US Sports Law Year in Review (2017/18) – Part 3- Leagues (non-labor matters)

This article originates from the paper entitled Sports Law Year in Review1, which gives a high level overview of key sports law developments in the United States between 15 May 2017 – 30 April 2018.

For ease, we’ve broken down the paper into its respective chapters, which will be published in turn as follows:

1. Agents and agent regulation

2. Leagues – labor matters

3. Leagues – non-labor matters

4. Contracts

5. Torts

6. Individual sports

7. College, high school and youth sports

8. International and Olympic sports

9. Title IX/Gender equity and civil rights;

10. Intellectual property and broadcasting

11. Personal injury, health and safety

12. Stadiums and venues

13. Sports Betting/Daily Fantasy Sports

It was drafted under the supervision on Professor Mattew Mitten and Professor Gabriel Feldman, and was presented at the Sports Lawyers Association Conference in Washington DC. 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.

LawInSport would like to thank the SLA and in particular Professor Mitten and Professor Feldman for permitting the republication of this work.

Leagues – labor matters

National Football League

In a consolidated class action suit against various NFL defendants, DirecTV entities, CBS Corporations, Fox Broadcasting Company, NBCUniversal Media, and ESPN, a group of fans claimed that the agreement between the NFL and DirecTV that created DirecTV’s “Sunday Ticket” program is anticompetitive and that it violates the Sherman Act. The NFL and DirecTV have an exclusive distribution agreement that allows for DirecTV to broadcast football games on DirecTV’s Sunday Ticket channels which are produced by CBS and Fox. This allows for Sunday Ticket subscribers to watch games that are out of their local market. The plaintiffs claim that defendants have violated Section 1 of the Sherman Act by agreeing to constrict competition in the distribution of live broadcasting of NFL games, resulting in increased prices paid by advertisers and consumers. Plaintiffs further alleged that the defendants violated Section 2 of the Sherman Act by monopolizing the live broadcasts of NFL games by making DirecTV the only source for most of the NFL regular season games. The United States District Court for the Central District of California found that since the NFL and NFL teams own the rights to the broadcasts, the NFL’s conduct in working collectively with NFL franchises to enter into an exclusive distribution agreement with DirecTV did not constitute an unreasonable restraint on trade. Further, the court held that the plaintiffs failed to establish any antitrust injury and granted the defendants’ motion to dismiss with prejudice. See In re Nat'l Football Leagues Sunday Ticket Antitrust Litig., No.ML1502668BROJEMX, 2017 WL 3084276, (C.D. Cal. June 30, 2017)

The United States Court of Appeals for the Fourth Circuit vacated a district court decision upholding the United States Trademark and Patent Office’s cancellation of the Washington Redskins trademark registrations. The registrations were cancelled in 2014 on the grounds that they violated the Lanham Act’s prohibition on disparaging trademarks. However, in June 2017, the United States Supreme Court held in another case that the Act’s prohibition is unconstitutional because it violates the free speech cause of the First Amendment. In that highly publicized case, Matal v. Tam, an Asian- American band called “The Slants” challenged the USPTO’s refusal to grant a trademark for their name because it disparaged those of Asian descent. While both the Redskins case and Tam were based on the same constitutional issues, the Redskins were procedurally barred from joining Tam at the Supreme Court level. Still, the Tam decision worked in the Redskins’ favor as the Fourth Circuit relied on the new precedent to vacate and remand the district court’s ruling. See Pro-Football, Inc. v. Blackhorse, 709 Fed. Appx. 182 (4th Cir. 2018). See also Matal v. Tam, 137 S. Ct. 1744 (2017).

WWE Chair Vince McMahon announced in January 2018 that the XFL will be relaunched in 2020. McMahon introduced the new version of the league as a “fancentric” and apolitical alternative to the NFL. The original XFL, which lasted just one season in 2001, presented itself as a more violent game than that of the NFL. However, McMahon plans to “listen to medical professionals” this go around and promised that the sport will be safe for players. While no decisions have been made as to which eight cities will have teams, the league is set to have a ten game season and a four team playoff. Additionally, each team will consist of forty players who will be paid more when their team wins.

