2021 Preview: Litigation

In this second installment of previewing 2021, I take a look at some of the compelling storylines to follow in the world of sports litigation. As trials now occur virtually, several ongoing disputes are expected to reach resolutions this year, including a six year-old lawsuit against the National Collegiate Athletic Association (NCAA), which will fundamentally rearrange the way college athletes are “defined” and compensated. Let’s take a look at what is on the docket to be decided this year.

NCAA v. Alston
For fans of EA Sports’ NCAA Football, the dream of the beloved video game making a comeback has become a reality following a surprise announcement last week. O’Bannon v. NCAA, a class action lawsuit against the NCAA, Collegiate Licensing Company, and video game publisher Electronic Arts, brought an end to the game franchise in 2014 when college players sued over the unauthorized use of their name, image, and likeness (NIL). A $60 million settlement ended the dispute and with it any NIL-related profit opportunities for college players, such as broadcast rights and merchandising. Rather than simply license NIL rights with college athletes, all profiting parties were forced to abandon these lucrative areas of college sports, stemming from the NCAA regulations prohibiting athletes receiving outside compensation. This concept had become known as amateurism. Amateurism has prevented college athletes from profiting from their NIL.

This is just a snippet of the NCAA’s long battle against its athletes and their authority over NIL rights, however a new chapter may be on the horizon. The relevant lawsuit, NCAA v. Alston, is a years-old case that will be making its way to the Supreme Court. Following the Ninth Circuit’s decision in favor of the plaintiffs, the NCAA’s petition for certiorari was granted, meaning the Supreme Court will hear the case and make a final ruling. If the Supreme Court affirms the Ninth Circuit’s judgment, the NCAA rules restricting education-related pay and benefits for college athletes will be stricken down. However, if the Supreme Court goes a different route, a win for the NCAA may essentially grant antitrust immunity to the organization, which would allow it generous latitude in terms of what changes if any the NCAA would make to its current compensation structure. The debate over amateurism will take place on March 31st, and regardless of outcome, will have permanent, far-reaching consequences for the future of college sports.

Jeffery Kessler, head attorney at Winston Strawn LLP, will be arguing on behalf of Alston and college athletes as a whole, while the NCAA and its athletic conferences will be represented by a plethora of law firms.

Bryant v. Island Express Helicopters Inc.
Little more than a year ago, the helicopter carrying Kobe Bryant, his daughter Gianna, and seven other passengers crashed, tragically resulting in the deaths of everyone on board. Many of the details are well-known at this point: despite traveling the same route to a girl’s basketball tournament 24 hours earlier, pilot Ara Zobayan became disoriented in the heavy fog that hung over the Calabasas hillside that day and misperceived the helicopter’s final plunge, apparently believing that they were climbing to four-thousand feet shortly before impact. However, what still remains to be determined is the outcome of the litigation against Island Express, Zobayan’s employer and the owner of the helicopter.

Vanessa Bryant, the widow of the Lakers’ legend, brought suit against the helicopter company and Zobayan on twenty-eight counts alleging negligence resulting in the wrongful deaths of the passengers. Island Express attempted to cross-claim the Federal Aviation Administration, alleging that the air traffic controllers had negligently handled a shift change that occurred during the flight, according to Law360. Both Bryant and the federal government have filed a motion to dismiss, which if granted would remand the case from federal court to Los Angeles Superior Court, where Bryant is more likely to find a favorable verdict if the case goes to trial. However, both sides must first await the investigation results of the National Transportation Safety Board (NTSB). These findings will determine if the crash was due to a mechanical failure or human error, as previously suspected. The NTSB is expected to announce the release of its report tomorrow on Tuesday, February 9th via livestream.

Vanessa Bryant is represented by Munger, Tolles & Olsen LLP and Robb & Robb LLC. Island Express is represented by Cunningham Swaim LLP and Worthe Hanson & Worthe. The federal government is represented by the U.S. Attorney’s Office for the Central District of California and U.S. Department of Justice

Senne v. Office of the Commissioner of Baseball
The Minor League (MiLB) system of Major League Baseball (MLB) has been a lightning rod of controversy over the past year following the MLB’s decision to cut the number of minor league teams from 162 to 120 or one affiliate per MLB team for each of the four “levels” of MiLB. Commissioner Rob Manfred has faced backlash from minor league team executives and Congress alike. However, it seems that the MLB’s 120 Plan” not-so-coincidentally comes at a time where the league awaits a verdict on a class action lawsuit that would make the operation of the Minors Leagues exponentially more expensive. Enter Senne v. Royals.

