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Wednesday, June 25, 2008
Bad Duke Football Team Wins in Court
Being a bad football team paid off for Duke University, which won a breach of contract lawsuit because in large part because of its unsuccessful track record and a contract clause that required the plaintiff, the University of Louisville to find an adequate substitute school after Duke backed out of a obligation to pay the better school.
Duke's football team has amassed a record that few would envy. Six wins and 45 losses over the last five seasons puts the team in the category of as bad as it could get. As reported by the Louisville Courier-Journal, the University of Louisville sued Duke claiming breach after the Blue Devils opted out of the final three games of a four-game football series covering the 2002, 2007, 2008 and 2009 seasons after Louisville demolished the Duke Team 40-3 after the first game in 2002. Apparently, Duke waved the surrender flag to avoid more embarrassments.
The case, University of Louisville v. Duke University, No. 07-CI-1765, filed in Franklin (county) circuit court, sought $450,000 in damages. The amount was derived from a contractual cancellation penalty clause of $150,000 per game if the nonbreaching party is unable to schedule a replacement game with a “team of similar stature." According to the article, Duke asked Louisville to attempt a good faith effort to find a replacement opponent and promised to pay Louisville only if the school could not find one. Louisville claims it could not do so and therefore asked for the liquidated damages.
It is in interpreting "team of similar stature" where Duke's lack of success helped. Judge Phillip J. Shepherd agreed with Duke’s argument that it team was so bad that finding a replacement team of "similar stature" should have been a slam dunk (pardon the bad pun). As the opinion noted:
"To say that one thing is “of a similar stature” to another is to say that
the two are on the same level. Nothing in the language of the agreement
suggests that it is necessary or appropriate to conduct an in-depth
analysis of the relative strengths and weaknesses of the breaching team
and its potential replacements. Nor does the agreement specify that
replacement teams must be from a particular major athletic
conference or even a particular division of the National Collegiate Athletic
Association (NCAA). The term “team of similar stature” simply means any team
that competes at the same level of athletic performance as the Duke football
team. At oral argument, Duke (with a candor perhaps more attributable to
good legal strategy than to institutional modesty) persuasively asserted
that this is a threshold that could not be any lower. Duke's argument
on this point cannot be reasonably disputed by Louisville.
Louisville did find substitute teams and the court rejected the claim that the term "similar stature" was ambiguous. According to Shepherd, finding a suitable replacement literally meant that any NCAA Division I team would suffice – including those in the Football Championship Subdivision (formerly known as Division I-AA.) Therefore, the court granted summary judgment for Duke for the 2007 and 2008 season, but did not consider the 2009 season since the claim lacked ripeness.
Imagine, however, if Duke was a more competitive football team. Then the substitution clause would be more difficult to fulfill. Or, in a legal nightmare scenario, imagine that Duke's football team was as good as its men's basketball team! Needless to say, substation would be far more difficult.
[Note: I would like to thank reporter C.L. Brown and the Louisville Courier-Journal, who giving me access to the opinion.]
Justice Alito’s Comments on Holmes’s Opinion in Federal Baseball
"That to which it is incident, the exhibition, although made for money would not be called trade or commerce in the commonly accepted use of those words. As it is put by the defendants, personal effort, nor related to production, is not a subject of commerce."
Justice Holmes, Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs, 259 U.S. 200, 209 (1922).
Howard Wasserman posted a reference on June 3 to comments by Justice Samuel Alito before a Supreme Court Historical Society gathering on the opinion of Justice Holmes in Federal Baseball that established the foundation for baseball’s antitrust exemption. In reading the linked post by Tony Mauro at The BLT: The Blog of LegalTimes, I found the following statement:
"Alito said the Supreme Court's decision has been pilloried by scholars and judges alike in the decades since it was issued. More recently, he said, some commentators have been 'less harsh,' fitting it into a more modest view of the scope of the Constitution's commerce clause. Alito indicated that he is in the camp that views the case more kindly."
I do not have access to Justice Alito’s comments or his references. However, after teaching the case for years, I think that one aspect of Holmes’s decision is commonly overlooked. If you notice the second sentence in the quotation at the beginning of this post, you will see the hook for my argument. To support this reading of the case, I have spent some time analyzing the briefs of counsel. The position that a baseball game was the result of human labor and not production or manufacturing of goods was argued by counsel and accepted by Justice Holmes for deciding that baseball was not within "trade" - the second of the three prongs of a Sherman Act § 1 violation with "contract, combination, or conspiracy" and interstate commerce.
The defendants (the member teams of the two leagues and the three members of the National Commission) were represented by George Wharton Pepper, Benjamin S. Minor, and Samuel M. Clement, Jr. In their brief, the attorneys offered three reasons why organized baseball was "not within the Sherman Act." The presentation of the first of these three reasons begins on page 46. Counsel advanced the following statement - "(a) Personal effort, not related to production, is not a subject of commerce; and the attempt to secure all the skilled service needed, for professional baseball contests is not an attempt to monopolize commerce or any part of it. It is believed that in no decided case has it ever been held that personal effort, considered apart from production, is a subject of commerce." This is the point of Holmes’s opinion that has long been ignored. Notice that in the quotation above, Justice Holmes specifically refers to the position taken by the defendants that personal effort apart from production (e.g. manufacturing) does not constitute commerce. After citing § 6 of the Clayton Act ("That the labor of a human being is not a commodity or article of commerce."), counsel proceeds to discuss a number of cases supporting their basic position.
