Aaron Hernandez Charged with Murder

I have a new SI column on the charges and how Hernandez might wage a defense strategy.

Breaking Down the San Jose vs. MLB Lawsuit

Image from SanJose.com

The on-going dispute surrounding the Oakland Athletics' proposed move to San Jose took a new turn last week when the city of San Jose filed an antitrust lawsuit against Major League Baseball in federal district court (for prior Sports Law Blog coverage of the dispute, see here, here, and here).  The complaint, available here, argues that both MLB's franchise relocation policies in general, and the league's failure to approve the A's relocation to the city in particular, violate state and federal antitrust law, as well as several other California common law torts.  Under MLB rules, any proposed relocation must be approved by at least three-quarters of MLB teams.  Moreover, teams have complete veto power to prevent another franchise from relocating into their home territory.  Although MLB has not formally rejected the Athletics' proposed relocation, it has delayed a decision on the matter for several years.  San Jose's suit asserts that this delay is costing it millions of dollars in potential tax revenue and economic development. 

As others have noted, San Jose faces an uphill battle in the lawsuit as MLB has a number of potential defenses at its disposal.  The most obvious defense for MLB is its historic exemption from antitrust law.  In a series of three decisions (Federal Baseball in 1922, Toolson in 1953, and Flood v. Kuhn in 1972), the U.S. Supreme Court has consistently held that federal antitrust law does not apply to professional baseball, thus apparently undermining the city's Sherman and Clayton Act claims.

In response to the antitrust exemption argument, San Jose's best hope may be to persuade the district court to follow a series of precedents from the early-1990s limiting the scope of baseball's immunity.  Most notably, in the 1993 case of Piazza v. Major League Baseball, the Eastern District of Pennsylvania decided a suit similarly challenging MLB's relocation policies after the league refused to approve the proposed relocation of the San Francisco Giants to Tampa Bay.  The Piazza court allowed the plaintiffs' antitrust claims against MLB to proceed despite the league's exemption by interpreting the Supreme Court's baseball trilogy as only protecting the reserve clause from antitrust scrutiny.  Because major league players successfully defeated the reserve clause via arbitration and collective bargaining in the mid-1970s, the upshot of the Piazza holding was that MLB's antitrust exemption was effectively null and void.

However, as I argued in my 2010 law review article Defining the 'Business of Baseball': A Proposed Framework for Determining the Scope of Professional Baseball's Antitrust Exemption, the Piazza precedent is of dubious validity given that it was premised on several erroneous conclusions.  Indeed, most subsequent courts considering the scope of baseball's antitrust immunity have disregarded Piazza, making it unlikely that the court in San Jose's suit will adopt such a narrow interpretation of the exemption in this case (unless, of course, the court - itself located in San Jose - is particularly motivated to allow the case to proceed to discovery and trial).

Meanwhile, although unlikely, it is also possible that MLB will decide not to assert its antitrust exemption in the case.  The league has been extremely reluctant to rely on its exemption in recent antitrust cases, presumably for fear of triggering an adverse court decision limiting the scope of its immunity.  Most notably, MLB did not assert the exemption as a defense in the Garber v. MLB lawsuit filed last year challenging baseball's television broadcast policies under antitrust law.  Therefore, should baseball believe that it can successfully persuade the court to dismiss San Jose's lawsuit on other grounds (such as those discussed below), then the league may opt to forgo asserting the exemption in this case.  However, given that control over franchise relocation is one of the two most important protections the league derives from the exemption (with the shielding of the minor league system from antitrust scrutiny being the other), San Jose's suit would appear to be a prime case for MLB to rely on its historic antitrust immunity.

In addition to the antitrust exemption, MLB can make at least two other potentially strong arguments in support of its motion to dismiss the lawsuit.  Most significantly, the city of San Jose's standing to sue in the case appears to be tenuous at best.  The city's complaint is based upon an option contract San Jose entered with the team in 2011, under which the Athletics have three years to purchase a parcel of land from the city for just under $7 million.  However, the option contract in question does not obligate the Athletics to purchase the land, nor to relocate the team to the city even if the option were exercised.  While A's owner Lew Wolff has consistently expressed his desire to move the team to San Jose, he has yet to formally commit to such a relocation, and has never suggested that he would be willing to move the team without MLB approval. 

