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Sports Law Scoreboard

An Inside Look Into The Legal and Business Side of Sports

The Other Bar: How Not To Let It Get to You

Posted in Sports Business and the Law

My heart goes out to Steve Sarkisian, USC’s football coach, even though I am a loyal UCLA Bruin. He got up in front of the most loyal supporters at a fundraiser, slurred his words and according to him mixed prescriptions and alcohol. He needs help and hopefully is on his way to receiving it.

One of my mentors was a dogged, tough litigator. He was also an alcoholic. He died at around 50. When we would go out to lunch, he would have three drinks. It is no secret that being a head coach or a trial lawyer is a tough job. In each, you prep hard and perform in front of an audience. Criticism can be immediate and devastating. You win or you lose. You do not tie. What’s to do? I have no solution, but I know that alcohol is not it.

Meditate, exercise, talk to your loved ones. Remember the quote from that great Trojan John McKay. When his team lost 52—0 to Notre Dame he met with his team and advised them, “There are one billion Chinese who could not give a damn.” Above all, if this is you, find help. There is an organization in town called The Other Bar. If you need it, there is no shame in starting afresh.

Third Circuit Determines That New Jersey’s Partial Repeal of Its Sports Betting Prohibition Is an Unconstitutional Violation of PAPSA

Posted in Sports Business and the Law

In a 2-1 decision this morning, the United States Court of Appeals for the Third Circuit affirmed the District Court’s decision that New Jersey’s law partially repealing its prohibition against sports wagering violates the Professional and Amateur Sports Protection Act of 1992 (“PAPSA”).  The Honorable Marjorie O. Rendell, who wrote Court’s majority opinion, concluded that New Jersey’s law “violates PASPA because it authorizes by law sports gambling.”

Judge Rendell stated that “PASPA is constitutional and does not violate the anti-commandeering doctrine” – a holding the Third Circuit had already reached the last time New Jersey attempted to legalize sports betting in 2012.  Then, despite noting that New Jersey had a “salutary purpose” of attempting to revitalize its casinos and racetracks, Judge Rendell acknowledged that the Court was bound to interpret PAPSA as Congress intended.

Ironically, to reach her conclusion that Congress intended to ban sports betting in New Jersey, Judge Rendell cited a one-year exemption from PAPSA granted to New Jersey when the law was enacted in 1992.  That exemption would have permitted sports betting at New Jersey’s casinos had New Jersey taken advantage of the exemption at the time (which it did not do).  Judge Rendell held today that “by explicitly excepting a scheme of sports gambling in New Jersey’s casinos from PAPSA’s prohibitions, Congress intended that such a scheme would violate PAPSA.”

Judge Rendell also stated that the fact that New Jersey’s repeal is limited to racetracks and casinos “constitutes specific permission and empowerment,” which runs afoul to PAPSA.  Only a full-scale repeal would avoid conflicting with the statute.

Adding to the irony mentioned above, the Honorable Julio M. Fuentes, who authored the Third Circuit’s prior opinion finding PAPSA constitutional, wrote a dissenting opinion.  He failed to see Judge Rendell’s logic when she concluded that a partial repeal constitutes an improper “authorization” under PAPSA, while a full repeal would not.  Judge Fuentes instead recognized that “[a] repealed statute is treated as if it never existed; a partially repealed statute is treated as if only remaining part exists”.  Thus, after New Jersey enacted its repeal, “it is as if New Jersey never prohibited sports gambling in casinos, gambling houses, and horse racetracks.”

Going forward, it is likely that New Jersey will Petition the Third Circuit for a rehearing en banc, which would result in full review by the entire Third Circuit if granted.  If the Third Circuit declines to hold a rehearing en banc or affirms its panel’s decision, New Jersey would likely Petition for Writ of Certiorari to the United States Supreme Court to have the Supreme Court review the constitutionality of its partial repeal.  The fact that the same Judge who authored an opinion finding PAPSA to be constitutional dissented today indicates that an appeal would have at least some likelihood of success.