The first cited case, Paul v. Virginia, 75 U.S. 168 (1868) involved the sales of contracts for fire insurance, and counsel followed that with a reference to Hooper v. California, 155 U.S. 648 (1894) that marine insurance sales could not be distinguished from fire insurance sales. Hooper was one of the two cases cited by Holmes in the opinion, and it would be overruled by the Court in 1944 by United States v. South Eastern Underwriters Ass’n., 322 U.S. 533 (1944). Counsel proceeded to distinguish Paul and Hooper from one involving correspondence school instruction, International Textbook Co. v. Pigg, 217 U.S. 91 (1909). Unlike a baseball game played locally between two teams, the main point of the transaction in Pigg was the shipment of educational materials from Pennsylvania to students in various states.
Counsel turned next to a discussion of Metropolitan Opera Co. v. Hammerstein, 147 N.Y.S. 532 (1914):
The production of opera or other theatrical exhibition before an audience in exchange for the price of tickets involves none of the elements of trade or commerce as commonly understood. There is no dealing with an article of trade or commerce nor any use made of the instrumentalities of commerce. The holder of the ticket pays a certain price as a consideration for the privilege of experiencing the gratification of an artistic sense."
The three attorneys continued to pile on more precedent. In In re Duff, 4 F. 519, 521 (1880), they quote the court: "This bankrupt was a theatrical manager ... I think he cannot be considered a merchant or tradesman within the meaning of the statute;" In re Oriental Society, 104 F. 975 (1900): "A corporation engaged in giving theatrical performances is, of course, not engaged in manufacturing, printing, or publishing;" People v. Klaw, 106 N.Y.S. 341 (1907), determining that booking arrangements by theatre owners did not constitute trade.
In examining American Baseball Club of Chicago v. Chase, 149 N.Y.S. 6 (1914), counsel provided a quotation from the opinion citing a definition of "commerce" from the Century Dictionary ("‘interchange of goods, merchandise or property of any kind; trade, traffic") together with a definition of "commodity" before concluding that
The foundation of the National Agreement is the game of baseball conducted as a profitable business, and if this game were a commodity or an article of merchandise and transported from State to State, then the argument of the defendant’s counsel might be applicable.
Gary Hailey, an attorney and author of "Anatomy of a Murder: The Federal League and the Courts" in the spring 1985 edition of the Society for American Baseball Research’s National Pastime concluded that "given the legal doctrines of the day the Federal Baseball case was correctly decided. The courts of that era applied the federal antitrust laws only to businesses that were primarily engaged in the production, sale or transportation of tangible goods."
Although I do not think that either reading of Federal Baseball was an appropriate reason for the per curiam opinion upholding the decision in Toolson v. New York Yankees that really established the reliance on stare decisis that was critical for Justice Blackmun’s opinion in Flood v. Kuhn, I do think that it provides an important point of jurisprudential context for the 1922 opinion by Justice Holmes.
Hank Steinbrenner, Chien-Ming Wang, Salary Arbitration and the DH
On Sunday, June 15, New York Yankees pitcher Chien-Ming Wang tore a tendon in his right foot and suffered ligament damage while rounding third base during a 13-0 victory and the finale of a series sweep against the Houston Astros. Wang improved his record to 8-2 for the season while lowering his ERA to 4.07. Wang was on the base paths after a fielder’s choice, and one of the results was the ire of Hank Steinbrenner concerning the National League’s refusal to adopt the designated hitter.
Kevin Kernan of the New York Post agreed with Steinbrenner’s assessment in a June 17 article. Kernan quoted Steinbrenner as arguing that the National League needed to join the 21st Century and abandon the game as played in the 1880s. Furthermore, Steinbrenner noted that "It’s OK for the Yankees to fill up the seats in the National League parks, they make a ton of money off us." Kernan seconded the observation - "Steinbrenner is right. Most leagues, amateur, college and professional use the DH, something the American League instituted in 1973." Although upset over losing the pitcher for an extended period, Steinbrenner and the Yankees’ position during salary arbitration in February clearly popped into my mind.
Wang had requested $4,600,000 from the Yankees who countered with a $4,000,000 offer. Of course, either figure was a big increase over his 2007 salary of $489,500. Wang wanted a long-term contract, but the Yankees responded that it was "not the time" according to Anthony DiComo’s February 12 posting for MLB.com. DiComo further commented that "the team’s reasoning, according to Wang, was that it’s difficult for pitchers to stay healthy, so there’s little incentive to sign a young starter to a long-term deal." With Wang not eligible for free agency until 2011, the Yankees had little incentive to grant Wang’s request. A number of articles noted Brian Cashman’s position that the figure chosen by the Yankees was the appropriate slot for a first-time arbitration-eligible pitcher with Wang’s career numbers.
