Sports Litigation Alert


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Table of Contents

Case Summaries

Articles

News Briefs

Featured Expert Witness

Sports Litigation Alert is proud to offer an Expert Witness Directory at our website. SLA subscribers are entitled to be listed in that directory, please email your details to us and we will include you in the listing. Here is this issue's featured expert:

William E. Kruse
Expertise: Pat-down Searches
Telephone (916) 564-4800

Case Summaries

Plaintiff Doesn’t Need Expert for Products Liability Claim against MacGregor, Riddell

A New Jersey state court judge has granted the motion of defendants MacGregor Sporting Goods and Riddell Sports, Inc. to bar the report of a plaintiff ‘s expert witness on the grounds that the report had no basis in fact.

However, the court denied their motion to dismiss the claim of the plaintiff, who was allegedly injured while using the equipment made by the defendants. Specifically, it found that aspects of the plaintiff’s claim, which were targeted by the defendants, were best left for a jury to consider.

The impetus for the litigation was plaintiff Laura Vazquez’s claim that she was injured on June 16, 2008, while moving a volleyball stanchion manufactured by the defendants.

In support of the personal injury claim, the plaintiff retained John Tesoriero, who opined that a product defect led to the injury. The defendants’ expert countered that there was no defect and that the high school “was responsible for assembling the subject volleyball stanchion in accordance with manufacturer's instructions.”

At deposition, Tesoriero changed his opinion from his initial report and agreed with Anderson to a point, alleging that “the defects were (1) the failure to provide proper labeling of the subject equipment for the proper assembly of the subject volleyball equipment; and (2) the failure to provide assembly instructions.”

The court agreed with the defendants, which argued in their motion that Tesoriero “has no experience or education in the field of labeling or instructions, and so his opinion as to the warning labels or lack thereof, should be barred.”

The defendants’ second argument — that “barring Mr. Tesoriero's report and testimony precludes a finding of liability” — was less compelling.

“(A)ssuming that the plaintiff proceeds on a theory alleging a warning defect, summary judgment would not be appropriate, because, as discussed above, the adequacy of a warning label is ordinarily a question of fact for the jury,” wrote the judge.

“The defendants may argue that although the pole contained other warnings, there was no warning or instruction indicating which end to insert into the base, and therefore nothing to gauge the adequacy of. However, photographs taken of volleyball stanchions at the site of the subject accident reveal that the other warnings on the poles related to the use of the stanchion. When the poles are inserted properly, these warnings are visible and legible. When the poles are inserted upside-down, the warnings are also displayed upside down. A question for the jury is thus presented as to whether a reasonable person, under similar circumstances faced by the plaintiff, would know by looking at the warnings on the pole, whether the pole was inserted properly or upside down, and nevertheless attempt to move the stanchion.”

The court continued, noting that “not all products liability cases require expert testimony. (T)he need for expert testimony depends on the complexity of the subject matter. Some product issues are within the ken of the average juror and do not require the assistance of expert testimony. See Driver, Keefe & Katz, Current N.J. Products Liability & Toxic Torts Law (GANN) 9:4-1(a). Consequently, Ridenour v. Bat Em Out held that no expert was needed to support a claim that a warning against the foreseeable misuse of rocking or pushing should have accompanied a change-making machine capable of being tipped over by an eleven-year-old boy. 309 N.J. Super. 634, 643, 707 A.2d 1093 (App. Div. 1998).

“Conversely, expert testimony is only required to support a claim when the subject matter is so esoteric that jurors of common judgment and experience are unable to make a determination without the benefit of the information and opinions possessed by a person with specialized knowledge. Macri v. Ames McDonough Co., 211 N.J. Super. 636, 642, 512 A.2d 548 (App. Div. 1986). Macri also noted that in inadequate warnings cases, it is left to the court to determine whether, based on all the evidence presented, there is a need for expert testimony. Id. at 643.

“Applying these rules to the present case, the court holds that a juror of common experience and judgment can make a determination regarding the adequacy of warning labels on the volleyball poll. Summary judgment is denied, and the case may proceed without the plaintiff's expert report and testimony regarding the adequacy of the warning/instruction.”

Laura Vazquez v. Riddell Sports, INC., et al.; Super. Ct. N.J. , Law Division, Essex County; DOCKET NO.: L-4007-10; 2012 N.J. Super. Unpub. LEXIS 2161; 9/4/12

Attorneys of Record: (for plaintiff) Walter M. Piccolo, Esq., Fusco & Macaluso LLC. (for defendants) Scott D. Samansky, Esq., Fishman McIntyre PC.

