A year in review: US sports law - International and Olympic - (Part 8)

Thursday, 18 August 2016

This article provides a broad overview of legal issues relating to international sports law and the Olympics between May 2015 to May 2016. This 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.

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.

International & Olympic Sports

FIFA Corruption Charges and Aftermath

In May 2015, several top FIFA officials (but not then-current president Sepp Blatter) were indicted for wire fraud, racketeering, and money laundering as part of a corruption investigation by the U.S. Department of Justice in cooperation with Swiss officials. The charges arise out of alleged corruption in connection with World Cup bids, marketing and broadcast deals, and various other matters the past twenty years. This criminal prosecution is pending in the Eastern District of New York.

In September 2015, Swiss authorities opened a formal criminal investigation of Blatter based on “suspicion of criminal mismanagement” of FIFA, which arose out of his signing a contract "unfavorable to FIFA" and making "disloyal payments" of more than $2 million to Michel Platini, president of UEFA (the European soccer confederation) in February 2011. (Forbes 9.25.15)

After the Swiss criminal investigation was commenced, FIFA suspended Blatter and Platini as well as Jerome Valcke (FIFA’s Secretary General). Blatter and Platini originally were banned from participating in the national or international governance of soccer for eight years, which was reduced to six years by the FIFA Appeal Committee on February 24, 2016. Both of them are appealing their suspensions in pending proceedings before the Court of Arbitration for Sport.

On February 26, 2016, Gianni Infantino was elected as the president of FIFA. He will serve as president for the remainder of the current term of this office until 2019. FIFA also adopted new regulations, which establishes a three term limit (i.e., 12 years) of office for high-level officials including the president. FIFA also passed a regulation requiring “at least one female representative on the new governing Council from each of FIFA’s constituent continental confederations.” (Law 360 2.26.16)

World Anti-Doping Agency (WADA) Independent Commission Report o In November 2015

A WADA Independent Commission released a report finding there was a state-sponsored doping scheme implemented by Russia that involved a number of track and field athletes, several coaches, and the All-Russia Athletic Federation (ARAF). It concluded that the London Olympics were “more or less sabotaged by allowing Russian athletes to compete when they should have been suspended for doping violations” and recommended that the IAAF impose lifetime bans on five Russian middle-distance runners, including the gold and bronze-medal winners in the 800 meters at the London Olympics, and five Russian coaches and administrators. The Report also criticized the IAAF and found evidence of corruption and bribery in connection with drug testing protocols within international track and field. In addition, it was critical of WADA for not taking steps to ensure signatories such as International Federations, National Olympic Committees, and National Governing Bodies are complying with their obligations under the WADA Code and declaring those that are not to be non-compliant (which could preclude the subject governing body’s athletes from participating in the Olympic Games and other international sports competitions). In response to the Report’s suggested reforms, the WADA Foundation endorsed a proposal to strengthen WADA’s ability to conduct investigations and to rely on whistle-blowers in an effort to uncover doping. It also declared six nations non-compliant with the WADA Code. o As a result of the Report, Russian track and field athletes have been banned from all international competition since last November and the ARAF has been suspended as a member of the International Association of Athletics Federations (IAAF). An IAAF taskforce has determined that the ARAF still has a lot of work to do before it can be reinstated as an IAAF member and its track and field athletes can participate in the 2016 Rio Olympics. Norwegian anti-doping expert Rune Andersen stated that “[t]he view of the taskforce is that there is significant work still to be done to satisfy reinstatement conditions [.]” Russia has until May to show they have adjusted their program and imposed proper guidance and oversight. There are concerns that the ARAF is continuing to breach WADA Code. Current and former athletes have signed a petition requesting that the IAAF demand that the ARAF and athletes repay any prize money won and appearance fees prior to the country being reinstated.

WADA Response to Numerous Positive Tests for Meldonium

Effective January 1, 2016, WADA banned the use of meldonium, a heart attack medication developed in Latvia, after determining it was being used by athletes for performance-enhancing purposes. Since then more than 200 athletes worldwide have tested positive for meldonium, including at least 30 Russian athletes and professional tennis player Maria Sharapova. This has resulted in questions regarding whether there is a legitimate basis for banning meldonium, controversy with some athletes claiming they stopped taking the substance before it was banned, and uncertainty regarding how long meldonium remains in the body after ingestion. In an April 11, 2016 Statement on Meldonium Notice, WADA stated:

“In the case of meldonium, there is currently a lack of clear scientific information on excretion times. For this reason, a hearing panel might justifiably find (unless there is specific evidence to the contrary) that an athlete who has established on the balance of probabilities that he or she ingested meldonium before 1 January 2016 could not reasonably have known or suspected that the meldonium would still be present in his or her body on or after 1 January 2016. In these circumstances, WADA considers that there may be grounds for no fault or negligence on the part of the athlete. However, given that the presence of meldonium in the athlete’s sample collected on or after 1 January 2016 constitutes an anti-doping rule violation, the disqualification of the athlete’s results shall (even where there is no fault or negligence) be dealt with in accordance with the applicable Code provisions. If the sample was collected in competition, then the results in the competition in question will be automatically disqualified in accordance with Article 9 of the Code.”

