A year in review: US sports law - Individual Sports, College, High School and Youth Sports (Part 3)

Friday, 05 August 2016

This article provides a broad overview of individual sports college, high school and youth sports in the United States of America between May 2015 to May 2016. The content of this article originates from the presentation by Professor Matt Mitten at the annual conference of the Sports Lawyers Association ("SLA") in Los Angeles in May 2016.

For the ease of our readers we have broken down each topic presented by Prof Mitten into a series of articles. The the full update covers the following topics:

Agent Regulation and Team Sports – Labor Matters; 
Team Sports - Non-Labor Matters;
Individual Sports College, High School and Youth Sports;
Title IX/Gender Equity & Civil Rights;
Intellectual Property & Broadcasting;
Personal Injury and Safety, Stadiums and Venues;
Sports Betting/Daily Fantasy Sports;
International & Olympic Sports Miscellaneous.

The SLA, a non-profit, international, professional organization whose common goal is the understanding, advancement and ethical practice of sports law. Each year in May the SLA hosts an Annual Conference at which the above topics are presented and debated.

Individual Sports

Pacquiao and HBO Class Action Lawsuit

Pacquiao and HBO are being sued for not revealing he had a torn rotator cuff prior to his fight against Floyd Mayweather. The suits filed by various plaintiffs have been consolidated in federal court for the Central District of California because it had the largest number of cases and there was a “significant nexus” to the case. (DR 8.18.15)

Hicks v. PGA Tour Inc. (N.D. Cal. 2016)

The court rejected claims by professional golf caddies against the PGA Tour who were seeking compensation for wearing endorsement bibs for corporate sponsors, which they argued were distinct forms of advertising different from other types of sponsorships. It dismissed the plaintiffs’ breach of contract claims because “no reasonable person signing the [caddie] contract after 2010 could believe he retained the right not to wear a bib during a tournament. The only reasonable interpretation of the contract is that the caddies agreed the Tour could make them wear bibs.” Their right of publicity claim alleging the PGA was using them as human billboards by forcing them to wear bibs was dismissed because they did not meet the test for misappropriation under California’s common law right of publicity or statute. The court dismissed plaintiffs’ antitrust claims because “the product markets proposed by the caddies are not natural. They are artificial, contorted to meet their litigation needs.” In addition, the court stated that the plaintiffs have not explained how there is an antitrust violation using a “plausible product” market definition. The court also rejected the plaintiffs’ Lanham Act claims, which are precluded by the parties’ contracts, and their unfair competition claim because it “falls with the other claims.”

Tennis Match-Fixing Allegations

Prior to the 2016 Australian Open, world tennis governing bodies, including the ATP, were accused of covering up evidence of match-fixing in the sport. The governing bodies have vehemently denied these accusations, which include assertions that the Tennis Integrity Unit (TIU), an oversight organization formed by a number of the top tennis governing bodies, did not take action to investigate match-fixing allegations against 28 “top-level” players. The BBC has reported that it found evidence gamblers have paid players to throw matches, linking 16 players who have been ranked it the top 50 and Grand Slam doubles champions. The names of these players were not disclosed. The governing bodies point to the Tennis Anti-Corruption Program, which authorizes the TIU to investigate match-fixing allegations, and its 18 disciplinary cases since its formation in 2008.

MMA Legalized in New York 

In March 2016, New York legalized amateur and professional mixed martial arts, thereby becoming the last state to do so. Mixed martial arts organizations have worked for eight years to open the New York market. The two biggest fight promoters, the Ultimate Fighting Championship (UFC) and Belator Fighting Championship, are planning events in the state. The UFC stated it has spent more than $2 million in lobbing to legalize the sport in New York. The bill allows for New York to collect a 3% tax on “both gross receipts of ticket sales and broadcast fees (each is capped at $50,000 per event).” (Newsday 3.22.16)

Attempted Monopolization Litigation

The Elite Rodeo Ass’n v. Prof’l Rodeo Cowboys Ass’n, 2016 WL 429886 (N.D. Tex,) A new rodeo circuit formed by rodeo cowboys, the Elite Rodeo Association (ERA), alleged that the Professional Rodeo Cowboys Association (PRCA)’s new policy preventing ERA cowboys from participating in PRCA sanctioned events constitutes an illegal boycott and monopolization in violation of Sherman Act §1 and §2. The court denied the PRCA’s motion to dismiss the case because ERA’s antitrust claims are plausible, but denied ERA’s request for a preliminary injunction against enforcement of PRCA’s policy because it did not prove irreparable harm and a likelihood of success of the merits of its antitrust claims. The parties have agreed to allow ERA cowboys to enter PRCA events, but if any ERA cowboys win prize money, it will be kept in escrow and forfeited if ERA does not ultimately prevail on its antitrust claims.