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Court Sides with Cheerleader in Claim against Coach

A federal judge from the Western District of Pennsylvania has granted summary judgment to a school district, which was sued by a cheerleader, who was injured in practice almost a decade ago.

However, the court left intact her claim against the coach, finding that a “jury could reasonably conclude that the risk of significant injury from a fall onto the hard LGI flooring surface was foreseeable and a fairly direct result of (the coach's) decision to proceed with the stunt in the absence of appropriate matting.”

The incident occurred on March 3, 2004 when plaintiff Heather Hinterberger, a member of the Iroquois High School cheerleading squad, was seriously injured when she attempted a "twist down cradle" — a stunt that was being introduced to the squad for the first time on that day.

The court noted that there were multiple spotters that day as the squad tried several times to perform the stunt. On the last attempt, the plaintiff “flew over and outside the perimeter of her base and her spotters, striking first her left hip, then her left shoulder, then her head on the LGI room floor. As a result, the plaintiff suffered a severe closed head injury. At the time that the plaintiff struck the floor, there was no matting in place.”

Hinterberger sued the cheerleading coach, Sally Loftus, and the Iroquois School District in the Erie County Court of Common Pleas. The case was ultimately removed to federal court.

What remains of Hinterberger's claim centers on 42 U.S.C. § 1983, “which does not create substantive rights but instead ‘provides only remedies for deprivations of rights established elsewhere in the Constitution or federal laws.’ Kneipp v. Tedder, 95 F.3d 1199, 1204 (3d Cir. 1996). To prevail under § 1983, a plaintiff must prove that she: (a) suffered the deprivation of a right secured by the United States Constitution or federal law (b) by a person acting under color of state law. Mark v. Borough of Hatboro, 51 F.3d 1137, 1141 (3d Cir.1995).”

The court continued: “With respect to the first element of the plaintiff's case — demonstrating a violation of her federal rights, the plaintiff claims that her substantive due process right to bodily integrity was violated by Loftus' conduct under a state-created danger theory. The plaintiff seeks to hold the Iroquois School District liable for this alleged constitutional injury under a municipal liability theory.”

In moving for summary judgment, the defendants argued that the plaintiff “has failed to produce evidence of a substantive due process violation. Alternatively, they contend that Loftus is entitled to qualified immunity. The defendants further contend that the school district cannot be held liable under §1983 because it did not enact any policy, practice or custom which could be identified as the moving force behind the plaintiff's alleged constitutional injury.”

The court found that there was evidence of a substantive due process violation, pursuant to the "state-created danger" theory, a doctrine that holds that state actors can be liable under § 1983 for private harm which befalls a citizen where “state authority is affirmatively employed in a manner that injures the citizen or renders him 'more vulnerable to injury from another source than he ... would have been in the absence of state intervention.’” Bright v. Westmoreland County, 443 F.3d 276, 281 (3d Cir.2006)

The plaintiff satisfied, at least in terms of surviving summary judgment, the requisite elements for the doctrine — “(1) the harm ultimately caused to the victim was foreseeable and fairly direct; (2) the state actor acted with a degree of culpability that shocks the conscience; (3) a relationship between the state and the plaintiff existed such that the plaintiff was a foreseeable victim of the defendant's acts, or a member of a discrete class of persons subjected to the potential harm brought about by the state's actions, as opposed to a member of the public in general; and (4) a state actor affirmatively used his or her authority in a way that created a danger to the citizen or that rendered the citizen more vulnerable to danger than had the state not acted at all.” Bright, 443 F.3d at 281.

The court found it significant that Loftus “fully appreciated the need for better matting to the point that she approached the athletic director about the issue, unsuccessfully, and informed other parents of this fact. Despite this awareness, Loftus allowed the introduction of the twist-down cradle to proceed in the unmatted LGI room.”

The court next turned to the plaintiff’s claim that the school district was liable under §1983 because it didn’t allocate the necessary funding or provide the proper training to Loftus that would create a safer environment.