As a result, San Jose's suit poses a similar fact pattern as that litigated back in the late-1970s when the Los Angeles Memorial Coliseum first sought to attract an NFL team (following the Rams' move to Anaheim Stadium, but before the Coliseum reached its eventual agreement with Al Davis to move the Raiders to Los Angeles).  Specifically, the Coliseum sued the NFL alleging that the league's relocation restrictions prevented the stadium from securing a new NFL team, thus violating antitrust law.  The district court dismissed the case, however, concluding that the Coliseum lacked standing to sue.  Los Angeles Memorial Coliseum Commission v. National Football League, 468 F.Supp. 154 (C.D. Cal. 1979) ("Los Angeles Memorial I").   In particular, the court held that because the Coliseum had not yet found an NFL team willing to move to the stadium, and because the league had not yet rejected any proposed relocation, there was not yet an actual case or controversy to resolve.  It wasn't until Davis formally agreed to move the Raiders to Los Angeles, and the NFL officially blocked the relocation, that the Coliseum was able to move forward with its case (resulting in the so-called Los Angeles Memorial II litigation).  Accordingly, given that Wolff hasn't definitively committed to moving the Athletics to San Jose, and because MLB hasn't formally rejected the proposed relocation, the court may very well follow the Los Angeles Memorial I precedent and conclude that San Jose lacks standing to sue.

Meanwhile, MLB can also argue in its motion to dismiss that San Jose's state law claims are preempted by federal law.  In Flood v. Kuhn, the Supreme Court not only dismissed Flood's federal antitrust claims pursuant to baseball's exemption, but also his state antitrust claim as well.  In particular, the Flood Court held that the regulation of professional baseball required national uniformity, thus concluding that Flood's state law claims were precluded by the Commerce Clause.  Consequently, MLB will likely argue that, at a minimum, the Flood precedent requires that San Jose's claim under California antitrust law be dismissed (the league may also assert that some of the city's other state law tort claims -- its unfair competition claim in particular -- are similarly preempted, although that argument will likely be harder to win).

Finally, however, even if San Jose were to survive MLB's motion to dismiss, and the court allows the suit to proceed to trial, the city may still face an uphill battle in winning the suit.  The Ninth Circuit Court of Appeals has held on two separate occasions that professional sports leagues' restrictions on franchise relocation do not automatically violate federal antitrust law.  See Los Angeles Memorial Coliseum Commission v. National Football League, 726 F.2d 1381 (9th Cir. 1984) ("Los Angeles Memorial II"); National Basketball Ass'n v. SDC Basketball Club, 815 F.2d 562 (9th Cir. 1987).  For instance, despite ultimately condemning the NFL's refusal to allow the Raiders to move to Los Angeles, the Los Angeles Memorial II court noted that several factors could potentially justify a league's decision to block a proposed relocation under antitrust law.  These factors included: (i) an interest in protecting the loyalty of fans in the franchise's current home city, (ii) the maintenance of some reasonable territorial restrictions, (iii) the preservation of traditional rivalries, (iv) giving municipalities time to recoup their investments in local stadiums, and (v) maintaining a league presence in major television markets.  While not all of these considerations will apply to the Athletics' proposed move, San Jose will ultimately have to convince the court that MLB's failure to approve the relocation was improper in light of the legitimate factors outlined in Los Angeles Memorial II, should the case proceed to trial. 

Of course, the city probably does not intend to take the case all the way to trial.  Instead, San Jose's litigation strategy likely hinges on surviving MLB's inevitable motion to dismiss and entering the discovery phase, at which point the city will have significantly increased its bargaining leverage over the league.  If San Jose can get to that stage then its litigation strategy may prove fruitful.  Given MLB's potential defenses outlined above, however, I suspect that the city will be unable to defeat a motion to dismiss the suit.

Update (6/27/13): Professor Ed Edmonds wisely notes in the comments that San Jose will also have to overcome the text of the Curt Flood Act of 1998 if it wishes to persuade the court to adopt the Piazza precedent limiting baseball's antitrust exemption to the reserve clause.  As Professor Edmonds notes, the text of the act would appear to support a broad interpretation of the scope of the exemption.

Help Wanted: Current College Athlete to Join Plaintiffs

As you should know by now, the O'Bannon v NCAA case continues to wind through the court system, and this past Thursday there was a hearing to address class certification before federal judge Claudia Wilken  The resolution of this case will forever change college athletics; whether it ends in a trial on the merits (doubtful) or settlement (far more likely).