When neither side budged, the case went to a hearing on Thursday, February 14, in St. Petersburg. The arbitration panel of Jack Clarke, Stephen Goldberg, and Christine Knowlton sided with the Yankees. The Wang decision was one of the six victories this February by the clubs against two losses. Jon Heyman provided some interesting insight into the hearing in SI.com’s The Daily Scoop on February 20. Heyman noted that Wang’s representatives "badly overshot when they tried to compare Wang to Michael Jordan." The Yankees argued that Wang had not matched Dontrelle Willis when he first became eligible for arbitration after a 22-win season in 2005. The woes of Willis since that breakout season are probably well known to most readers of this blog. The Yankees also likened Wang to Scott Kasmir, Joe Blanton, Freddy Garcia, Roy Oswalt, and John Lackey. Oswalt, for instance, jumped from $500,000 to $3,250,000 for the 2004 season. The Astros were rewarded with back-to-back 20 win seasons in 2004 and 2005. Oswalt excited the game against the Yankees right after Wang’s injury. The Yankees also stressed the great run support that Wang received.
The Yankees concern about Wang’s injury potential probably focused on his arm not his right foot. Albert Chen’s excellent Sports Illustrated piece, "Chien-Ming Wang Has A Secret" (April 21, page 44) detailed the rise of the Taiwanese star and the concern shown by many major league teams over the physical demands placed upon young pitchers in Taiwan. Wang missed the entire 2001 season after blowing out his shoulder. Chen pointed out in his article that the "grueling training regimens in Taiwanese colleges and professional leagues have been blamed for the short careers of pitchers." Wang had pushed his won-lost ledger for the Yankees to 54-20 (.730 percentage) with his victory over the Astros. He was on target for an interesting round of salary arbitration in February 2009. Now he faces rehab sessions, and Hank Steinbrenner will push for a change in the designated hitter rules at least for interleague games.
Green Bag Call for Papers: Baseball and the Law
We are seeking submissions for our 2010 Almanac & Reader, which will have a baseball-and-the-law theme.
We want scholarly essays on topics related to baseball and the law. We hope to select 12 essays, each between 1500 and 5000 words long. Topics in which we are particularly (but not exclusively) interested are: (a) baseball and … civil rights law; criminal law; defamation law; intellectual property law; international law; labor law; media law; property law; tax law; tort law; transportation law; (b) baseball players who were or became lawyers; and (c) roles played by lawyers in baseball.
Please send your proposals for papers to firstname.lastname@example.org.
(H/T): Legal Scholarship Blog
Tuesday, June 24, 2008
Does Shaq Have First Amendment Claim Against Phoenix Sheriff Who Took Away His Badge Over Kobe-Rap?
We've blogged before about Shaq's amusing part-time role as a volunteer reserve sheriff (see my post here and Mike's post here). After moving from Miami to Phoenix as part of the "worst trade ever", Deputy Diesel resumed his part-time law enforcement career with the Maricopa County Sheriff.
The Sheriff was not pleased, however, with Shaq's recent "freestyle" Kobe-dis, which aired yesterday on the web site TMZ (warning: mildly unsafe for work). In the profanity-laden performance, Shaq uses a racial epithet, accuses Kobe of ruining his marriage and opines that Kobe could not win a championship without him.
Sheriff Arpaio has now asked Shaq to turn in his badges. "[I]f any one of my deputies did something like this, they're fired," explained the Sheriff.
Could Shaq challenge his termination based on his First Amendment right to free speech? Interestingly, Arizona has recently produced some cases in which law enforcement officers challenged their terminations on free speech grounds. In Dible v. City of Chandler, the Ninth Circuit upheld the termination of a law enforcement officer who participated in his wife's pornographic photo business. The Court opined that his "speech" did not involve a matter of public concern, and therefore was not protected by the First Amendment.
While much of Shaq's rap clearly involved private matters, and his termination resulted more from the terms he used than the content of his expression, what about his assertion that Kobe couldn't win a championship without him? A matter of public concern or importance?
Monday, June 23, 2008
More on Sonics Lawsuit
Jim Brunner of the Seattle Times has a terrific new piece on the increasingly-acrimonious lawsuit between the Sonics and the city of Seattle. The article is entitled "Sonics Trial: What's Under All the Drama?" He interviews my good friend Professor Al Brophy and me, along with others, for the story. Here's an excerpt of our comments:
* * *
"I think the truth is the Sonics had the advantage going into this," said Michael McCann, a Boston College law professor and legal analyst for SportsIllustrated.com. "The tradition of courts has been to substitute monetary damages."
A crucial test for the city to reverse that presumption may be whether it can prove that the Sonics are a unique tenant — one that brings benefits to the city that cannot be calculated in dollars and cents.
The city has argued that point, bringing in witnesses to talk about the Sonics' charity work and the team's spillover economic benefits to the community.
