Landmark Sports Litigation
A trio of historic cases has left an indelible mark in the minds of sports attorneys, athletes, leagues and fans for decades to come. The 1972 Supreme Court case of Flood v. Kuhn, 407 U.S. 258 (1972), reversed the Ninth Circuit’s decision to uphold federal antitrust protection of Major League Baseball. In its place, the high court ruled that baseball was a "sporting activity" exempt from federal antitrust laws. The Court reasoned that Congress intended for baseball to be a protected activity through the Sherman Antitrust Act including its preservation of the reserve system, a practice by which MLB owners were able to eliminate competitors and fix player salaries. While informal, business-savvy agents have since limited the scope of the exemption, the Holding leaves a lasting impact on the law as it relates to professional athletes and their respective leagues. Antitrust issues were again brought under scrutiny in 1974 with the case of Mackey v. NFL, 543 F.2d 606 (8th Cir. 1976). However , this time the case found "a negotiated working assumption" in favor of the players with respect the Union Labor Exemption, leaving professional sports leagues open to broader scrutiny under federal anti-trust laws. Notably in this case, the NFL Players Association, an industry union formed in the late 1950s, was subject to jurisdiction within the Eighth Circuit. Today, however, with the ongoing issues between the NFL and the players’ Union amid another labor dispute, many pundits would argue that the exemption is as strong now as it was in the 1970s. Most recently, the Supreme Court issued its decision in American Needle, Inc. v. NFL, where it ruled that individual football teams "act independently and not as a joint venture for their common benefit" in Licensing of the Chicago Bears to Reebok, as opposed to licensing jointly with the other teams to Reebok. Thus, the decision opened the door for future lawsuits against professional sports leagues which now can be brought in not just federal, but also state courts, as opposed to arbitration in their respective cities.
Sports Intellectual Property and Branding
Sports often go hand in hand with branding, as the teams and athletes themselves become synonymous with the products their names are attached to. But not all branding is created equal, and there have been some notable legal disputes over intellectual property rights in sports.
One arena that has been a hotbed of IP controversy is that of college sports. In particular, a trademark registration filed in 1973 by the NCAA has drawn objections from several parties in recent years. The application sought to register "The Big Game" as a service mark for professional and amateur football games, exhibitions and tournaments. Currently the mark is still shown as pending with the U.S. Patent and Trademark Office, and the list of opponents continues to grow. These include the University of California, Berkeley, which has petitioned for an interference hearing, and Santa Clara University, which opposed the mark when it first was published for opposition back in 1973.
Of course, the most famous ongoing sports trademark dispute is that of the defunct USFL vs. National Football League. Off and on for 30 years, it has been a case that just won’t go away. The dispute stems from the NFL’s decision to expand its season into spring, which prompted the USFL to move its schedule into the fall. For several years the upstart league thrived, merging with the CFL in ’84 in an attempt to draw attention to itself and snare lucrative broadcasting contracts. However, the NFL filed an anti-trust lawsuit against its rival over its actions, leading to the USFL’s demise in 1986. The NFL went on to win the case at trial and was awarded $1 in damages (the one dollar amount was suggested by the jury as symbolic of the fact that the USFL had little to no chance of recovering any significant revenue from the NFL.) While that lawsuit was still pending, the USFL had filed a $1.5 billion lawsuit and sought treble damages based on anti-trust laws. However, a judge later invalidated this argument on the grounds that the evidence presented was impermissible.
Meanwhile the trademark dispute that has garnered more attention than either of the previous two is actually one filed by a tiny bank in Cincinnati against the NFL, for its use of the term "The Big Game" in reference to the Super Bowl. The dispute led to a suit filed in district court in Ohio. Initially the court ruled in favor of the NFL, but on appeal the decision was reversed. Last month, however, a federal appeals court panel reversed itself, and ruled in favor of the NFL once again. The plaintiff’s argument was based on the fact that it had been using the phrase "Big Game Bank" since 1979 to refer to itself, preempting the NFL’s use of the mark. News reports indicated that the plaintiff would likely ask the appeals court to review its decision, but as of yet has not.
Sports Athlete Contracts, Labor and Disputes
The landscape of professional sports is shaped not only by the teams and the players, but also by the intricate web of contracts and labor relations that bind them together. As much as athletic prowess defines the league, the strength of these player contracts plays a critical role in ensuring competitive balance, team loyalty, and the economic viability of franchises. Indeed, all professional athletes sign restraint of trade agreements that turn them into agents themselves, effectively promising to play for only one team each season.
Most of the time, when a player signs a contract for more than one year, the two parties can be counted on to plan for future performance in good faith. But sometimes, they do not. When that happens, it is often in the courts. One sport where litigation is unavoidable is hockey. The National Hockey League (NHL) is unique in that a team can go to arbitration with a player absolutely and entirely alone. There’s no union to submit a grievance and no union-dominated process or grievance arbitration system – a situation quite unlike that found in any other major professional sport.
Anticipating the potential trouble, in Lipinski v. NHL Players Ass’n, 609 F.3d 187 (3d Cir. 2010), the players’ union sought relief in federal court for a player who had been the victim of bad faith negotiation tactics by a team. The union sought declaration that a player’s release is a mandatory subject of bargaining, and that a player must get union representation before a team can unilaterally release him from his contract.