Seven years ago, former minor leaguer Aaron Senne filed a lawsuit against the Kansas City Royals. The litigation has since expanded to include thousands of players past and present who are alleging that they have received unlawfully low wages from MLB for their services. These claims include zero compensation for spring training as well as its fall counterpart, both of which are reportedly “strongly implied” to be mandatory. Further, some players even claim to have made as little as $1,100 per month during the five-month regular season, which, assuming a minimum forty-hour workweek, would make their hourly wage $6.875. Of course, this figure falls well below the $7.25 federal minimum wage; however the MLB may already be shielded from this apparent discrepancy.

Hidden on page 1,967 (of 2,232 total) of Congress’s 2018 $1.3 trillion spending bill, the “Save America’s Pastime Act” essentially exempts minor league players from the protections of the Fair Labor Standards Act (FLSA). This legislation meant that minor league players could no longer receive overtime, nor payment for spring training, rendering minor leaguers “seasonal employees” by default. There are many other considerations that fill out this complicated picture, but in short, the MLB’s lobbying for these provisions may signal that the MLB is not expecting the court to rule in its favor. Hence, why eliminating 42 teams – or roughly one-thousand players – will mitigate some of the blow the MLB will face if it loses this case.

The MLB petitioned the Supreme Court to reject the class action on the basis that the claims lacked commonality; however the land’s highest court declined to hear the case. Therefore, the lawsuit will proceed in the Ninth Circuit where Judge Joseph C. Spero has tentatively scheduled a trial for June 2022. However, allowing such an expensive (and contentious) lawsuit to reach trial may threaten the MLB’s most valuable commodity: its antitrust exemption. While a settlement appears unlikely, all eyes are on the league as it prepares for its next move.

The minor league class is represented by law firms Korein Tillery LLC and Pearson, Simon & Warshaw, LLP. MLB is represented by Elise Bloom of Proskauer Rose LLP.

COVID-19’s Impact on Sports Broadcasting and Salaries

It’s been just over two weeks since the last live broadcast of a professional sporting event and the effects are rippling through the world of sports business. COVID-19’s arrival and subsequent spread across the United States prompted the suspensions of the NBA’s, NHL’s and XFL’s seasons, as well as the delay to the start of the MLB season and countless other disruptions throughout sports. Much like almost every other area of the U.S. economy, sports have taken an enormous hit and while fans and organizations alike are eager to see their favorite athletes return to competition, it is uncertain as to when they will be able to safely, and lucratively, do so.

Between the timing of COVID-19’s lockdown on U.S. sporting events and the ambiguous 2-to-6 month timeframe medical experts are forecasting for a full recovery, each league has tailored its own plan in response to sudden halt of play. Below is a quick summary of just a few of the major sporting organizations’ financial and/or scheduling proposals.

NBA: After announcing that players would receive full salaries on the April 1st due date, the NBA announced earlier this week that it would be reducing the pay of 100 of the leagues’ highest-paid executives by 20% for the duration of the coronavirus crisis. Moreover, the league has extended its credit limit to $1.2 billion for added flexibility in covering its coming expenses. While there is no set plan on when play for the current season will resume, league commissioner Adam Silver has insisted that regardless of timeline, the league would prefer to salvage some portion of the season and crown a champion for the 2019-2020 season. Among the avalanche of proposals of how to “save the season,” Atlanta Hawks CEO Steve Koonin, recommended permanently pushing back the start date of the NBA season to December and concluding with the NBA Finals in late summer, given the current season would optimistically end in August or September. Moreover, Brooklyn Nets point guard Spencer Dinwiddie tweeted out an interesting idea in which the NBA season would resume with a March-Madness style tournament involving all 30 teams.