HIPAA HITECH & HIT Blog: Athletes Do Not Leave Their HIPAA Rights at the Locker Room Door

Posted in Privacy Issues, Sports Business and the Law

On the firm’s HIPAA, HITECH & HIT Blog, Fox partner Elizabeth Litten published a post yesterday noting two recent high-profile instances of HIPAA breaches involving professional athletes, and reviewing a 2002 clarification by the U.S. Department of Health and Human Services that a professional athlete has the same HIPAA rights as any other individual.

Fox partner Bill Maruca also recently discussed one of the instances in detail – a tweet by ESPN reporter Adam Schefter containing a screenshot of hospital records from hand injuries suffered by New York Giants defensive end Jason Pierre-Paul on July 4.

Five Tips for Young Lawyers Interested in Practicing Sports And Entertainment Law

Posted in Sports Business and the Law

I hear from young lawyers at least twice a month, interested in practicing in sports and entertainment law. I generally talk with them, unless they call wanting me to come up with a topic for their law review article. Heck, coming up with the topic is part of their growth experience, not mine.

Here is a synopsis:

  1. Do not worry about becoming a sports and entertainment lawyer. Worry about becoming a good lawyer. Entertainment and sports lawyers come from all backgrounds, from former public defenders to estate lawyers.
  2. Join relevant organizations. I am outside G.C. to the National Sports Marketing Network. It is most worthwhile. Look also at the ABA’s Forum on the Entertainment & Sports Industries.
  3. Ask yourself: why? If it is for the glamour and excitement, think again. While it is fun and exciting, you are not Jerry McGuire.
  4. Read, read , read. Go to ESPN.com and SI.com every day. What are the legal problems highlighted? How would you handle them?
  5. Find a way for us to work together. Great way to learn.

 

Five Things That a Good Lawyer Could Do for the Women’s Soccer Team

Posted in Sports Business and the Law

One of our fine associates just returned from the 2015 FIFA Women’s World Cup Final in Vancouver.  Heady, exciting event. If I were advising the women on the team, I would suggest that they take a look at the following:

  1. Disability insurance: Youth does not last forever and even the greatest athlete is one knee away from being unemployed;
  2. Estate planning: Ah, to be young, single and immortal. But smart people plan ahead.
  3. Make the right marketing deals: Good agents make deals; smart lawyers guide, write or edit effective deals.
  4. Pre-nups: Not just for men anymore. Each person is different, but something to consider (and includes same sex marriages these days).
  5. Endorsements: Protect yourself against deals that benefit others and not you. Look for companies that will grow with you.

Bonus pick: Pay attention to your education. It is unscientifically proven that athletes who know what they are doing off the field, tend to do better financially.

 

“An Oral Contract Isn’t Worth the Paper It’s Printed On”: NBA Style

Posted in Sports Business and the Law

This famous (and incorrectly reported) quote is attributed to Samuel Goldwyn of MGM fame. The response is “It depends.” DeAndre Jordan of the L.A. Clippers told everyone that he was going to sign with the Dallas Mavericks. He goes to Texas yet meets again with a group of teammates from the Clippers. All of a sudden, he is wavering.

In California oral contracts are legal with certain statutory restrictions. For example, palimony suits are so ‘70s and the courts tired of them, nixing them in the California codes. Oral promises to marry are so 19th Century, but used to be legal and subject to suit.

In any event, the NBA requires a written contract and it is his prerogative for Jordan to come back home to his adopted land and lead the Clippers to the Promised Land.

By the way, Mavs owner Mark Cuban might be subject to another Goldwynism from Mr. Jordan, “I will never talk to you again, unless I need something from you. “

How the Recent NBA Draft Can Teach You How to Pick a Jury

Posted in Sports Business and the Law

When my son was at home, I used to sneak out and watch the NBA draft with him. Nothing so sweet as that. But even if you are not a basketball fan, the draft is a great teacher as to how or how not to pick a jury.