“Budgetary decisions of this kind do not reflect deliberate indifference for purposes of establishing municipal liability under § 1983,” wrote the court, citing Collins v. City of Harker Heights, 503 U.S. 115, 128-29, 112 S. Ct. 1061, 117 L. Ed. 2d 261 (1992)

The court also added that the plaintiff failed “to establish a viable §1983 claim against the School District premised upon the district's failure to properly train Loftus. The alleged failure to train Loftus was neither the cause of the plaintiff's alleged constitutional injury nor a display of deliberate indifference to her rights.”

Heather Hinterberger v. Iroquois School District and Sally Loftus; W.D. Pa.;
Case No. 1:08-cv-317-SJM; 2012 U.S. Dist. LEXIS 138268; 9/26/12

Attorneys of Record: (for plaintiff) Thomas V. Myers, LEAD ATTORNEY, Nichols & Myers, PC, Erie, PA; Marissa Savastana Watts, T. Warren Jones, MacDonald, Illig, Jones & Britton, Erie, PA. (for defendants) Richard A. Lanzillo, LEAD ATTORNEY, Knox, McLaughlin, Gornall & Sennett, Erie, PA.

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Football Player Can’t Show that Coach’s Insults Caused ‘Severe Emotional Distress’

A state court judge in Connecticut has sided with Pop Warner Football in a case in which it was sued by a father, who claimed that various team officials committed intentional infliction of emotional distress when they called his son names in an attempt to motivate him.

In granting the defendant’s motion for summary judgment, the court wrote that the boy “did not suffer distress so severe that no reasonable man could be expected to endure it.”

Pasquale Civitella, on behalf of his minor son, Joseph Civitella, filed the lawsuit on October 15, 2009, naming Pop Warner Football Team of Shelton, Connecticut, Inc., Anthony Branca, Frank Camerino, and Edward Brighindi as defendants.

He alleged that on various dates, in both practices and at games, Branca (the head coach) called Civitella names, such as "Italian bastard," "prick," "you suck," "you are shit for brains," "son of a bitch," "you are a fool," and "you are an idiot." Civitella claimed he was called the names in front of his teammates.

“After the incidents, Civitella was angry, upset and depressed,” wrote the court, citing the complaint. “Those emotions lasted anywhere from a day to a week. Civitella denies any lasting depression, but claims to be still angry over the events. While Pasquale Civitella claims his son has become withdrawn, depressed and has sought assistance from clergy, his son has not sought any medical treatment, psychological treatment or other counseling. When asked whether he needed help or treatment, Civitella ‘did not feel there was a need for it.’ Other than claiming to be still angry, Civitella related no lasting effects from the incidents.

“Civitella still participates in interscholastic athletics, including football, lacrosse and track and field at St. Joseph's High School. His intention is to continue his education in college. He enjoys several hobbies, including ‘hanging out’ with his girlfriend and several other friends, watching sports, movies, weight lifting, working out and working on cars. His grades suffered no appreciable difference from before or after the incidents.”

Thus, the defendants argued that the plaintiff “cannot establish the necessary elements for the claim of intentional infliction of emotional distress,” which are: “(1) that the actor intended to inflict emotional distress or that he knew or should have known that emotional distress was the likely result of his conduct; (2) that the conduct was extreme and outrageous; (3) that the defendant's conduct was the cause of the plaintiff's distress; and (4) that the emotional distress sustained by the plaintiff was severe." Appleton v. Board of Education, 254 Conn. 205, 757 A.2d 1059 (2000); citing Petyan v. Ellis, 200 Conn. 243, 253, 510 A.2d 1337 (1986).

The court seemed to concede that coaches don’t have the same “latitude to employ equal opportunity insults... . (C)omments, which would have produced a shrug of the shoulders decades ago, may now be considered ‘outrageous’ and unacceptable, without regard to motive or intent.”

At the same time, the court carefully measured whether the plaintiff the standard for “severe emotional distress.”

Specifically, it noted that “the minor son testified at his deposition that while he found the incidents with his coach to be upsetting, he ‘just thought it was a part of football.’ His reactions cannot be said to be intolerable, or show that he is suffering distress so severe that no reasonable man could be expected to endure it. While his father testified that he is withdrawn and sought assistance from clergy, he has not sought medical treatment for any anger or depression, and testified that he does not see the need for it. His circle of friends, grades, activities and hobbies did not seem to change at all because of the incidents. His very limited depression over the incident and anger cannot be said to be any more than a degree of transient and trivial emotional distress, which is a part of the price of living among people. Everyone, at one time or another, will experience the less pleasant side of a teacher, coach, official, supervisor, boss, colleague, or even a friend. Those cases of embarrassment, humiliation, hurt feelings and other less debilitating, more transient forms of suffering, including the mild and short-lived suffering that the minor plaintiff, Joseph Civitella, endured here, are not sufficient to impose liability.