Where are we going?  I offer big picture perspective, a solution, and immediate needs below:

Big Picture:

Joe Nocera of The New York Times takes a big picture approach to look at the impact the O'Bannon case will have on college athletics in this article titled "The Lawsuit & The NCAA."  The theme continues to be, change is coming and the only question is how and when.

One Solution:

Advocating for paying college athletes, I wrote the following piece in The Boston Globe recently.  Then, I offered a solution in an op-ed in The Chronicle of Higher Education by proposing the creation of a new NCAA division in this article.

Immediate Concern:

What's become apparent is that the class certification efforts--to include current college athletes as plaintiffs with former college athletes--is that Judge Wilken has indicated a willingness to certify IF a current college athlete is formally willing to participate as a plaintiff.  While the plaintiffs asked if the individual could be anonymous, it appears that the answer is "no."  Thus, the rights of future college athletes and the framework of this industry are seeking a courageous CURRENT student-athlete.

Andy Staples provided a great overview of the situation in Sports Illustrated with this piece titled "Current College Athlete Set to Become Face of Ed O'Bannon v NCAA."  To summarize the requirements, the plaintiffs seek the following:

1.  A current student-athlete in the sport of men's basketball or football;
2.  Who starts at a school in either the ACC, Big 12, Big Ten, Pac-12 or SEC;
3.  That gets significant screen time when his team's games are televised (i.e. a star);
4.  Who has a pristine personal history;
5.  Who is courageous, strong in his convictions, and intelligent.
6.  And finally, someone willing to be the face of change in college athletics.

Up to the task?

Footnoting the New Jersey Sports Wagering Litigation

I recently had the chance to read the latest round of briefs filed in the on-going New Jersey sports wagering lawsuit.  The case is now at the U.S. Court of Appeals for the Third Circuit, with oral arguments scheduled for June 26.  Griffin Finan of Ifrah Law penned a comprehensive post pertaining to the DOJ's brief filed on the side of the plaintiff quintet (NCAA, NFL, NBA, NHL, and MLB).  New Jersey filed a reply brief on June 14 and I was struck by the content of the footnotes contained therein, as lead counsel Ted Olson (a former Solicitor General) made a number of thought-provoking points.  I have long been fascinated with the use of footnotes in Supreme Court opinions and academic writing generally.

After losing at the District Court level, New Jersey's appeal is premised on three arguments: (i) the sports leagues lack standing; (ii) PASPA violates the 10th Amendment; and (iii) PASPA violates the principle of equal sovereignty. In support of the state's standing argument, the brief includes four footnotes.  In sequential order:

Footnote #1 addresses the recurring issue of actual injury (from sports wagering) and injury stemming from the perception of game-fixing.  It posits that "[a]ny perceptions of game-fixing - no less than the instances of game fixing themselves - are caused by the Leagues' own agents."

Footnote #2 flags the issue of the sports league plaintiffs holding events in Las Vegas, but not having pro franchises in the city.

Footnote #3 covers the "Sports Wagering Law's carve-out for New Jersey collegiate teams" and posits that "[t]hat exemption was included at the request of the NCAA." The emphasis in bold/italics is contained in the brief.  It is not my own.  Curiously, this footnote appears to be at odds with a previous report pertaining to the matter.  I am unable to reconcile footnote #3 with the the statement made in the article linked in the previous sentence.  As such, I am curious if the sports league plaintiffs and/or the DOJ raise this issue during oral arguments or a subsequent pleading.

Footnote #4 gets to the issue of whether PASPA confers any intellectual property right and cites the recent SCOTUS decision in Already, LLC v. Nike, 133 S. Ct. 721 (2013).

I look forward to reading the transcript of the upcoming oral argument and seeing how many of these footnoted issues are covered.  My sense is that the over-under is 2.5.

Yesterday's Class Certification Hearing in O'Bannon

Steve Berkowitz of USA Today has an article this morning concerning yesterday's hearing before Judge Claudia Wilken in the O'Bannon lawsuit.  Here is an excerpt:

The [defendants'] lawyers also contended that various state laws and legal precedents say that athletes have no property rights for appearing in live, unscripted events – and thus have nothing that the NCAA or the schools are infringing upon when it comes to game telecasts and re-broadcasts.

That led Curtner to state that when it comes to television agreements, schools and conferences were simply "selling access" to their venues.