Nspire Sports League LLC v. IFBB Prof. League (ED Va. March 3, 2016)

(alleged attempted monopolization of “business of competitive bodybuilding” in the U.S. by muscling out potential competing leagues)

College Sports

NLRB Rejects CAPA Effort to Unionize Northwestern Football Players

In Northwestern University and College Athletes Players Ass’n (NLRB 2015), available at file:///C:/Users/Owner/Downloads/Board%20Decision.pdf, the NLRB refused to affirm the Regional Director’s finding that “the grant-in-aid scholarship players are employees within the meaning of Section 2(3), and directed an election.” Noting this case “raises important issues concerning the scope and application of Section 2(3), as well as whether the Board should assert jurisdiction in the circumstances of this case even if the players in the petitioned-for unit are statutory employees,” the NLRB found that “it would not effectuate the policies of the Act to assert jurisdiction in this case, even if we assume, without deciding, that the grant-in- aid scholarship players are employees within the meaning of Section 2(3).” It concluded “asserting jurisdiction would not promote labor stability due to the nature and structure of NCAA Division I Football Subdivision (FBS)” because only 17 private universities have FBS football teams. The NLRB added it was addressing the “case in the absence of explicit congressional direction regarding whether the Board should exercise jurisdiction [and] conclude[d] that asserting jurisdiction in this case would not serve to promote stability in labor relations.” Nevertheless, the NLRB noted that its decision was “limited to the grant-in-aid scholarship football players covered by the petition in this particular case [and left open the issue of whether they] might assert jurisdiction in another case involving grant-in-aid scholarship football players (or other types of scholarship athletes)."

Fair Labor Standards Act Inapplicable to Intercollegiate Athletes

In Berger v NCAA, 2016 U.S. Dist. LEXIS 18194 (SD Ind.), the court ruled that three

University of Pennsylvania women’s track & field athletes had standing to assert an FLSA claim against only their alleged employer (Penn), effectively denying their request to certify a plaintiff class of all current and former NCAA Division I women’s and men’s student-athletes on rosters from academic year 2012-13 to the present against the NCAA and 123 Division I universities. It also held that they are not “employees” under the FLSA because “the revered tradition of amateurism in college sports” constitutes “an essential part of the ‘economic reality’ of the relationship between Plaintiffs and Penn.” It concluded “students at Penn who choose to participate in sports—whether NCAA sports, club sports, or intramural sports—as part of their educational experience do so because they view it as beneficial to them.” See also Sackos v. NCAA, (S.D. Ind., filed October 20, 2014) (a former female volleyball player at the University of Houston, alleged that the NCAA and its Division I universities conspired to violate the Fair Labor Standards Act by failing to pay Division athletes at least the current federal minimum wage of $7.25/hour for their athletic playing services, which constitute part-time employment because they “engage in non-academic performance for no academic credit in athletic competition” on behalf of their respective universities)

NCAA Antitrust Litigation

In O’Bannon v. NCAA, 802 F.3d 1049 (9th Cir. 2015), a Ninth Circuit panel upheld the lower court’s ruling that an NCAA rule limiting student-athlete compensation to an amount below the full cost of attendance for their playing services is a commercial restraint subject to antitrust challenge that has anticompetitive effects. The majority held that “[t]he Rule of Reason requires that the NCAA permit its schools to provide up to the cost of attendance to their student athletes. It does not require more.” They rejected the lower court’s determination that an agreement among NCAA schools capping the amount that could be paid to student-athletes to less than $5,000 a year beyond the cost of attendance for their name, image, and likeness is an antitrust violation. Because NCAA student-athlete compensation rules integrate academics with athletics and preserve the popularity of college sports by promoting amateurism, capping the stipend at the full cost of attendance is a less restrictive alternative of achieving these procompetitive objectives. The majority reasoned that “not paying student- athletes is precisely what makes them amateurs” and that "offering them cash sums untethered to educational expenses . . . is a quantum leap;” therefore, the lower court’s determination the payment of a stipend less than $5,000 a year beyond the cost of attendance is a less restrictive alternative was erroneous. Stating that “in terms of antitrust analysis, the concept of amateurism is relevant only insofar as it relates to consumer interest,” the dissent concluded “that providing student-athletes with small amounts of compensation above their cost of attendance most likely would not have a significant impact on consumer interest in college sports.” The plaintiffs have filed a petition for certiorari by the Supreme Court.

