name, '84 49ers, is enough to establish the "symbol of identity" prong for the player...even if the name, stats, weight, etc. are not used.

- Alexander

TwoStep420 -- 11/17/2008 3:49 PM

Very first result that came up in my search --

From Bear Stearns & Co. v. Daisy Sys. Corp. (In re Daisy Sys. Corp.), 97 F.3d 1171:

Bear Stearns expands upon the district court's analysis, however, by summarily concluding that "the relationship between an investment banker and the banker's client is not a fiduciary relationship as a matter of law." We must reject this legal conclusion, as the existence of a fiduciary relation is a question of fact which properly should be resolved by looking to the particular facts and circumstances of the relationship at issue. See Kudokas v. Balkus, 26 Cal. App. 3d 744, 103 Cal. Rptr. 318 (1972); Stokes v. Henson, 217 Cal. App. 3d 187, 265 Cal. Rptr. 836 (1990). In Kudokas, the California Court of Appeal held that the "existence of a confidential or fiduciary relationship depends on the circumstances of each case and is a question of fact for the fact trier." 26 Cal. App. 3d at 750. Similarly, in Stokes the court inferred the existence of a fiduciary relationship between an investment advisor and his clients on [**22] the basis of the surrounding facts. 217 Cal. App. 3d at 194. Accordingly, in determining whether Bear Stearns may have owed any fiduciary obligations, the district court should have evaluated more carefully the details of the Daisy/Bear Stearns relationship.

john -- 11/17/2008 4:19 PM

Jimmy H/Alexander --

I believe the ROP is implicated in this case because the retired players are readily identifiable, even though their actual names aren't used. For example, the running back on the 1964 Browns is #32, a 6'2", 230lb African-American with a unique running style. Obviously, it's a question for the jury (as to whether the player in the game is identifiable as Jim Brown), but it certainly could be enough for a ROP claim.

john -- 11/17/2008 4:39 PM

John,

With the facts you mentioned in your last post, I agree, ROP would be implicated. However, these were not the facts of the discussion between Alexander and Myself, nor the facts of the case in the original post. Furthermore, EA was not a defendant in the Cali case.

Alexander,

From a point of fairness, I agree with you, however, it does not fit the scope of ROP statutes. As we see all to often, fairness and the law do not always walk hand in hand.

Jimmy H -- 11/17/2008 5:40 PM

I feel like I'm in moot court. John, I think comparing the union's relationship with retired players to that of an investment advisor with a client who pays the advisor hundreds of thousands of dollars for the purpose of advising the client in sophisticated transactions is apples and oranges. But in any event, the dissent in that 1996 case you cited (more than 10 yrs. old by the way) makes much more sense:

"Kenney reaches too far when he says that the facts could possibly support a breach of fiduciary duty claim. The district court, with that perceptive and informed sententiousness that often characterizes the work of our district judges, said that:

Merely because Bear Stearns was hired as an expert consultant to render financial services does not mean it was in a position of superiority in this relationship between two sophisticated business entities. Daisy's “complete” dependence on Bear Stearns, even if it is true, is unjustified and does not render Bear Stearns liable for an arms-length business transaction that has gone sour. In addition, the conclusory allegations that Daisy was somehow vulnerable to Bear Stearns or that Bear Stearns “exerted undue influence” over Daisy are unsupported....

Just so. Nothing in this case suggests that there was any fiduciary relationship whatever between these sophisticated entities or that Kenney can honestly plead one. Kenney's attempt to clothe Daisy in the weeds of a poor put-upon consumer of professional services borders on the ludicrous; I suspect that it is only in conditions of litigation that Daisy's high-powered executives would be willing to say that they were mere lambs under the protection of the shepherds at Bear Stearns. Finally, while there is at least some indication of negligence on the part of Bear Stearns, there is no indication of a breach of fiduciary duty.

Thus, with some misgivings, I agree that there may have been negligence. But to leverage this action into a fiduciary duty case breaks down all barriers between mere negligence and breach of fiduciary duty. Of course, I agree that the district judge properly granted summary judgment on the issue of negligent misrepresentation."

Rick Karcher -- 11/17/2008 5:41 PM

Whether you question the outcome of the Bear Stearns case, is sort of beside the point. The point is that there is that inquiry as to the existence of a fiduciary duty. And I think everyone would agree that the NFLPA was in a superior position to retired NFL players. So, it strikes me that the NFLPA case is an easier one, but either way, it can be determined by a jury.

Anyway, 42 comments, that's a pretty good discussion.

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