Seattle also brought in author and National Book Award winner Alexie — who compared NBA players to Greek gods — to speak for passionate fans who would miss the team. (He brought up the missing cucumber sandwiches, which had been served at a past season-ticket holder event, to imply Bennett had deliberately sabotaged fan interest.)
The city has "a strong argument" when it comes to the unique benefits of having an NBA team as its arena tenant, said Alfred Brophy, a law professor at the University of Alabama and an expert in landlord-tenant law.
"Public interest is a trump card that judges throw down to resolve these kinds of huge cases, especially when you have something like a building that a lot of people use, or a highway, or in this case, a city's treasured team," Brophy said in an e-mail.
Brophy dismissed Bennett's claim that the team would lose $60 million over the final two seasons at KeyArena.
"The team's fear that they'll lose money isn't a factor in whether they've broken the contract. Just because you struck a bad deal and you're going to lose money isn't a basis for getting out of a contract," he said.
* * *
George Carlin and some sports
Comedian George Carlin died yesterday of heart failure at age 71.
At Concurring Opinions, Deven Desai links to one of Carlin's funniest routines--comparing baseball with football. Worth a watch.
The New Republic's Feature Article on Sonny Vaccaro
In this week's The New Republic, Jason Zengerle has a terrific, in-depth (nearly 6,000 words) article on basketball legend Sonny Vacarro and his arguments against the NCAA and the current age eligibility rule for the NBA draft. I was interviewed for the article, which is entitled The Pivot. Here are a few excerpts:
* * *
As a shoe company executive, an all-star game organizer, and a summer camp and tournament operator, the 68-year-old Vaccaro has been one of the most powerful--and controversial--men in basketball for nearly three decades. He is the sport's ultimate insider, the man who brokered the marriage between Michael Jordan and Nike that gave birth to Air Jordan; plucked a 15-year-old Tracy McGrady from basketball obscurity in rural Florida and put him on the path to NBA stardom; and played godfather to myriad successful college basketball coaches, most notably Ben Howland, who reportedly owes his job at UCLA to Vaccaro's lobbying . . . When the NBA holds its annual draft on June 28 in New York City, Vaccaro will be there as the guest of at least three players expected to be taken in the first round. As one of those players, O.J. Mayo, who began keeping Vaccaro's counsel as a ninth-grader, has put it: "Sonny's kind of a man in the back."
* * *Vaccaro believes the NCAA is fraudulent for two fundamental reasons: The first is that the NCAA is more devoted to business than to education; and the second is that the NCAA makes its money by exploiting the talents of the young men it is supposed to be educating. "They're not good people, the NCAA," Vaccaro told me. "It's a one-sided street; all the money goes to them." Vaccaro is revolted by the hypocrisy that's become engrained in the culture of college athletics--the insistence that the athletes are students, that the coaches are teachers (not "mercenaries" and "hired guns," as he calls them), and that "college sports," as NCAA president Myles Brand has declared, "is not a business." If Vaccaro's life is a testament to anything, it's that college sports is a business. And his new mission is to ensure that the people who contribute most to that business, the athletes, get something in return. "My goal," Vaccaro says, "is to get freedom for these kids."
* * *In the meantime, Vaccaro is looking for ways to circumvent the "one-and- done" rule. The most promising avenue lies overseas. Two years ago, he was on the verge of brokering a deal for two American high-school stars to play one season for a professional team in Israel, but he scotched the idea because of Israel's conflict with Hezbollah. "The guy from the team was telling me, 'Sonny, the bombs don't come to Jerusalem,' but I couldn't let them go there," Vaccaro recalls. (Both players went to college instead.) Vaccaro is now looking for other young hoops phenoms who'd be interested in playing overseas for the year they'd otherwise be in college before coming back to enter the NBA draft. "I need Jackie Robinson; I need a guy who can stand this," he says. "And I think I'll have one."
* * *
For the rest The Pivot, click here. For other Sports Law Blog coverage of Sonny Vaccaro, including discussion of his recent talks at Harvard Law School and Yale Law School, among other schools, click here.
Book Recommendation: Money Players
I recently enjoyed reading Marc Isenberg's Money Players: A Pro Athlete's Guide to Success in Sports, Business & Life. I enthusiastically recommend it to any sports fan, but particularly any player, team executive, agent, or prospective agent.
Over the course of 23 chapters, Money Players thoughtfully details every imaginable business aspect of becoming and being a professional athlete--from selecting an agent to maximizing media relations to understanding the duties and rights of being a member of a players' union--and does so in very clear and precise ways. In chapter 7, for instance, Marc offers a particularly terrific description of how the player drafts work, comparing the rules, as well as the risks and benefits of the major leagues' drafts.
I suspect I'll be regualrly using Money Players as a resource. It certainly delves into sports law issues and does so with both sophistication and clarity. If you would like to learn more about Money Players, check out these excerprts, Darren Heitner's interview of Marc on Sports Agent Blog, and Marc's blog, Money Players. If you are interested in learning more about ordering the book, click here.