In March 2016, O’Bannon district judge ordered NCAA to pay more than $42.3M in attorney’s fees and costs

Jenkins v NCAA litigation seeks an injunction against NCAA rules prohibiting NCAA conferences and universities from individually deciding amount to compensate student-athletes for their playing services (in February 2016, district court certified three classes of student-athletes “all players in the top tier of college football teams, the Division I Football Bowl Subdivision, all men’s Division I basketball players, and all women’s Division I basketball players, who have received full scholarships since the action was initiated)"

Hartman v. NCAA, Case No. 4:15-cv-00178 (N.D. Cal., filed, 1/13/15), Gregory- McGhee v. NCAA, Case No. 4:14-cv-01777 (N.D. Cal., filed April 17, 2014), and Alston v. NCAA, Case No. 3:14-cv-01011 (N.D. Cal., filed March 5, 2014) (pending cases seeking treble damages for difference between full cost of attendance and NCAA limit to value of room and board, tuition, books and fees).

Rock v NCAA (SD Ind. 2016) (refusal to certify a class of football players “recruited” by Division I schools who didn't receive scholarships for the full duration of their undergraduate education because this definition, including the term “recruited,” is impermissibly vague and subjective, making the class unascertainable)

On April 27, 2016, the NCAA Board of Governors adopted an anti-discrimination measure Wednesday requiring sites that are hosting NCAA athletic events or bidding on them "to demonstrate how they will provide an environment that is safe, healthy and free of discrimination." This action is in response to recent legislation in some states (e.g., Mississippi and North Carolina) allowing discrimination against members of the LGBT community. "The higher education community is a diverse mix of people from different racial, ethnic, religious and sexual orientation backgrounds," board chairman and Kansas State president Kirk Schulz said in a statement. "So it is important that we assure that community ... will always enjoy the experience of competing and watching at NCAA championships without concerns of discrimination."

NCAA Rules Modified to Facilitate Baseball and Basketball Players’ Ability to Communicate with Professional Teams

The NCAA liberalized rules previously limiting Division I men’s basketball and baseball student-athletes’ ability to interact with professional teams. NCAA president Mark Emmert stated that this will allow student-athletes the ability to “develop an objective reality of what their prospects” are without potentially losing their eligibility. The rule change will allow athletes to enter their respective draft multiple times and provides a later date for when an athlete must remove their name from the NBA draft to preserve their eligibility. Prior to the rule change, student-athletes gauging their professional basketball interests could not participate in the NBA draft combine. Now, student-athletes can participate in the NBA draft combine and one tryout per NBA team to determine their pro potential without losing their eligibility. In regards to baseball, the rule changes allow for high school baseball players to hire an agent and still preserve collegiate eligibility. Under the previous rule, high school athletes would lose eligibility if they hired an agent.

McNair v. NCAA (Cal. App. 2015) (unpublished opinion)

The court ruled that former USC assistant coach Steve McNair has demonstrated a probability of prevailing on the merits of his defamation cause of action against the NCAA: “[T]he issue centers on whether the COI report’s operative statement falsely states that McNair “had knowledge” of the agency agreement [involving former USC football player Reggie Bush] and improper benefits and hence acted unethically and dishonestly under NCAA legislation by lying about that knowledge and failing to report that knowledge to USC. McNair presented admissible evidence, which if credited by a jury, indicates that he did not know about the NCAA violations, in which case the operative statement is susceptible of a false meaning. McNair stated in his declaration that the operative statement was false. His declaration flatly denied he had any knowledge of, and denied he ever discussed improper benefits with [Bush’s agent]. If this declaration is credited, McNair did not know about the NCAA violations and thus did not violate NCAA ethical conduct legislation. As noted, the two-minute call appears to be the sole basis for the NCAA’s ethics-violation finding against McNair. Yet, a jury could reasonably conclude that Lake’s interview did not support the statement that McNair knew about the NCAA violations. Lake appeared to be confused when questioned about his relationship with McNair. Lake accepted that McNair called him. Although Lake said in his interview that McNair “knew about the money [Bush] took, he knew that [Bush] had an [agency] agreement,” when pressed by the interviewers, Lake made clear that this was Lake’s own assumption. Nowhere during Lake’s description of the two-minute call did Lake ever say that he informed McNair of, or that McNair claimed knowledge about, the agency agreement and improper benefits. Instead, Lake speculated that Bush told McNair, or that McNair knew from osmosis because “he was around a lot” and “watched.” Lake’s later statement that he called McNair to get his money back only creates a factual dispute but does not defeat McNair’s evidence as a matter of law.”