“Therefore, the motion for summary judgment is granted.”

Pasquale Civitella, PPA v. Pop Warner Football; Superior Court Of Connecticut, Judicial District Of Ansonia - Milford At Derby; CV095010392S, 2012 Conn. Super. LEXIS 2265; 9/5/12

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Court Dismisses Personal Injury Claim Arising from Field Hockey Game

A New York state court judge has dismissed the personal injury claim of a high school student, who alleged that a physical education teacher’s participation in a game of field hockey contributed to injuries he suffered. In so ruling, the court found specifically that the teacher did not expose the plaintiff “to an unreasonable risk of harm.”

The injury occurred when Otis R. Scerbo (the teacher) struck Pedro Godoy's right hand with his hockey stock as he was attempting to shoot the ball into the goal. In the complaint, Godoy alleged that the defendants (Scerbo and Central Islip Union Free School District) “negligently supervised the physical education class in allowing an adult teacher to participate in the floor hockey game, and in failing to provide adequate protective equipment for the students.”

The defendants moved for summary judgment on the grounds that they did not breach any duty to the plaintiff by allowing Scerbo to participate in the hockey game, and that the plaintiff has failed to submit any admissible evidence that the district was negligent for the failure to provide protective equipment.

In its analysis, the court noted that when a student “is voluntarily involved in an extracurricular sport, the school district owes a lesser duty to ‘exercise ordinary reasonable care to protect student[s] . . . from unassumed, concealed, or unreasonably increased risks’ (Lomonico v Massapequa Pub. Schools, 84 AD3d 1033, 923 N.Y.S.2d 631 [2d Dept 2011], citing Benitez v New York City Bd. of Educ., 73 NY2d 650, 541 N.E.2d 29, 543 N.Y.S.2d 29 [1989])

“However, here the record reveals that the plaintiff was participating in a compulsory physical education class. It is well settled that ‘schools are under a duty to adequately supervise the students in their charge and they will be held liable for foreseeable injuries proximately related to the absence of adequate supervision’ (Mirand v City of New York, 84 NY2d 44, 49, 637 N.E.2d 263, 614 N.Y.S.2d 372 [1994]). Generally, the duty owed by a school district is to exercise the same degree of care that a ‘parent of ordinary prudence would observe in comparable circumstances’ (Mirand v City of New York, id., quoting Hoose v Drumm, 281 NY 54, 22 N.E.2d 233 [1939]; Benitez v New York City Bd. of Educ., supra; Lomonico v Massapequa Pub. Schools, supra).

“Even applying this more exacting duty of care, the participation of a teacher in an athletic activity is not a violation of the duty of supervision if his or her conduct does not expose the student to any unreasonable risks (Hamill v Town of Southampton, 261 AD2d 361, 689 N.Y.S.2d 196 [2d Dept 1999]). The plaintiff's claim that Scerbo's participation in the game of floor hockey exposed the plaintiff to an unreasonable risk of harm is completely and utterly unsupported by even a scintilla of admissible proof. The plaintiff offers only utter speculation and conjecture whether Scerbo's participation resulted in the inadequate supervision of the students or whether his participation allowed or caused the plaintiff to be exposed to an unreasonable risk of harm. Indeed, the uncontroverted evidence is directly to the contrary. The mechanism of injury in the case at bar is no different than that of the now legion of cases here in the Second Department absolving a School District for liability where the injury causing incident occurs near spontaneously and without any opportunity to intercede to prevent same no matter how diligent and focused the supervision, and the court cites as one example those cases involving a child's sudden fall from ‘monkey bar’ apparatus at a playground; but there are also cases directly on point involving injuries caused by the sudden swing of a hockey stick (see, Bramswig v. Pleasantville Middle School, 68 AD3d 1035, 891 N.Y.S.2d 160 [Second Department, 2009]; Spaulding v. Chenango Centr. School Dist., 68 AD3d 1227, 890 N.Y.S.2d 162 [Third Department, 2009]). So too, in the case at bar, it is uncontroverted that the plaintiff's hand was suddenly struck when he attempted to block a shot. There is absolutely no evidence whatsoever raising any issue of fact that the teacher's participation in the game and more particularly his taking of the shot that led to plaintiff's injury was in any way negligent conduct on the teacher's part or a result of a superior skill set of the teacher wherein it could be said that the teacher should not have participated in the game or could have prevented this sudden and unanticipated occurrence had he been supervising rather than playing or any other basis upon which to conclude negligence. The record shows only that it was a shot taken as any player would take whether teacher or student. A motion for summary judgment cannot be denied on the basis of wholly unsupported conjecture.