Sunday, June 22, 2008
New Sports Law Scholarship
Recently published scholarship:
James J. LaRocca, No trust at the NFL: league’s network passes rule of reason analysis, 15 UCLA ENTERTAINMENT LAW REVIEW 87 (2008)
Saturday, June 21, 2008
The Essence of Success - Sports and Otherwise
Every now and then we get a glimpse of the essence of something – that special ingredient among many that is most responsible for whatever it is. Without malt powder, it’s only a milk shake kind of stuff. Tiger Woods by all accounts is a successful golfer. At only age 32, he is winning major tournaments at a pace faster than anyone in the history of the sport. Around the water cooler we try to capture his essence by saying “He’s a great athlete”. But upon the revelation that he not only won the U.S Open while hurt, but with a broken leg and a bum knee (technically two fractures of a major leg bone – the fibula- and serious ACL knee ligament damage), the essence is something more than just having “athleticism”. Some humans with great athleticism would cue the pain and have been back at the clubhouse by day 2, 3, 4, or day 5. Some humans would have missed the US Open altogether by the completely legitimate excuse of taking the advice of Tiger’s highly respected doctors. They essentially said, “swing your crutches not your clubs” this week.
But from the 5-day reality show called the US Open, we saw the essence of why Tiger Woods is so successful.” He wasn’t at his job just to make money. Before the Open started, he already had $128 million from salary, winnings, endorsements and appearance fees, making him the top-earning US athlete on the Sports Illustrated “Fortunate 50” for several years and counting. It is his ability to compete at the highest level in the face of adversity, the competitive desire to win, the single-minded purposefulness to overcome major “distractions”, the patience and perseverance to, as he says, “grind it out. Isn’t that the key in many of our personal and professional endeavors? When we rewind our minds to when we have been most successful, hasn’t it often involved one or more of those attributes? When you worked not just to get paid, but a combination of profitability and passion? Without swinging a 7 iron, haven’t you done your best when you stayed focused on the task at hand, or continued to work into the night to grind out a document when you could have been sipping martinis, or ignored the excuses to fight for what you believed about your abilities, not limiting yourself to what others thought were your limitations? What I saw in the US Open, therefore, was not just a sporting event. I saw a glimpse of greatness, born not in a golf swing or the singular desire to make the next dollar (OK, the next million dollars). The essence was in the mind and heart of a great achiever. I also saw a glimpse of the essence of what breeds success in all of us – just not as profitable and prolific, but prophetic nonetheless.
 He has now won 14 major championships. Only a legend named Jack has more at 18, but it took him longer to reach where Woods is now.
Thursday, June 19, 2008
Article on Coach Liability in Pro Athlete Injury Cases
From the Tort Law Professor Blog:
Sports law casebook author and Wake Forest Professor Timothy Davis has posted Tort Liability of Coaches for Injuries to Professional Athletes: Overcoming Policy and Doctrinal Barriers. Here's an abstract of the article:
The resolution of seemingly straightforward disputes that arise in sports often require courts to invoke rules from several substantive areas of the law. The potential tort liability of coaches and their teams for injuries to professional athletes provides such an illustration. Determining the culpability of coaches requires resort not only to tort law doctrine, but also to doctrine and policy related to contract, labor, and workers compensation law. This article first provides an overview of the law regarding the tort liability of institutions for injuries to athletes and the standards of care that courts have adopted. The article suggests that the breach of any duty imposed on coaches and their teams to players would most likely be assessed according to a heightened standard of care, specifically recklessness. The article concludes, however, that even if a coach engages in conduct that falls short of the applicable standard of care, a professional athlete will have difficulty prevailing in a tort-based civil action against a coach, or by virtue of vicarious liability, the team. In this regard, the article briefly discusses the defenses that might impede a player's ability to pursue state tort claims. These defenses, which include the labor law preemption doctrine, mandatory arbitration, and workers compensation, demonstrate the convergence of different strands of law in resolving sports-related disputes.
Tuesday, June 17, 2008
NCAA "Singles Out" Baseball Player for Not Paying Advisor
Liz Mullen of SportsBusiness Journal (OSU Case Raises Questions About NCAA Rules for Agents, 6/16/08) reports that Oklahoma State University pitcher Andy Oliver was declared ineligible late last month by the NCAA after he received a bill for $113,000 from his "advisor," MLB certified agent Robert Baratta. Oliver recently terminated Baratta, and hired Scott Boras as his advisor. According to Mullen, "Baratta maintains that by charging Oliver for 325 hours of advice at $350 an hour, he was following NCAA guidelines that state a student athlete must pay his adviser at that adviser’s normal rate." Mullen raises an interesting point: "The issue in the industry is the fact that many MLB player agents routinely charge student athletes nothing unless and until the player is drafted. That leads to the question of whether this standard, industry practice is a violation of NCAA rules." I would add that it also leads to the corollary question of whether or not agent regulations of governing bodies should conform with industry norms.