Major League Baseball

Minor league baseball players brought a class action claim against the Commissioner of baseball, the former Commissioner of Baseball, and the 30 Major League Baseball franchises alleging that defendants violated federal antitrust law by artificially depressing minor league players’ salaries. The players further argued that the MLB and its franchises conspired to fix the salaries paid to minor league players. Defendant owners of the MLB franchises filed a motion to dismiss, citing baseball’s antitrust exemption. The Ninth Circuit Court of Appeals ultimately held that the employment of minor league players and the reserve clauses of their contracts falls precisely within baseball’s exemption from federal antitrust laws, and dismissed the suit. See Miranda v. Selig, 860 F.3d 1237 (9th Cir.), cert. denied, 138 S. Ct. 507 (2017)

Right Field Rooftops, LLC, owner of rooftop seating adjacent to Wrigley Field, alleged that the Chicago Cubs violated the Sherman Antitrust Act by constructing a video board in the stadium that obstructed the view of the field from said seats. The plaintiffs argued that attempting to set a minimum price for tickets, attempting to purchase all rooftop businesses, acquiring several rooftop businesses, threatening to obstruct views of rooftop businesses if they refuse to sell to the Cubs, and constructing the video board demonstrated monopolistic behavior. The Seventh Circuit Court of Appeals affirmed the district court’s dismissal, holding that the alleged monopolistic behavior fell within the baseball exemption of antitrust laws, as the construction of the video board and other noted behavior was part of the “business of providing public baseball games for profit.” See Right Field Rooftops, LLC v. Chicago Cubs Baseball Club, LLC, 870 F.3d 682 (7th Cir. 2017)

MLB Commissioner Rob Manfred announced in January 2018 that the Cleveland Indians will no longer use its “Chief Wahoo” logo on team uniforms starting in 2019. The logo, which is the head of a red-skinned man wearing a feather, has been criticized for being a racist caricature of Native Americans. Both the MLB and the Indians organization have been parties in legal actions targeting the team’s name and logo in challenges brought before the Trademark Trial and Appeal Board, as well as Ontario courts. The appropriateness of the “Chief Wahoo” logo, which dates back to the 1940s, was also at the center of national discussion after the Indians appeared in the World Series in 2016. It was at that time that Manfred announced his plan to speak with Indians owner and CEO Paul Dolan about the possibility of changing the team’s logo. Ultimately, Dolan agreed to stop using the logo on team uniforms, however the logo will still be used on merchandise sold in Ohio and at the team’s spring training site in Arizona. Similarly, the Baseball Hall of Fame announced in March 2018 that it would use Cleveland’s “block C” logo on recent inductee Jim Thome’s plaque, which is to be unveiled this summer. Thome, who played with the Indians in the 1990s, expressed his preference for the “block C” logo, stating that it is “the right thing to do.”

The Miami Marlins were sold for $1.2 billion in October 2017. Jeffrey Loria, the former owner of the team, sold his franchise to an investment group led by Bruce Sherman and includes New York Yankee legend Derek Jeter. While Sherman will be the principal owner of the team, Jeter is expected to run the day-to-day of the organization as CEO. The sale was not without controversy. The city of Miami and the larger county of Miami- Dade brought suit against the team in February 2018 for their alleged five percent cut of the sale. According to the city and county, a 2009 agreement for the public funding of the Marlins’ $600 million stadium states that the two governments are due 5% of any profits resulting from the team’s sale. The complaint states that the Marlins were originally bought by Loria for $158 million and that the current sale price represents a 757 percent increase in the team’s market price. The Marlins are pushing to arbitrate the dispute per an arbitration clause in the agreement. See Miami-Dade et al. v. Miami Marlins LP et al., case number 1:18-cv-20908 (S.D. Fla.)

Soccer

The North American Soccer League brought an antitrust action against the United States Soccer Federation claiming that the federation is misapplying its standards for divisional level designation in order to conspire against the NASL. The USSF, as the governing body of American soccer, applies the Professional League Standards which is a set of qualifications for professional soccer leagues in the United States that are seeking Division I, II, or III designations. These designations are similar to those of the divisions in the NCAA and demonstrate a level of quality of competition. NASL claims that the USSF amended and executed the Professional League Standards in a conspiratorial way to ensure that Major League Soccer as the only Division I league and United Soccer League Pro as the only Division II league. NASL argues that it applied for Division I status in 2015 and Division II status in 2017 and that these applications were unfairly denied to ensure that the MLS and USL had monopolies in those league, respectively. In denying the NASL’s motion for a preliminary injunction, the United States District Court for the Eastern District of New York found that the plaintiff showed proof of irreparable harm and that an injunction would not harm public interest but held that the plaintiff did not show that it was entitled to relief. The court came to this conclusion since the plaintiff failed to show an unreasonable restraint of trade under the “rule of reason” analysis. Ultimately, plaintiff failed to show a “clear showing” of entitlement to relief because of the reasonableness of the restraint. On March 16, 2018, the NASL filed an amended complaint adding Major League Soccer as a defendant in the suit. See N. Am. Soccer League, LLC v. United States Soccer Fed'n, Inc., No. 17-CV-05495 (MKB), 2017 WL 5125771, (E.D.N.Y. Nov. 4, 2017)