Oklahoma State University Committee on Infractions Case

The Committee on Infractions (COI) issued penalties based on its findings that the university violated its drug testing policy and engaged in impermissible hosting of athletes. As to the second issue, the NCAA reported that, “Over the course of four years, the university’s Orange Pride program engaged in impermissible hosting activities during football prospects’ official and unofficial visits. The Orange Pride is an all-female group organized and directed by the football program to participate in hosting during recruiting events. NCAA rules do not allow the use of student hosts in a way that is inconsistent with the university’s policies on providing campus tours or visits to all prospective students. The panel was concerned with the university’s continued use of the group despite information distributed by the NCAA specifying that groups like Orange Pride for athletics recruiting was impermissible...”

Former Coach Steve Sarkisian sues USC for alleged wrongful termination  Sarkisian v. U.S.C., E.D. Cal., No. BC603337

Sarkisian is suing USC for wrongful termination, alleging he was fired in October 2015 by the university instead of receiving assistance and treatment for his alcoholism. He is asking for $30 million in lost wages and other damages and claiming that while he consumed a small amount of alcohol, he was not intoxicated during the two incidents that led to his firing. Rather, it was his anti-anxiety medication that created the appearance he was intoxicated.

High School Sports

Miss. High Sch. Activities Ass'n v. R.T., 163 So. 3d 274 (Miss. 2015)

The court held that once a school decides to create a sports program and establish eligibility rules, the school must follow those rules and may be held accountable when it does not do so. The court added that high school student-athletes are among the intended beneficiaries of high school athletic programs and the rules that govern them regardless of whether those rules are administered by the school, the school district, or a private entity with whom the school contracts. When the school delegates its authority to control student eligibility through a contract with a private entity, as it did in this case, students directly affected by the contract are third-party beneficiaries who have a contract claim if it is breached.

Bell v. Itawamba County School Board, 799 F.3d 379 (5th Cir. 2015) 

In an en banc divided opinion, with strong dissents, the court held that a school board in Mississippi did not violate a student’s First Amendment free speech rights when it suspended the student for posting a rap song accusing two coaches of sexual harassment, on the ground that, “the school board reasonably could have forecast a substantial disruption at school, based on the threatening, intimidating, and harassing language in Bell’s rap recording.” A number of judges wrote separate concurrences and three judges joined in a strong dissent, in which they found that there was no proof offered by the school district that the speech did in fact or actually threatened to disrupt school activities.

High School Football Coach Allegedly Instructs Players to Hit an Official  

John Jay High School football players Michael Moreno and Victor Rojas blindside tackled football official Robert Watts during a game. The two players stated they had grown angry about allegedly unfair officiating by Watts. The players claim they were ordered by an assistant coach, Mack Breed, to hit the official. The players also claim Watts was using racially vulgar language. The players were suspended and sent to complete the semester at an alternative school. Mr. Breed resigned from his position soon after the incident on September 4, 2015, and he pleaded guilty to misdemeanor assault charges on Monday, December 14, 2015. HIs sentence of one year in jail with a $3,500 fine was suspended under the terms of a plea agreement, and he will instead serve 18 months of probation.

Florida Student-Athlete Transfer Legislation

A Florida law enacted in April 2016 allows students to transfer freely between Florida high schools and athletes to be immediately eligible after transferring, but they cannot play the same sport for a second school in the same season except under special circumstances such as a parent's death, divorce or military deployment. The law imposes penalties for schools caught recruiting athletes: a first offense mandates a $5,000 forfeiture of pay for the school employee, a second offense is a 12-month suspension without pay in addition to the fine and a third offense includes the fine and a possible loss of the employee's education certificate.

Youth Sports

Jackie Robinson West Little Leaguers Litigation

The parents of the players on the JRW baseball team that had their 2014 U.S. Little League championship stripped from them filed a lawsuit in Cook County Circuit court in Illinois. Parents have filed suit on behalf of 11 of the players against “the volunteers who ran the team, the rival coaches who turned them in, Little League, ESPN, and Stephen A. Smith." The lawsuit claims Little League officials should have recognized the team’s residency issues prior to the team having national success. In addition, the suit claims that Little League should have ignored the complaint. The lawsuit argues that Little League, JRW, and ESPN all profited from the popularity of the team and is claiming unjust enrichment by the three entities. In addition to the unjust enrichment claim, the plaintiffs argue that Stephen A. Smith defamed JRW parents on a 2014 episode of “First Take” on ESPN. (Chicago Sun-Times 2.12.16)