Tall kid with long arms and a long rap sheet? Some teams see the arms and others the rap sheet. Slow guy who shoots the lights out?  Maybe he ends up Jason Kapono and stays in the league over ten years or maybe he washes out.

Federal courts barely let you pick juries, but state courts still allow voir dire. You need to go beyond the obvious and trivial to see who will benefit your client. I tried a case where I left on a school janitor who had tats from here to there. Folklore would say that he was not a good juror for the defense side in a wrongful death suit. He was very thoughtful on questioning, ended up as the foreman and helped me to a defense verdict. I spoke with him later, and he felt that the death of the plaintiffs’ decedent “was caused by her own damn fault.” See what you will, but make sure that you have gathered as much information as possible.

Are Consumers Entitled to Sue Over the Fight of the Century?

Posted in Sports Business and the Law

Well, the two of them squared off and Manny P lost. Turns out that he had an injury before the fight and fans who paid to see it (or lawyers) are suing claiming various consumer fraud violations. I have a public policy problem with this one. Sports figures are injured all the time and managers either play them or not. Does a Dodger fan have the right to sue because Puig is not in the lineup? How about if he is and does not play as well as the fan thinks he should. I predict that the court will throw these out, finding that the decision has to lie with the fighter’s manager, not a plaintiff’s lawyer.

“Fight Of The Century” A Feast For Class Action Litigators

Posted in Uncategorized

It was billed as the “Fight of the Century” – the match between world champion Manny Pacquiao and undefeated world champion Floyd Mayweather, Jr.  When every dime is accounted for, revenue from last Saturday’s fight at the MGM Grand in Las Vegas is expected to top $400 million. Unsurprisingly, that is a record.  Honest fans paid approximately $100 for pay-per-view access, and the fighters will ultimately split a purse worth more than $300 million.  In the end, Mayweather won by unanimous decision and, by every metric, the fight was a massive success for the athletes, their promoters, and the Vegas machine.  It was also a big letdown for fans who had waited for an epic match-up that arguably should have happened five years ago.

Reports subsequently revealed that Pacquiao injured his shoulder in the months leading up to the fight.  On Wednesday May 6, he underwent arthroscopic surgery in Los Angeles to repair a torn rotator cuff in his right shoulder.  Despite the preexisting nature of the injury, Pacquiao denied any “injury to [his] shoulders, elbows, or hands that needed evaluation or examination” on his pre-fight questionnaire submitted to the Nevada State Athletic Commission.  Pacquiao’s camp denied making any misrepresentation, stating that Pacquiao and his adviser, Michael Koncz, inadvertently “checked the wrong box” on the questionnaire.

Following the injury disclosure, boxing fans teamed up with a few entrepreneurially-minded class action litigators to flood the federal courts with lawsuits alleging fraud and conspiracy by the fighters, their promoters, the television networks, and television providers. See, e.g., here and here.

Of local interest, on Monday, two Philadelphia residents joined the fray with a class action matter filed in the United States District Court for the Eastern District of Pennsylvania.  Plaintiffs, Allan Gordon and Seth Lamb named Showtime and HBO, Mayweather Promotions, LLC, Pacquiao and his promoter, Top Rank, Inc., Top Rank’s CEO and President, Bob Arum and Todd Duboef, respectively, and Michael Koncz, alleging that the defendants conspired to conceal Pacquiao’s injury.  Protesting what they call a “sham fight,” Plaintiffs complain that Pacquiao injured his shoulder so severely that he could not train for a period of two weeks.  Plaintiffs suit is summarized in Paragraph 13:

Defendants each engaged in blatantly self-interested and wrongful conduct which violated the contractual expectations and rights of pay-per-view purchasers who fully anticipated and contracted for access to view and observe an honest and fair boxing match played in compliance with all laws, regulations, and [Nevada Athletic Commission] rules.