WADA also confirmed that athletes with a concentration of between one and 15 mcg before March 1, or those below one mcg after March 1, could have their cases stayed to wait for the results of ongoing studies, although their suspensions could be lifted in the meantime. See https://wada-main- prod.s3.amazonaws.com/resources/files/wada-2016-04-12-meldonium-notice-en.pdf.

A special CAS Anti-Doping Division will adjudicate doping issues arising during the 2016 Rio Olympic Games, which formerly were determined by IOC Disciplinary Commission. IOC President Thomas Bach stated: “This is a major step forward to make doping testing independent . . . It represents support for the IOC’s zero tolerance policy in the fight against doping and in the protection of the clean athletes.” CAS Anti-Doping Division awards may be appealed to CAS ad hoc Division for Rio Olympic Games.

USADA Recreational Competitor Therapeutic Use Exemption

The United States Anti-doping Agency (USADA) has created a new therapeutic use  exemption for masters and amateur athletes who are prescribed banned drugs, which allows masters and amateur athletes to compete in low-level competitions while taking banned substances. An athlete must prove to USADA that he or she is unlikely to actually win one of these amateur races, in addition to proving a legitimate medical need for the drug. USADA stated: “Out of fairness to those non-competitive athletes, we put in place a process that allows for them to compete while still requiring a fair and reasonable review of each recreational athlete’s medical situation,”  

R v. Riesberry, Supreme Court of Canada (2015), opinion available at https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/15682/index.do.  

The Canadian Supreme Court ruled that a defendant accused of providing performance enhancing drugs to racehorses, thereby committing a doping offense, may be found guilty of fraud on the betting public under the Canadian Criminal Code. It also ordered a new trial concerning whether cheating in a game is a crime. This ruling could lead to Canadian athletes who use performance enhancing drugs being charged with criminal fraud.

CAS Ruling on Females with Hyperandrogenism

In July 2015, the Court of Arbitration for Sport issued an interim award suspending

the “IAAF Regulation Governing Eligibility of Females with Hyperandrogenism to Compete in Women’s Competition” (“Hyperandrogenism Regulations”) for a maximum period of two years in order to give the IAAF, the international governing body for track and field, the opportunity to provide scientific evidence concerning the quantitative relationship between enhanced testosterone levels and improved athletic performance in female hyperandrogenic athletes (i.e., those with high levels of naturally occurring testosterone). Absent such evidence, the CAS panel was unable to conclude that hyperandrogenic female athletes might benefit from such a significant performance advantage that their exclusion from competing as females is justifiable. While the Hyperandrogenism Regulations are suspended, Ms Dutee Chand, an Indian 200 and 400 meter sprinter, is permitted to compete in both national and international level athletics events. If the IAAF does not submit any scientific evidence within this two-year period, the Hyperandrogenism Regulations will be declared void. CAS 2014/A/3759, Dutee Chand v. Athletics Federation of India & International Association of Athletics Federations (award of July 27, 2015) available at https://www.tas-cas.org/fileadmin/user_upload/award_internet.pdf.

Transgender Athletes Allowed to Compete at 2016 Rio Olympics Without Sex Reassignment Surgery

Based on recent scientific, cultural, and legal issues, the IOC has recommended that transgendered athletes “should be allowed to complete at this year’s Rio Olympics without undergoing sex reassignment surgery.” Since 2003, transgendered athletes who transitioned “are required to have reassignment surgery followed by at least two years of hormone therapy in order to be eligible to compete.” While the rules have changed, there are still some limitations. Athletes transitioning from male to female “will need to prove that their testosterone level has been below a certain cut-off point for at least one year before the competition.” Athletes who transition from female to male will be able to compete in men’s competitions “without restriction.”

IOC’s Gender Verification and Hormone Regulation Policies Challenged in Canadian Court

Kristen Worley, a Canadian elite transitioned XY female cyclist, alleges in a complaint filed with the Human Rights Tribunal of Ontario that the IOC’s gender- verification and hormone regulation policies as well as its selected levels of testosterone for females are discriminatory. As an athlete with a transitioned history, Worley alleges that her physician’s determined healthy level of androgens in her body exceeds the range mandated by the international cycling federation, whose policies are established by the IOC. She asserts that requiring her to stay within this range by not granting a medical exemption would push her body into "an extreme post- menopausal state" and leave her too ill to engage in competitive cycling.

