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Thursday, May 20, 2010
'Spygate' Class Action Suit Dismissed as Third Circuit Rejects Ticketholders' Lack of 'Honesty' Claim

A group of New York Jets' season ticketholders lost their attempt to claim damages for the New England Patriots secret videotaping of the Jet's defensive calls during the 8 games played at Giants' Stadium from 2000-2007. Citing the fact that "honesty" is not a cause of action for a ticketholder who merely has a license to "enter" the stadium attend a game, the U.S. Court of Appeals for the Third Circuit, dismissed the claim, affirming the ruling of a lower court. For my prior article, click here.

The ruling in Mayer v. Belichick is not surprising, but the legal analysis provides some interesting insights. Although the panel, in a unanimous opinion by Judge Robert E. Cowan, ultimately concluded that no damages can be ascertained from the suit, the discussion focuses far more on the nature of a ticket license, rather than damages. Although he notes that the case is unusual and possibly an case of first impression, his opinion, joined by Judges D. Michael Fisher and Gene E. K. Pratter, weave a fascinating interplay with other suits by ticketholders and the nature of a sports ticket license.

Noting that the complaint failed to state a "legally cognizable protected right, interest or injury" warranting dismissal under FRCP 12(b), the court did display trepidations about unfettered powers of licensors in controlling and limiting rights of ticketholders. "Courts all over the country have struggled to deal with litigation arising out of the often complicated ticket arrangements between teams and their fans," the opinion noted, adding "ticketholders may have legitimate reasons to be upset at the manner in which they are treated." Judge Cowan cited a series of cases involving claims for poor performance and rules violations as closely analogous to this case. In two specific cases (one from the 7th Circuit and the other from a New York appellate court, the conclusions pointed to the limiting language of ticket as providing only entry to the race and nothing else. In a pithy quote, the panel used the language of the 7th circuit, stating that if fans are not happy with the [Chicago] Cubs, they can "head south to Comiskey Park" and watch the White Sox. Additionally, he added, with some justification, that permitting this lawsuit could permit suits by ticketholders over "blown calls" and "improper acts of teams, coaches, referees, and others."

Although the panel noted the lack of damages, it focused more on the scope of the license. I think that if Mayer et al were able to show damages (say, from contract fraud or business torts), the result would be the same. True, determining actual damages without a trial would be highly speculative, but I think that the lack of damages was a side issue.

That raises the question of the lawsuit's viability if the license was more open-ended. Say, it permitted entry to the facility and provided a "a professionally-played match" (of course, a team would never do this, but worth a thought). But what about legislation? What if a state passed a "Sportsticketholder Protection Act" prohibiting "unduly" limited licenses on tickets as unconscionable and mandates that the event must be of "reasonable quality commensurate in the sport." That would make some plaintiffs' lawyers salivate.

For an article in, click here.


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