Gordon and Smith each paid $99.99 to watch the match – Gordon from his secondary home in Hallandale Beach, Florida, and Smith from his home in Philadelphia.  They assert statutory claims under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (the “UTPCPL”) and the Florida Deceptive and Unfair Trade Practices Act, both of which provide for remedies in addition to actual damages. In the case of the UTPCPL, for instance, a consumer can recover three times the amount of his or her actual damages and an award of attorneys’ fees for a proven violation of any provision of the UTPCPL.  In addition to their statutory claims, Plaintiffs assert common law claims for tortious interference with a contractual relationship, fraud, breach of contract, unjust enrichment, and civil conspiracy.

Plaintiffs ask the Court to certify the matter as a class action and to designate Plaintiffs as representatives of a class that Plaintiffs anticipate will exceed “hundreds of thousands” of pay-per-view subscribers.  In reality, the class of potential plaintiffs could exceed five million.

Given the number of actions and potential class members, it is likely that present and future actions arising from the fight will be consolidated by the United States Judicial Panel on Multidistrict Litigation for the purposes of reducing expense and the toll on judicial resources.  The MDL is a panel consisting of six federal judges from across the country (including Third Circuit Court of Appeals Judge and former First Lady of Pennsylvania, Marjorie Rendell), which serves to (1) determine whether civil actions pending in different federal districts involve one or more common questions of fact such that the actions should be transferred to one federal district for coordinated or consolidated pretrial proceedings; and (2) select the judge or judges and court assigned to conduct such proceedings.

In the interim, the chairman of the NSAC, Francisco Aguilar, has already promised an investigation by the state attorney general’s office, implying that Pacquiao might be facing perjury charges.

Daily Fantasy Sports Websites Face Legal Hurdles Relating to Advertising Promotions

Posted in Sports Business and the Law

The rapid rise of fantasy sports in the last 15 years is well documented. In 2013 alone, an approximately 30 million Americans spent an estimated $11 billion on fantasy football. In the past year, the hottest trend in fantasy sports has been the growth of daily fantasy sports websites, such as FanDuel and DraftKings. These websites allow customers to draft unique teams each day in whichever sports they choose, then compete in tournaments against up to thousands of individuals at stakes of their choosing.

The two aforementioned companies have enjoyed immense early successes – as of last month, DraftKings and FanDuel were allegedly working on funding deals with various investors that would result in company valuations of over $1 billion each. Many American professional sports leagues and individual teams have entered into contracts with the companies, as reflected here. However, recent lawsuits against both companies concerning truth in advertising laws have created issues that could take years to resolve.

Last week, a group of plaintiffs filed a class action federal lawsuit against DraftKings in Illinois. The plaintiffs consist of a group of customers who deposited money to DraftKings after learning of the company’s promise to provide a 100% match of their deposits. While DraftKings advertises this promotion across many platforms, in reality it does not provide a 100% match of customers’ deposits at the time of deposit.

According to the DraftKings website itself, “Deposit bonuses release in increments of $1 for every 100 Frequent Player Points (FPPs) that you earn by playing in paid contests. All deposit bonuses expire four months after they are created.” As alleged in the plaintiffs’ Complaint, “a consumer who had deposited $600 would have to spend at least $15,000 on contests, and do so within four months, to obtain what was promised as a “100% First-Time Deposit Bonus” or ‘DOUBLE YOUR CASH’ bonus of $600; that would be $14,400 more than his or her initial payment.” The plaintiffs also allege that DraftKings Terms of Use are “a maze of fine print that consists of nearly 6,000 words in single-spaced tiny print.”

Two additional truth in advertising class action lawsuits against DraftKings are pending in federal courts. FanDuel, which also promotes a match deposit bonus yet requires customers to “unlock” the bonus by entering paid contests over time, has recently faced three class action truth in advertising lawsuits, but each of those cases has resolved through a voluntary dismissal (presumably via settlement).

It is difficult to evaluate at this stage whether the companies will significantly suffer from these lawsuits, though the recent valuation estimates after some of these lawsuits were filed indicate that they will continue to prosper. In fact, the companies may even have already determined that the increased business from their deposit bonus match promotions is greater than the cost of defending and settling the lawsuits. Regardless, it will be interesting to see how courts across the country adjudicate the actions that are still pending.