USOC Allows U.S. Athletes to Endorse Non-Olympic Sponsors During Rio Olympic Games o The USOC is permitting athletes to endorse the products and services of non-Olympic sponsors during the Rio Olympics under strict conditions, including a requirement that proposed endorsements must be submitted to the USOC for review by January 27, 2016. Previously, USOC rules prohibited such endorsements, which many athletes objected to during the 2012 London Olympic Games. ( SBD 6.12.15)

Gold Medal, LLC v. U.S. Track and Field, No. 6:16-cv-92 (D. Ore. Jan. 20, 2016)

Plaintiff, a company co-founded by two-time Olympian Nick Symmonds, manufactures and sells chewing gum with caffeine, taurine, and B vitamins used by runners as an alternative to coffee and energy drinks as a means of optimizing their athletic performance. It claims that the 2016 Olympic Trials Uniform Advertising and Logo Regulations, which prohibit any commercial advertising on athlete uniforms except an apparel manufacturer’s standard logo, violates federal antitrust law by reducing competition in the market for individual athlete sponsorship agreements. Among other requested relief, plaintiff seeks to enjoin defendants U.S. Track and Field and the USOC from preventing it from sponsoring individual athletes at the upcoming 2016 Olympic track and field trials in exchange for its company identification being displayed on their competition apparel.

California Court Dismisses Concussion Suit Against FIFA o Mehr v. FIFA, 2015 WL 4366044 (N.D. Cal.)

“Allegation that FIFA requires its members, such as U.S. Soccer, to ‘follow FIFA’s rules and the Laws of the Game’ and also requires the members of its members (i.e., U.S. Soccer’s members) to follow those rules and laws, even if true” is insufficient to make it subject to U.S. court’s jurisdiction; “[t]o find otherwise would be to suggest that FIFA is subject to personal jurisdiction everywhere in the United States where soccer is played.”

Vicki Palivos et al. v. Federtion Internationale Football Association et al., No. 2:15-cv- 01721 (D. Nev. 2016)

Plaintiffs brought a class action suit claiming the defendants “conspired to inflate ticket prices for the 2014 World Cup in Brazil.” FIFA is seeking to dismiss this suit on the ground that a Nevada court does not have personal jurisdiction. (Law 360 3.2.16)
European Commission Antitrust Investigation of International Skating Union o In October 2015, the European Commission opened a formal antitrust investigation into International Skating Union (ISU) rules that permanently ban skaters from competitions such as the Winter Olympics and the World and European Championships if they participate in non-ISU approved events. The Commission will review whether the rule banning athletes from any ISU competition for participating in non-ISU events constitutes an illegal restraint of trade or an abuse of dominance.
German Court Challenge to CAS Arbitration Award o On January 15, 2015, in Pechstein v. International Skating Union, the Munich Higher Regional Court refused to recognize a CAS award upholding a two-year ban on speed skater Claudia Pechstein for blood doping in 2009, thereby permitting her to bring suit in a German court against the ISU seeking $5.18 million in damages for lost income during her allegedly wrongful suspension. The court ruled the CAS award would not be enforced under the New York Convention because it violated German public policy on two grounds: 1) there was no valid CAS arbitration agreement between Pechstein and the ISU because she was required to enter into it as a condition of participating in the ISU’s World Speed Skating Championship during which she was found to have engaged in blood doping; and 2) the CAS process for choosing an arbitration panel is unfair because it is skewed in favor of international sports governing bodies such as the IOC, IFs, and NOCs based on a closed list of arbitrators from which parties are required to select arbitrators and the procedure by which the CAS panel president is appointed. The court’s ruling, which has significant implications regarding the enforceability of CAS awards by national courts, is being appealed to the German Federal Supreme Civil Court, which is expected to render its decision on June 7, 2016.

Miscellaneous

NBPA Votes To Settle Tennessee Jock Tax Lawsuit

Under Tennessee tax law, NBA and NHL players paid $2,500 for every game they played in the state, with an annual cap of $7,500 per year per player. The NBPA Board of Player Reps voted to settle the lawsuit the player’s union brought against the state of Tennessee involving the state’s jock tax. The settlement is similar to the one the NHLPA received, which was $3.32 million, or about half of what they paid to the state of Tennessee over a shorter period of three years. (SBD 7.21.15)

Baseball Stadium Bond Financing Gives Rise To Securities Fraud Charges o In the first municipal bond criminal securities fraud case, federal prosecutors assert that the Rampano, New York town supervisor and the former head of a development corporation lied to investors about local finances, including the costs of a minor league baseball stadium. The indictment states they did so “partly to conceal both the extent to which the town financed the stadium project and the impact of that financing” as well as to hide the development corporation’s lack of liquidity, which caused bond investors to incur “millions of dollars in losses.” United States v. St. Lawrence, S.D.N.Y., No 7:16-cr-0029)

Court Rejects Snowboarders’ Federal Equal Protection Suit

In Wasatch Equality v. Alta Ski Lifts, Co., 2016 WL 1566626 (10th Cir.), the plaintiff alleged that a Utah ski resort’s skiers-only policy violated the equal protection rights of snowboarders. However, because the Tenth Circuit ruled that the ski resort is a private business not subject to the constraints of the federal constitutional law, the merits of this claims was not addressed.