MLB: The MLB reported this week that it had reached an agreement with the MLBPA on a loose framework of financial and scheduling logistics regarding the upcoming season. Perhaps the most shocking news was the revelation that IF the season is cancelled, players would receive the same amount of service time they received the season prior. This means that players with a year remaining on their contract, such as recently-acquired outfielder Mookie Betts, will hit free agency in 2021 without ever playing a game for the Los Angeles Dodgers who traded valuable assets for his services this year. Also, in the event that the season is cancelled, the MLB made it clear that players would not be able to sue for full salaries, however all players will be receiving a $170 million advance over the next two months. Despite these insurance measures, Commissioner Rob Manfred is hopeful that the MLB resumes play this summer, while he acknowledges that a full 162-game season is likely off the table. The reported contingency plan includes 1) beginning the season once there are no bans on mass gatherings that limit the ability to play in front of fans, 2) no travel restrictions, 3) medical experts determine that games will not pose a risk to the health of teams and fans. Moreover, if/when play resumes, the MLB noted that doubleheaders, a 14-team playoff format, and a neutral, warm-weather location for a November/December World Series are all in serious consideration.

NHL: While the NBA and MLB have quickly pivoted to rescuing their seasons, the NHL has not matched their optimism nor their speed in announcing contingency options. The league has not yet united around a financial agenda, yet both the Dallas Stars President and General Manager have taken voluntary 50% pay cuts. Meanwhile, the Boston Bruins and Montreal Canadiens announced layoffs as their own responses. While many see the cancellation of the rest of the season as the most realistic scenario, others have proposed a timeline similar to that of the NBA with the season picking back up in July/August and ending in August/September. Most notably, star players Alex Ovechkin and Sidney Crosby said that they would be “OK” with skipping straight to the playoffs if and when the season is able to resume, however they acknowledged the question of fair play and keeping the integrity of the sport.

XFL: I really feel for the XFL here. Riding a strong start in its inaugural season, the decision to not only suspend but cancel its remainder must have been decisively more difficult than those of other sporting leagues. The XFL was exactly at the midway point of its season having played through five weeks of its ten week schedule (excluding a two-week playoff in April). Though the eight-team football league had been dealing with declining ratings following its initial excitement, it immediately committed to paying its players’ full salaries and returning refunds or credit to its ticket holders. The XFL also announced that it will be back for a 2021 season and has great reason to do so. Ten former XFL players have already signed contracts with NFL teams for the upcoming season with more likely to follow in the coming days.

MLS: Major League Soccer was in the midst of only the second week of its season when it made the decision to postpone its season for 30 days. As updates of the spread across the U.S. have come in, the Commissioner Don Garber pushed the deadline back to May 10th, but will likely have to do so again under the current climate. Garber, however, is adamant that when soccer returns, the MLS will play a full season’s worth of games even if it means extending the calendar of the season. While there has not been an unanimous response to salary fulfillment across the MLS, one team came under scrutiny for sending an email to its game day staff suggesting they file for unemployment while naming corporate partners who might be hiring.

BIG3…?: I was hesitant to include the Big3 in this rundown of major sporting organizations, however its response to the coronavirus crisis may just elevate its status to that of the leagues listed above. For those who are not familiar with the Big3, it is a 3-on-3 basketball league composed of former NBA and college players such as Amar’e Stoudemire and Joe Johnson. The games are played half-court style with rule oddities that differentiate it from the NBA such as the addition of a 4-point shot and first team to score 60 points as the winner. As for the coronavirus’ impact on the BIG3, originally games were supposed to be played around the country in Memphis, New York and more. However, BIG3 co-founder Ice Cube announced yesterday that the organization will be partnering with the producers of reality TV show “Big Brother” in efforts to air a basketball tournament-reality TV show hybrid to fill the significant void in the sports world. It was reported that the tournament will feature 16-22 players, who be previously tested for COVID-19 and if selected, will be quarantined in a house together for the duration of the season with anyone who breaks quarantine being kicked from the house. It was also reported that some of those selected may even in former top women’s basketball players.

The idea is that the three-person teams would shuffle teams each round and once an individual player accumulates three losses they would be eliminated from contention. Then, the final three players would win cash prizes with the top prize being at least seven figures. The goal is to air the tournament starting in May and given the current sport’s climate, or lack thereof, the BIG3 will surely see a large opportunity to scoop up hungry sports fans across the country craving any form of live competition. There is no word yet on whether or not these fans will be able to bet on these contests, however given the nationwide craving to slowly restart the economy, it wouldn’t a surprise to see Las Vegas announce the lines once the details of the BIG3’s proposal are ironed out. In any event, every other aforementioned league is looking at June start/resume dates in their most optimistic scenarios, so at the very least the BIG3 has at least a month to show us all what it has to offer, and hopefully hold us sports fans over until our favorite teams are back in action.