The court held that the issue of whether a player is released from his contract is a mandatory subject of bargaining because it directly implicates the relationship between an employer and a union member. Under the statute, an employer (i.e. a team) must bargain in good faith with a union over the terms and conditions of employment. The law also provides that a player must have the right to union representation at an arbitration or grievance proceeding. The court ruled that, in the context of workplace arbitration, an essential part of the "right to union representation" is granting the union the opportunity to act on behalf of the aggrieved player, which cannot happen if the player is robbed of the right to have an arbitrator hear his grievance against his team. Accordingly, the court concluded that a player must have the right to union representation at a player arbitration proceeding.
In another hockey case, Cam Neely v. NHLPA, No. 08-10318, D. Mass 2010 (Cam Neely representing himself), a hockey player who was for years a member of the Boston Bruins, was unhappy with the way the players’ union was being run, specifically the lack of adequate legal advice provided by the NHL Players Association. Accordingly, he sued the union for breach of fiduciary duty and breach of implied contract, alleging that the union owed him a duty of care and that it failed to provide him with adequate and competent legal advice when he engaged in contract negotiations.
The court also held that since the Collective Bargaining Agreement obligated the players’ union to give its members competent and adequate legal representation, and since the union was an agent of the player, it owed the player fiduciary duties of loyalty and care. Since there was sufficient evidence that the union violated its obligations in the course of providing the player with inadequate representation, the court denied the union’s motion to dismiss the player’s complaint.
Sports Doping and Performance Enhancing Drug Disputes
Doping cases can involve any number of sports and pose special legal problems for athletes, such as those raised by drug testing, the constitutional rights of the accused, the rights of sponsors, medical personnel and team employees. These disputes may also affect state statutory and regulatory provisions.
Should an athlete be banned or otherwise penalized when certain performance-enhancing substances are permitted in that sport; and, if so, what is the appropriate penalty? Problems involving selection of the forum to adjudicate the disputes and the law to apply have arisen, for example, where drug testing has occurred in Switzerland, France and in Italy . Athletes can be suspended from Olympic competition for doping violations, but have been successfully litigating against the I.O.C. and N.C.C.A.A. on other issues concerning the enforcement of anti-doping programs. One recent case involves the National Football League and its drug-testing program for recreational drugs, not performance-enhancing drugs. While some players argue that they should not be suspended from the game for such a violation, others see the drug-testing program as intrusive and unnecessarily severe.
Sports Equality and Discrimination
Legal cases addressing issues of gender, racial, and other forms of discrimination have had a significant impact on the sports world. In 1972, for example, Title IX was expanded to include protection against discrimination for athletes based on their sex, resulting in more opportunities for women to participate in school-sponsored sports. The landmark case of Cohen v. Brown University, 991 F. Supp. (D.R.I. 1998) and its subsequent appeals firmly established the precedent in which courts uniformly held that Title IX prohibits schools from providing less support for women’s teams than men’s teams. Thanks in large part to this precedent, female participation in school sports has increased.
Discrimination on the basis of race remains an ongoing issue. In 1971, the case of Ilsley v. Burch, 1 A.2d 10 (Del. 1938), created the prevailing rule that professional sports teams are private employers whose discrimination practices are covered under federal anti-discrimination statutes. Commissioner of Baseball Bud Selig was sued by seven African American former players who alleged racial discrimination in how they were treated while playing for the Milwaukee Braves. In Williams v. Sports Arena, Inc., 650 F. Supp. 226 (D. Utah 1986), the District Court for Utah held that the suit could go forward, and the players and Selig reached an out of court settlement.
Most recently, in January 2010, the National Football League was ordered to pay $17 million to use that the Cowboys "are an employee," exposing the NFL to liability for civil acts of discrimination.
Discrimination on the basis of sexual orientation is another issue that may garner attention in the future, as courts have not uniformly held that allegations of discrimination on the basis of a person’s sexual orientation are sufficient to allege a claim for gender discrimination under Title IX.
Influence of Sports Litigation on Rules
The impact of repeated legal disputes on the rules and regulations of individual sports is apparent from soccer and cycling to American football and basketball. Disputes can lead to unions being formed, lifetimes sentences being handed down, and legislative bodies being formed to oversee sports on a national level.
In US soccer, the US Women’s National Soccer Team filed a gender discrimination lawsuit against the US Soccer Federation in 2016 after a collective bargaining agreement (CBA) was collectively bargained between the parties. The USWNT argued that part of the issue for them is that there are no steps that a player can take to challenge the USSF’s compensation structure since the players have no access to the books to argue what their pay should be tied to.
Some states – led by California – have tried their best to protect athletes under 18 years old by limiting how much time athletes participate in practice and games . The development of unions such as the NFL Players Association and US Soccer players associations have attempted to collectively bargain such restrictions into each sport.
Australia recently brought attention to the issue of gambling in sports. In early 2018, the Australian Senate passed a bill banning "in-play betting," or wager on events that have already occurred.
More specifically, the bill attempted to stop live betting on the outcome of the U.S. Open and the Melbourne Cup, which the bill referred to as "major events." The bill also attempted to interdit advertisements promoting betting on the tennis and horse racing. With the technology available to fans in the palm of their hands, the need for strict event management has become increasingly prevalent.