“Similarly unsupported and without merit is the plaintiff's claim that the defendants failed to provide adequate protective equipment to the students. Accordingly, the defendants' motion for summary judgment is granted, and the complaint dismissed.”

Pedro Godoy v. Central Islip Union Free School District and Otis R. Scerbo; S.Ct.N.Y., Suffolk Co.; 09-48348, 950 N.Y.S.2d 693; 2012 N.Y. Misc. LEXIS 4240; 2012 NY Slip Op 22244; 9/6/12

Attorneys of Record: (for plaintiff) Keegan & Keegan, Ross & Rosner, LLP, Patchogue, New York. (for defendants) Ahmuty, Demers & Mcmanus, Esqs, Albertson, New York.

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Texas Rangers: Lenders Strike Out in Challenge to Financial Advisors’ Professional Fees

By Alicia B. Davis and Thomas Curtin

On September 25, 2012, Judge D. Michael Lynn for the United States Bankruptcy Court of the Northern District of Texas held that a “tail provision” for professional fees rendered prepetition survived — and was not cut off by — the debtor’s bankruptcy filing. In re Texas Rangers Baseball Partners, Case No. 10-43400-DML, 2012 WL 4464550 (Bankr. N.D. Tex. Sept. 25, 2012).

Background

Texas Rangers Baseball Partners (Partners) is a general partnership that owns and operates the Texas Rangers, a member of the Major League Baseball. Partners was 99 percent owned by Rangers Equity Holdings, which was an indirect subsidiary of HSG Sports Group. Since 1998, when HSG acquired the Texas Rangers, the team had been unprofitable and had been kept afloat by advances by HSG to cover its cash flow shortfalls.

Eventually, HSG hired Perella Weinberg Partners, Merrill Lynch and Raine Advisors, LLC to serve as financial advisors while HSG sought an investor. After it became clear that HSG’s problems could not be resolved by an investor, HSG entered into an engagement agreement with Raine to find potential buyers of the Rangers and to oversee a sales process. As a result of these duties, Raine was to receive a transaction fee which would have totaled $5 million had the sale been consummated prior to the commencement of Partners’ chapter 11 cases. The engagement agreement also contained a tail provision, which stipulated that Raine was entitled to $5 million if the Rangers were sold within twelve months after the termination of the engagement letter.

During this time, with the help of Raine, HSG initiated a process to sell the Rangers to Rangers Baseball Express LLC (Express).

Partners was unable to close the sale of the Rangers to Express prepetition. On September 25, 2009, shortly before the petition date, Partners entered into a replacement engagement letter with Raine pursuant to which Raine was to act as financial advisor in connection with the sale of the team. Under the replacement engagement letter, Raine would receive a $2.5 million transaction fee. Furthermore, the replacement engagement letter contained a tail provision, whereby Raine would be entitled to receive the transaction fee if a “Rangers Transaction” (the sale) was consummated within 12 months of the execution of new engagement letter.

In the meantime, Texas Rangers Baseball Partners borrowed approximately $20 million to satisfy its daily cash flow needs. HSG defaulted on this loan in March 2009. On May 23, 2010, a day before Partners commenced its chapter 11 proceedings, Partners and Express entered into an Asset Purchase Agreement, pursuant to which Partners agreed to sell the team to Express. The sale to Express closed on August 12, 2010 — the day Partners’ plan of reorganization became effective.

Subsequently, Raine, relying on the tail provision in the replacement engagement letter, filed a proof of claim seeking the $2.5 million transaction fee. The plan administrator and JPMorgan Chase Bank (the first lien agent) objected to Raine’s claims.

The Decision

The Court ultimately allowed Raine’s claim in its entirety, basing its decision on, among other things, its finding that the tail provision was enforceable notwithstanding Partners’ bankruptcy.