The NCAA Bylaws on amateurism and use of agents, which are incorporated into the student-athlete's scholarship, do not contain any provision requiring a student-athlete in any sport to pay his or her advisor, let alone how to pay his advisor. However, there is a statement buried in a Memorandum, dated October 7, 2007, from the NCAA to Baseball Student-Athletes with Remaining Eligibility that provides: "Finally, it is important to note that in order to maintain your eligibility at an NCAA school, if you receive assistance from an advisor, you will be required to pay that advisor at his or her normal rate for such services." The Memorandum contains a signature line for the athlete to date and sign.
The first "advice" that an advisor might consider giving his client is to not sign this document. I have no idea whether Oliver signed it, but I do not see how this Memorandum has any legal significance whatsoever if the student-athlete does not agree to it. Neither the NCAA bylaws nor the student-athlete's scholarship incorporates or references this document. If the NCAA were to declare ineligible a student-athlete who did not sign it, I think the student-athlete would make a very good case for breach of contract (his scholarship) and that the NCAA lacks the authority to declare any student-athlete ineligible for doing something that does not violate its rules and regulations. Under these facts and circumstances, it would be difficult for the NCAA to take the position that signing the Memorandum is a condition to remaining eligible. But that's the legal analysis. The practical reality is that if a player refused to sign it, the compliance director of the school would say to the player, "you need to sign it if you want to play."
This entire situation can be avoided if the NCAA would simply recognize that baseball players are uniquely situated from student-athletes in football and basketball because of the timing of the draft. The MLB draft takes place within days of the completion of the college regular baseball season, and during the playoffs for many players drafted. Student-athletes can't sign a contract with an agent before the draft because they will jeopardize their eligibility, and they also can't agree that they will pay an advisor when they sign a professional contract. So this "under the table" process takes place in which players choose an advisor with a handshake, and the advisor talks to clubs on his behalf, thus technically breaking every rule in the book. These verbal arrangements also create uncertainty between the parties regarding the terms of their relationship, including the agent's fee. But in football, for example, the player has a period of months between the end of the season and the draft to select and sign with an agent. The player signs the NFLPA standard representation agreement at which point there is no concern regarding loss of eligibility because the athlete has no remaining eligibility (he is either a senior or has declared himself eligible for the draft).
In a law review article published in 2005 (which can be downloaded from here), I proposed that the NCAA make an exception for baseball players and permit them to sign with an advisor during the season as long as the player and advisor execute a standard representation agreement drafted by the NCAA. This would help to clarify and define the "industry norms" as well as bring certainty to the terms of the player-advisor relationship.
Monday, June 16, 2008
Seattle Pins Hopes on Specific Performance to Keep Sonics in Town
Specific performance is one of those rarely-invoked contract remedies that makes for interesting reading. Because the remedy is limited to contracts involving "unique" items, it forces courts to determine the level of irreplacability and scarcity before imposing the remedy. Specific performance cases often involve cases of contracts involving rare works of art or real estate.
But a sports team? That is the question being asked in Seattle, where the city is attempting to compel its team, the SuperSonics to play out the remaining two years of its lease in Seattle before making a move to Oklahoma City. Previous posts in April 2008 and October 2007 discussed the dispute in detail. Essentially the team played in an aging facility (the smallest in the NBA) and when the city refused to make improvements in the KeyArena, the team was sold to Clayton Bennett, an Oklahoma City businessman who vowed to move it to his home town. The NBA gave its approval in the April.
However, the lease with Key Center ends in 2010 and the city wants the team to honor it. Marsha Pechman, the federal district court judge who will preside, will have the opportunity that law professors crave: decide on a case that has a compelling set of facts and the question of whether specific performance can be awarded in this case.
There is an excellent piece in the Seattle Post-Intelligencer which outlines the issue exceptionally well for non-lawyer readers. [Note, however, there is one journalistic faux pas that bothers me (as a former journalist). In that article, it states that "most attorneys claim that the city has a strong case." The author does not identify any attorneys nor gives us any basis for that quotation. It would have been helped to get some quotations.]
In any event, I don't see the case as being that simple. In addition to "uniqueness" the party seeking specific performance must show that it acted with good faith and with "clean hands." Let's assume that the Sonics are a "unique" tenant, unlike a typical business. This is reasonable since it would be difficult to find a replacement NBA team. But the good faith issue is in question and certainly would be contested during the trial. Did the city block attempts to refurnish or built a new arena? Did the two sides honestly try to resolve the dispute? Did Bennett act with good faith in his negotiations or did he consider it a fait accompli to move?
Finally, there is a bona fide question of the equity of compelling a team to play out a lease that would be less than economically viable. Setting aside the debate on whether the team "lost money" in Seattle, one can imagine the space crowds and public disdain for the team during those two years in Seattle. Compounding all this is a lawsuit by the former owner of the team seeking rescission of the sale and what effect a grating of specific performance would have on that litigation.
I see two upsides if the city is successful. By granting the request is that during those two years, it may be possible to the city of Seattle to agree on refurbishing the KeyArena or funding (partially) the construction of a new facility. But that is speculative and it may takes years for the fans to forgive the team for its actions. The second upside for the city is more vindicative: stick it to the team and force them to negotiate a settlement on better terms for the city. My gut tells me that is a plausible scenario.