Wilken appeared to chuckle at the assertion, and after the hearing, Hausfeld attacked it, calling it a "significant admission or acknowledgement" by the NCAA.

"I don't know about any of the broadcasters, but I'm not sure that anyone in their right licensing mind would pay billions of dollars for an empty stadium or an empty basketball court," Hausfeld said. "You're paying for the players, you're paying for the quality of the teams that perform on those courts and in those stadiums. You want and many of the contracts require the conveyance of the name, image and likeness rights of the athletes. So I think the court understood there was a bit of foolishness in that representation." 

Because college athletes have never legally asserted their right to a portion of the live broadcast licensing revenue, the NCAA, conferences and universities decide on their own that they are entitled to keep 100% of the billions in annual revenues generated by simply selling to the networks access to their stadiums.

There are some who question how it is that college athletes could possibly have a legal claim or right to the broadcast licensing revenue.  Perhaps the better question is, what is it that gives the NCAA, conferences and universities the exclusive right to it?   The network is the "author" (and therefore owner) of the broadcast under copyright law.  The NCAA, conferences and universities receive from the networks billions of dollars and an assignment of the copyright in exchange for stadium access, and in the process they have shut the athletes out by not giving them a seat at the negotiating table with the networks.  This lawsuit can be viewed as requesting or demanding a seat at the table.  So what law or case precedent gives the schools the right to exclude them?  What law or case precedent gives the schools the exclusive right to broadcast licensing revenue?  Hint: it cannot be analogized to the professional sports leagues.     

O'Bannon v. NCAA: Class Certification Hearing

I have a new article for SI.com on tomorrow's class certification that breaks down what to expect and also features research on Judge Claudia Wilken.  Here is an excerpt:

The 63-year-old Wilken is no stranger to this case, sports law or class certification hearings. She denied the NCAA and EA's attempts to have O'Bannon's case dismissed, though she did reject several of O'Bannon's claims in the process. On balance, her pretrial rulings have favored O'Bannon.

Wilken also presided over a recent settlement in Pecover v. EA. In that class action, consumers sued over EA's exclusive licensing deals with the NFL, NCAA and the Arena Football League. Those deals prevented rival video game publishers from releasing their own football games with real teams and players. The case was recently settled, with EA agreeing to pay $27 million into a fund that can be claimed by consumers of EA football games. The fact that the parties reached a settlement under Wilken's watch bears notice, as O'Bannon and the NCAA could ultimately do the same.

Wilken usually certifies classes. SI.com conducted an analysis of her 29 orders on class certification from 1998-2013. It found that she denied certification only six times (21 percent), while she granted certification 18 times (62 percent) and partially granted it five times (17 percent). Keep in mind, these orders concerned facts and claims mostly dissimilar from those raised by O'Bannon. Thus they may not be accurate predictors. Still, Wilken's history is a good sign for O'Bannon.

To read the rest, click here.

Also, as the O'Bannon hearing nears, there are many in-depth stories on Sonny Vaccaro, including this one in the Pittsburgh Post-Gazette by J. Brady McCollough.  Here's an excerpt from One-Man Rebellion:

"Mr. Vaccaro has that Magic Johnson factor, that aura about him," O'Bannon says. "I don't know if you've met Magic Johnson, but when you talk to him and meet him face to face, you feel like you're the one person that he wants to talk to at that moment. Mr. Vaccaro has that same effect. I've always felt like, when I talk to him, I'm the most important person in his life."

* * *

As the decades passed, Vaccaro became obsessed. He couldn't stomach the NCAA's transfer rules, forcing players to sit out for a year after transferring. He railed against the NBA's age limit of 19, which forced players to play one year of college basketball. The NCAA was glad to have the most talented players on campus, even for just a season.

Vaccaro's tipping point came one day when he was watching ESPN Classic and he realized that the NCAA, by licensing the rights of the games to be re-aired on the network, was able to continue making money off the players into eternity. Vaccaro felt that players should be paid residuals anytime their likenesses were used after their careers were over.

To read the rest, click here.

Foul up 3?

I long have been a believer in fouling up 3 in the closing seconds. Studies suggest it is advantageous, although not statistically so, at the NBA and college levels, although some studies differ.

But with the Spurs just having blown the NBA title by not fouling in that situation (much as I believe in all things Popovich, no way they bounce back from this on the road), is the consensus on this going to change?