First, the Court addressed whether Raine would have been entitled payment under the tail provision outside of bankruptcy. The Court determined that under New York law (the law that governed the original and replacement engagement letters), a court must construe a contract so as to “give effect to the intention of the parties as expressed in” the language of the contract. Here, the Court found that the broad language used to define a “Rangers Transaction” would encompass any transaction involving the sale of the Rangers.

Moreover, the Court noted that the tail provision did not contain any further preconditions or restrictions on Raine’s entitlement to the transaction fee. Thus, relying on the language of the replacement engagement letter the Court held that any sale of the Rangers within twelve months of termination of the replacement engagement agreement would give rise to Raine’s entitlement to the $2.5 million transaction fee, regardless of whether the sale resulted from Raine’s services.

The Court then turned to whether the tail provision survived the rejection of the replacement engagement letter in the bankruptcy case. In determining the effect of the rejection of the replacement engagement letter, under bankruptcy law, the Court had to treat the agreement as breached. Accordingly, the Court reasoned that, in a non-bankruptcy setting, following a breach of the replacement engagement letter, Raine would be able to rely on the tail provision to preserve its claim.

Nevertheless, the Court grappled with a key issue: whether the filing of the bankruptcy case cuts off the tail provision even if the claim would have survived in a non-bankruptcy setting. The plan administrator and the first lien agent argued that the bankruptcy case cut off the tail provision and cited to In re Oneida, Ltd., 400 B.R. 384, 389 (Bankr. S.D.N.Y. 2009), where the bankruptcy court disallowed a prepetition financial advisor’s claim, which, like Raine’s claim, was based on a tail provision.

The Court rejected this argument and concluded that filing for bankruptcy does not cut off a tail. The Court noted that the bankruptcy court in Oneida did not hold that a bankruptcy case cuts off a tail provision; rather, that decision was based on the fact that the transaction contemplated by the contract had already taken place before the bankruptcy, and thus, full performance had already been rendered by the advisor under the contract.

The Court pointed to a case from the Bankruptcy Court for the District of Maryland, as more factually analogous and persuasive to the case at hand. In that case, the bankruptcy court held that bankruptcy proceedings do not cut off or affect a tail provision because the tail provision in that case was predicated on a sale that did not occur until months after the petition date. See In re Nat’l Energy & Gas Transmission, Inc., 2006 WL 4594947 (Bankr. D. Md. Aud. 28, 2006). Here, as in Nat’l Energy, the tail ran until the sale was consummated, which did not occur until the effective date of the plan of reorganization. Accordingly, the Court determined that the tail provision ran through the bankruptcy proceeding until the sale was consummated and, therefore, Raine should be able to claim damages as it would in the event of a breach outside of bankruptcy.

Finally, the Court rejected the objectors’ claims that the engagement agreement was a fraudulent transfer. Among other things, the objectors raised concern about the simultaneous termination of the original engagement letter and the execution of the new engagement letter on the eve of bankruptcy, when Raine had purportedly completed its work. The objectors further contended that Partners incurred obligations under the replacement engagement letter without receiving any consideration. The Court found that the chronology was not worrisome because Partners was already liable under the original engagement agreement and, moreover, Partners received consideration for entering into the replacement engagement because the termination fee was significantly reduced.

In the end, the Court concluded that Raine was entitled payment in full amount of its general unsecured claims with interest because it would have been entitled to the entire transaction fee absent Partners’ bankruptcy.

Conclusion

The Texas Rangers decision provides greater protection to the claims of professionals and clarifies that a prepetition tail provision survives a bankruptcy filing. Where, as here, a tail provision is predicated on the consummation of a sale that does not occur until after the petition date, a court is likely to allow a financial advisor’s claim that is based on that tail provision.

Davis and Curtin are attorneys at Cadwalader, Wickersham & Taft LLP.

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Articles

Coach Files Suit Against United Football League Founder

By Scott A. Andresen

As the United Football League continues to be the professional football equivalent of Bernie Lomax, the league took yet another legal hit in its ongoing existence in a state of bardo[1] on October 15, 2012 when notable coach Marty Schottenheimer filed suit against league founder Bill Hambrecht and other unnamed parties in San Francisco Superior Court.