On February 10, 2018, the U.S. Soccer Federation elected Carlos Cordeiro as its 32nd president. Cordeiro, the Federation’s former vice president, was elected on the third ballot in the organization’s first contested election since 1998. Kathy Carter, Kyle Martino, Eric Wynalda and Hope Solo were among the final candidates for the position.

National Basketball Association

A lawsuit brought by fans against the Golden State Warriors and software designer Signal360 is headed to arbitration. The suit, which dates back to 2016, alleges that the team secretly recorded conversations through a smartphone app. The plaintiffs claim that the Warriors app, which gives fans updates on team news, scores, and schedule, uses the user phone’s microphone to track the user’s location. However, the app contains no warning of this process or that it is capable of picking up nearby conversations. If true, such a practice is a violation of the Electronic Communications Privacy Act which prohibits the recording of oral communications through the unauthorized access of a device’s microphone. The parties submitted a joint filing in January 2018 in which they requested the California federal court’s permission to privately mediate the claims. The court approved and the parties have agreed to hold mediations between October 12 and November 9, 2018. See Satchell v. Sonic Notify, Inc. et al. case number 4:16-cv-04961 (N.D. Cal.)

Alternative Leagues

American Flag Football League

The league has commitments from former NFL players Michael Vick and Justin Forsett. League financier Jeff Lewis believes his new football initiative can "spark nationwide interest, not only among many other NFL caliber athletes but among weekend warrior flag football players.” Lewis believes he can "take advantage of the increased popularity of flag football by offering a product that will be a much faster-paced game than the NFL." The plan for the league's debut is to play a 60-minute game in less than two hours in a 7-7 format on a 100-yard field. There are no kicks; teams

punt and kick off by throwing the ball to the other team on fourth down or after touchdowns and extra-point attempts.

Pacific Pro Football (PPF)

The semiprofessional league, led by NFL agent Don Yee, will offer college athletes a choice they've never had before: either go to school or "join this new league, earn a salary and benefits, and learn how they really live and play ball at the NFL level." PPF plans to offer intern, educational, and vocational programs to its players, but stressed the importance of each player’s control over his path from amateurism to professionalism. PPF will "consist of four teams to start play next summer, all based in Southern California and all owned by the league." They will play an eight game season, and a championship game, starting in July and ending in August in midsized municipal stadiums. The league hopes to eventually expand to other football hotbeds in Texas, Florida, the Midwest. Yee wanted the league to focus on helping “better prepare athletes with pro-style coaching and a daily schedule that more closely mimics the NFL lifestyle."

NCAA: The Historical Basketball League (HBL): Equity for College Athletes.

The first national basketball league for college students that will substantially compensate college athletes based on their athletic ability beyond just a college education. The HBL is founded on a simple idea: college sports are popular because they are sports played by college students, and that NCAA-style amateurism is a means of excluding athletes from the financial benefits of the league, rather than as a benefit to fans or athletes. The HBL will be also be a financial boon to the Historically Black Colleges and Universities (HBCUs) that participate in the league and share (with athletes and investors) in the league’s profits. The HBL gives schools and athletes an option outside of the traditional NCAA model, providing a choice of whether to go "pro" while in college or to be amateur about it. The first season will be in 2019-2020 with the opening game planned to be held on June 19th.

• Agents Anti-Doping Canadian Football League Collective Bargaining Contact Equality Major League Soccer (MLS) MLB Players Association (MLBPA) National Basketball Association (NBA) National Football League (NFL) National Labor Relations Board NCAA NFL Player Association (NFLPA) Olympic Sports Salary Cap Student Athletes Tort United States of America (USA)