Ex-MLB Pitcher files lawsuit against Astros over Sign-Stealing Scandal

Spring is here and baseball is finally returning from what has been a tedious offseason for just about everyone involved. Of course, at the heart of the frustration lies the now-infamous sign-stealing scandal that undoubtedly gave the Houston Astros a disproportionate competitive advantage en route to their 2017 World Series championship. However, while fans, players and front office execs alike are all justifiably upset with the Astros’ cheating, one former pitcher has particularly good reason to not only be frustrated with the ex-champions, but also take them to court.

On August 4th, 2017, Mike Bolsinger of the Toronto Blue Jays entered the game in the 4th inning to relieve as they were trailing the Astros 7-2. With a runner on and two outs, Bolsinger’s outcomes are as follows: walk, three-run home run, double, walk, single, walk, warning-track fly out. As a result of the horrendous outing, his ERA ballooned from 5.49 to 6.31 (league average was 4.36 that year) while his WHIP went from 1.66 to 1.81 (avg. was 1.33) and the Blue Jays promptly designated him for assignment after what would prove to be his final game in the big leagues since.

Given his stats —and if we’re being honest the eye-test too— it is clear Bolsinger certainly was never a Cy Young candidate by any means, yet the degree to which he gets teed-off seems oddly high. You can watch the entire appearance here, but the MLB’s investigation confirms part of what we see unfold in the clip: the Houston batters knew what pitches would be delivered before they were even thrown and allegedly used the trash-can-banging system on 12 of the 29 pitches Bolsinger threw. So, the question becomes, “If the Astros had not stolen signs, would the results of Bolsinger’s appearance be different in a way that would have ‘saved’ his job?”

The official way in which this civil suit is being framed is whether or not the Astros  engaged in unfair business practices and negligence via a “duplicitous and tortious scheme of sign-stealing.” Though initially filed toward the Astros organization on February 10th, the original grievance contained Doe defendants, essentially defendants to-be-named later, which reportedly likely include Astros Owner Jim Crane.

The significance of his involvement in this lawsuit stems from Commissioner Rob Manfred’s summary of Crane’s role in the scandal. Manfred wrote, “Jim Crane was unaware of any of the violations of MLB rules by his club,” plainly exonerating him. However, after the year-long suspensions and subsequent firings of general manager Jeff Lunhow and manager A.J. Hinch, Crane is the last man standing among a splintered front office and has been able to keep himself isolated from any sanctions. While it remains to be seen how directly the lawsuit aims to implicate Crane, it is possible that more details about his understanding —or lack thereof— of the cheating are made public which would inevitably drag out the controversy even further.

Odds are that the lawsuit will never reach trial, however if it did how would it play out? The only thing close to a baseball crime of this magnitude traces back to 1919 when eight members of the Chicago White Sox were accused of intentionally losing the World Series in exchange for a share of the profits from a gambling syndicate. So, while there isn’t a true precedent, a couple factors will outline the way the case proceeds.

First, grievances dealing with a player’s salary are covered by a labor law preemption, meaning that the Collective Bargaining Agreement between the MLB and MLBPA will govern any bargain between the feuding parties. To that end, the Astros can appeal the court to dismiss the lawsuit so that Bolsinger must arbitrate. There are several considerations that follow and make this aspect of the proceeding much more complex, however SportsIllustrated has covered these nuances in depth here for those who want to go a step further.

More interesting, however, is the question of whether or not the “Astros game” truly caused the derailing of Bolsinger’s career. As his aforementioned stats show, 2017 was already shaping up to be a make-or-break season for the 6’1″ righty as he was carrying a mediocre 6.83 ERA from the year prior into his first (and only) season with the Blue Jays. Yet, despite forfeiting 21 earned runs in just 27.2 innings in that 2016 season, 2015 provided a lot of hope for Bolsinger’s future in the league when he started 21 games, tossing 109 innings to the tune of a cool 3.62 ERA.

So, did Bolsinger, a 10th-round pick who never cracked any top-prospect lists, truly have a potential future that was unfairly derailed by Houston’s cheating? Or was his 2015 season just a fluke and his departure from the big leagues always inevitable? The most challenging aspect of all of this is that this outing against the Astros proved to be his final appearance in the MLB, so it is easy to hypothesize the “what ifs” that could have changed the course of history. Yet, I’m inclined to think that Bolsinger’s career would have been effectively over regardless of how bad a bashing the Astros gave him on that August 4th game.