The best solution: avoid specific performance and slap Mr. Bennett with damages (even perhaps some consequential damages, although that would be a leap) and wish him and the team a not so nice adieu.
Wednesday, June 11, 2008
A Good Walk Spoiled Even More
With the United States Open ready to begin this week, the man some Europeans think is the quintessential American is making news across the pond in the birthplace of golf. Donald Trump is in Scotland this week testifying before the equivalent of a zoning board and trying to calm the local furor over his plans to build a monstrous golf resort on a pristine piece of Scottish coastline called Aberdeenshire.
In the typical bravado of The Donald, Trump says he plans to build the “world’s greatest golf course,” two of them actually, together with an eight story hotel, 950 timeshare apartments and 500 houses. This is certainly a bit of hyperbole when many would argue the greatest golf course is further down the coast at St. Andrews. Quite a few have been built since the Old Course was finished in 1764.
The local board which originally reviewed Trump’s proposal rejected it because of the impact on a protected environmental site. The chief solicitor at the time, Martin Ford, was then promptly sacked and replaced with someone more sympathetic to development of the site.
Trump claims his motives are not the almighty dollar but to protect the environment and to cherish the memory of his mother who is of Scottish descent. As the poet once said, “Money doesn’t talk, it swears.”
Golf is under some fire lately by the Greens keepers, and I don’t mean the guys who keep the golf courses in tip top shape through the massive use of irrigated water and insecticides. There are about 35,000 golf courses world wide, half of those in the United States, with hundreds more being built each year. Each course uses on average 312,000 gallons of water a day, which comes to about 2200 gallons of water for each golfer for each round. When fresh water is in such short supply, particularly in states like California where the Open is being played, such consumption is difficult to justify. In addition, golf courses apply an average of more than a thousand pounds of pesticides annually or five times more than is used agriculturally, not to mention the amount of chemical fertilizer and weed killer added to the mix.
If you have ever played a course like St. Andrews, or Pine Valley not too far from my office in New Jersey, where the golf is played on a natural landscape, the experience is almost spiritual and far superior to that played on one of those desert monstrosities kept a sickly bright green. Golf needs to stop adding to the environmental problems facing all of us and our children and find the green dead straight ahead.
Sunday, June 08, 2008
Comparing Agent Regulation in the United States and Europe
On Thursday, I had the unique opportunity of guest lecturing in The Hague, The Netherlands at a seminar hosted by the Asser International Sports Law Centre of the T.M.C. Asser Institute, which is a center for research and postgraduate education in the field of international and European law. The center publishes numerous books, including an international sports law series, and for those interested in how sports agents are regulated around the globe I highly recommend their recent publication on the subject, Players Agents Worldwide: Legal Aspects. The seminar provided a great opportunity to engage in a comparative approach to agent regulation, and there are glaring differences between the systems in the U.S. and Europe.
In Europe, FIFA has been very proactive recently in unilaterally adopting strict rules and regulations that govern the certification and activities of agents, including in the areas of exam requirements, compulsory insurance, charging of fees and conflicts of interests (to name just a few). The first question from the perspective of an American familiar with agent regulation in the U.S. is obviously, why should FIFA have any say whatsoever in how agents conduct their business with players? That would be like the NFL dictating to players and agents how their relationship should operate. In the U.S., although we like to think that agent regulation is very complex with all of the various union agent regulations, state laws (UAAA), federal law (SPARTA), NCAA rules, and common law agency and fiduciary duty principles, agent regulation is much more complicated in Europe for a variety of reasons.
First, public regulation of agents via national law oftentimes expressly contradicts FIFA's agent regulations (which bind its member associations that are also bound by national law). For example, national law may prohibit intermediaries from receiving any compensation from workers and only permit compensation to be paid by the employer (which obviously prohibits a player from compensating his agent as permitted by FIFA). To make it more complicated, national law takes precedent over regulations of private associations such as FIFA. However, in the U.S., for the most part, state laws governing agents do not contradict union regulations. State law just adds another layer of certification and fee requirements, and in many respects union regulations are actually more stringent on agents than state and federal law. Also, in the U.S., public regulators basically defer to the unions to monitor and regulate agent misconduct. As I discussed at the seminar, although players unions in the U.S. are private associations (like FIFA), the unions are essentially "quasi-public" regulators of agent activity involving both amateur and professional players because federal labor law affords them the status of "exclusive" representative of the players, which even exempts union agent regulations from antitrust law. While the FIFA regulations have been challenged before under the Treaty of Rome's restraint on trade laws in the Laurent Piau case (in the Court of First Instance), without the benefit of an exemption, the regulations will most likely be challenged again on the same grounds as FIFA continues to make them more strict on agents.