Between his uninspiring rise from prospect obscurity to what seemed to be a failed starter-turned-reliever experiment, Bolsinger had the profile of someone destined to be in the MLB just for a cup of coffee while teams try to figure out if he has the “it” needed to stay. Toronto took a flier on him and despite returning to Triple A and posting an electric 1.70 ERA over 47.2 innings, its clear that the Blue Jays and the rest of the league were ready to move on from him.

These considerations are why this lawsuit figures to be so complex and monumental. Bolsinger’s attorney, Ben Meiselas of LA-based Geragos & Geragos, has a steep case to make, but successfully represented Colin Kaepernick in his collusion grievance against the NFL. The ramifications of any settlement that may be reached are far-reaching traveling all the way up to the office of the Astros owner and could prompt more players to follow suit (no pun intended). In any case, the dark cloud of Houston’s sign stealing scandal that looms over baseball won’t be going away any time soon.

Rob Manfred threatens Oakland with potential Vegas move for Athletics

Athletics.jpg

Fresh off of a disappointing wild card elimination at the hands of the Tampa Bay Rays earlier this month, the city of Oakland received more unpleasant news, this time from MLB commissioner, Rob Manfred. The former lawyer and business exec warned Oakland Mayor, Libby Schaaf, that the Athletics could relocate to Las Vegas if the city did not drop its lawsuit that would stop Alameda County from selling its shares of the team’s stadium, the Coliseum, to the team.

The Athletics have long shared the Coliseum with the Oakland Raiders, but are seeking to build a new stadium at Howard Terminal on the heels of the Raiders’ 2020 move to Las Vegas. The city of Oakland and Alameda County share ownership of the coliseum, however, because Oakland cannot match the Athletics’ $85 million dollar offer for Alameda’s share of the stadium, the city sued to block the sale. A judge issued a temporary hold on the transaction, prompting Manfred’s response, a sign that his patience with the situation is running thin.

The Coliseum has always been regarded among the MLB’s worst ballparks given its outdated, dual-sport accommodations. In turn, the Athletics consistently rank bottom five in the league in attendance despite making the playoffs in five of the last eight years. With the Raiders on the way out of town, the Athletics are looking to seize the opportunity of acquiring a new ballpark and have drawn up plans for a new, cutting-edge stadium that would be located on the Oakland Waterfront. While the initial projections have pegged this project to cost upwards of $500 million, the good news is that it will be privately financed. Moreover, the Athletics have already crossed a hurdle as the stadium proposal was passed unanimously last month in the Senate 34-0.

Though the bill was originally headed to Governor Gavin Newsom’s desk for final approval, the lawsuit has halted any momentum for the moment. However, as the MLB and the Athletics have a vested interest in moving forward with an established plan for the new stadium, Manfred’s pressure on city officials is justified. The commissioner’s calculated warning also strikes a chord with Oakland sports fans, who have already witnessed the Warriors’s last game in the city and are awaiting the same with the Raiders. While Manfred’s caution about a potential Vegas move is more hot air than a near reality, it certainly represents a plan B for the Athletics, and the prospect of losing three professional teams in two years is too much for Oakland to bear.

The next hearing in the city’s lawsuit is scheduled for November 14th, and while the city still won’t be able to match the $85 million offer at that point, it is reasonable to expect that their approach to the situation will have changed substantially as there is a lot to lose. The Athletics’ official site has published a summary of the economic impact the new stadium should expect to generate over the next ten years and it blows the $500 million construction figure out of the water. Between the 2,000 development jobs, local investments, and game-day attendee spending, the report estimates roughly $3 billion in total economic impact for residents and businesses once construction begins in 2021.

It is hard to imagine a scenario in which the Athletics are pushed to the point of relocation as all parties involved, the team, league and city, are in agreement of a new ballpark, but are still ironing out the finances. With a rich baseball history,  a solid young core and arguably the best general manager in the league, the Athletics have all the makings of a strong baseball franchise. They struggle, however, with their status as a small market team, and have not had a payroll that ranked higher than 26th, out of the 30 teams, since 2014. Yet, a new stadium – one that is actually intended for baseball – could be just what the Athletics need to spark their fanbase and vault themselves into a consistently profitable revenue stream. It’s no secret that the city of Oakland needs the Athletics just as much as they need it, so expect both sides to come together and put this lawsuit, and the threat of Las Vegas, behind them.