Another glaring difference between the U.S. and Europe is the characterization of the agent's role. In Europe, it is common practice for an agent - referred to as a "broker" - to represent both players and teams (and FIFA even permits it). Although prohibited by the FIFA regulations, clubs sometimes pay the agent's commission on behalf of the player and some club owners and agents even have ownership interests in players' transfer rights. These practices would simply be unheard of in the U.S., because the agent's role is clearly defined as a "fiduciary" role on behalf of the player and the agent is required to serve the best interest of the player and avoid conflicts of interest. Ambiguity over the agent's role in Europe leads to ambiguity regarding what constitutes "agent misconduct". But even exclusively within the U.S. where the agent's role is clearly defined, there is disagreement about what constitutes agent misconduct in certain situations. As an example, is it a conflict of interest for an agent to represent both coaches and players? The NBPA regulations prohibit it (and the union has indicated that it is going to start enforcing that provision) and the NFLPA regulations don't prohibit it. What should the agent certification process entail? And how aggressively should the regulations be enforced against agents? Most importantly, who gets to decide the answers to all of these questions? In the U.S., the labor laws clarify that the union is the proper entity to make these decisions, and, in theory, the players are the ones that should be making these decisions. In Europe, it is not at all clear who is the appropriate entity to regulate and determine the "industry norms."
While it is an industry norm in Europe for agents to work on behalf of both players and clubs, it is most certainly questionable whether FIFA should be unilaterally dictating to players and agents how to operate their relationship. Perhaps a more sensible and practical regulatory approach in Europe would be to bifurcate the club-agent relationship and the player-agent relationship. In other words, maybe FIFA (via its member associations) should only regulate the club-agent relationship, and leave it to the players and agents to figure out the industry norms within their relationship as well as how to regulate it. Such a bifurcation by FIFA would also have a better chance of withstanding future claims by agents that the regulations constitute an illegal restraint on trade.
Tuesday, June 03, 2008
Justice Alito on the Antitrust Exemption
Fun report of a talk by Justice Samuel Alito, about the Supreme Court's 1922 decision in Federal Baseball Club v. National League, the case that first held that Major League Baseball was not covered by the Sherman Act (which, Alito argues, is not the same as giving it an antitrust exemption) and that was affirmed purely on stare decisis grounds in the more-famous Flood v. Kuhn.
Will the Red Sox Sign Barry Bonds?
With David Ortiz out at least a month with a wrist injury, there is speculation that the defending World Series Champions Boston Red Sox might consider signing the still-unsigned Barry Bonds to be the team's designated hitter.
The upside to such a move would be clear: despite all of the controversy surrounding Bonds last year, and despite having little protection in the Giants' lineup, he still managed to hit 28 home runs in just 340 at bats. The Sox have no internal option who could produce anywhere near that production, and turning to the trade market to acquire an equivalent talent would require giving up top prospects. All Bonds would take is some $$$, and at this point, with no other apparent suitors now in June, his salary demands have probably dropped quite a bit.
The downside to signing Bonds, however, seems equally clear. Bonds would likely be something of a distraction, he is likely to face trial for perjury and obstruction of justice later this year (though the trial, if it occurs, would probably occur after the season), he and Curt Schilling are not known to be friends, and he has previously made caustic statements about the city of Boston, once saying "Boston is too racist for me."
If the move happens, it would almost certainly signal that the Bonds collusion conspiracy--that MLB teams tacitly agreed to not sign Bonds this season--was untrue.
The rationales for banning steroids
Michael Dorf, a top con law theorist, offers (link fixed) a few thoughts on steroid use and the rationales underlying banning performance-enhancing substances. He actually does a pretty good job of knocking down everything but the "role-model" argument, an argument which I never have accepted anyway. Worth a read.
Monday, June 02, 2008
Supreme Court Denies Cert in Baseball Fantasy Case
I was surprised by the Supreme Court's decision not to grant cert in the so-called "fantasy baseball" case, officially known as C.B.C. Distribution v. Major League Baseball Advanced Media (MLBAM). The facts have been discussed in Rick's excellent prior blog and the failure of the high court to consider the case means: (1) a confused right of publicity standard with varying standards and "tests" in jurisdictions all over the country; (2) a confusion of whether right of publicity claims in similar to unfair competition clause to be "pre-empted" by federal law; (3) a lack of national standard; and (4) no precise balancing test between the First Amendment and the right of publicity.
I was one of those who agreed with the Eighth Circuit's ruling, which noted the existence of publicity rights in a player's identity under Missouri law, but concluded that the First Amendment took precedence. Despite the not-quite-ethical conduct by the fantasy league distributor (which decided to create a game after it lost its license), it still seems like a stretch for the economic rights to trump free expression. However, the opinion was unusually short for an issue of this magnitude, with little discussion of the precise standard of review in such a case.
The subject is important because of the expansion of the right over the last quarter century and the greater potential to utilize one's name and likeness in new media. What may be needed is for a similar case to occur in another jurisdiction producing a contrary result. With an open split of opinion, then the Supreme Court may be compelled to take up the case.
[Additional note: I am presenting a paper at the on the subject, proposing some new ideas to deal with this vexing question. The presentation takes place at the 2nd International Conference on Business, Law and Technology (http://www.iblt.eu/), which will be held at the Touro Law Center, Long Island, New York on June 17-19, 2008. I will summarize my ideas in a separate post.]