In his one-count complaint for breach of contract, Schottenheimer alleges that Hambrecht and others affiliated with the UFL contacted him in early 2011 to be the head coach and general manager of the Virginia Destroyers UFL team. Schottenheimer subsequently entered into a two-year contract whereby he was to be paid $970,000 during his first year of employment and $1,000,000 in the second, as well as being entitled to reimbursement of business expenses incurred in the course of performing his duties. Schottenheimer was further entitled to a bonus of $50,000 if his team played in the UFL championship game, and an additional bonus of $100,000 if his team won the championship game.

Although Schottenheimer agreed to enter into a two-year agreement with the Virginia Destroyers team, he (rightfully, it would now appear) had serious concerns about the financial stability and ongoing viability of the league. To that end, Schottenheimer and Hambreach allegedly agreed that Hambrecht would personally guarantee payments due to Schottenheimer as a third-party guarantor during the first year of Schottenheimer's two-year contract with the team, regardless of whether the UFL became insolvent or ceased to operate.

During the 2011 season, Schottenheimer's Virginia Destroyers team enjoyed great success and won the UFL championship in November 2011. However, it is alleged that the team failed to pay Schottenheimer much of what he owed pursuant to his contract to the tune of $1,100,000 in salary, $150,000 in bonus compensation and $100,000 in expenses incurred on behalf of the team for hotel costs and otherwise advanced by Schottenheimer.

Although the team acknowledged that Schottenheimer was due all sums demanded, it informed Schottenheimer that it was financially unable to live up to its contractual obligations. Schottenheimer then made demand upon Hambrecht as the personal guarantor of the team's obligations. Hambrecht made no payments in response thereto, leading to the initiation of the lawsuit.

In Schottenheimer's Prayer for Relief, he requests general damages, special damages, reasonable attorney's fees, costs of suit, interest at the maximum legal rate on all sums awarded, and such other relief as the court deems just and proper.

Hambrecht has until November 14, 2012 in which to file an answer to the complaint. A case management conference is set for March 20, 2013, with the filing and service of a case management statement required no later than March 5, 2013.

Scott A. Andresen is the principal of Andresen & Associates. He can be reached at scott@andresenlawfirm.com Research assistance for this article was provided by Stephanie Horner, Marquette University Law School


[1] Prior to the initiation of the Schottenheimer lawsuit, a collection of UFL parties (i.e., the United Football League, UFL, UFL Management LLC, Bill Hambrecht, Paul Pelosi and Hambrecht 1980 Revocable Trust) have had not less than 27 separate actions initiated against them since May 2010— Most (if not all) of which arise out of failure to pay amounts contractually due.

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Armstrong’s Endorsement Contracts and the “Morals Clause”

By Brian Socolow

Lance Armstrong has had a bad fall, and that’s before taking into account the morals clauses in his endorsement contracts.

In late August 2012, Lance Armstrong, seven time winner of the Tour de France, announced that he would no longer contest the U.S. Anti-Doping Agency’s (USADA) allegations that Armstrong and his teammates used performance enhancing drugs in violation of international cycling rules. The following day, USADA stripped him of his Tour de France titles and imposed a lifetime cycling ban. In October 2012, USADA issued its report on Armstrong and the U.S. Postal Service Team, claiming that over 1,000 pages of sworn testimony, email messages, financial payments, and lab test results “shows beyond any doubt that the U.S. Postal Service Pro Cycling Team ran the most sophisticated, professionalized and successful doping program that sport has ever seen.”

A few days later, the International Cycling Union announced it would not appeal USADA’s decision, and in the weeks that followed, Nike, Trek and Oakley terminated their endorsement relationships with Armstrong.

It appears that these brands invoked the morals clause in their endorsement contracts with Armstrong. A morals clause allows a company to terminate, or otherwise take some corrective action against, an endorser who is tarnishing the company’s reputation based on some “immoral” conduct. This type of protection seems reasonable considering what a company invests and its goals in entering into an endorsement agreement. The company might pay an athlete millions of dollars to be the public face for the company’s products, and then spend millions more to build its advertising and marketing campaign around the athlete so that the athlete’s name and achievements become associated with the company’s products. When the athlete-endorser’s talents and achievements are overshadowed by scandal or criminal conduct, that spells economic disaster for the company. When the association between the athlete-endorser and the company begins to damage the company, the company understandably wants to part ways.

When negotiating the morals clause in an endorsement agreement, the kind of behavior that will trigger the clause is a critical point. In general, an athlete will want a narrow morals clause with a short list of very specific actions that will trigger the clause, such as a conviction on criminal charges, and limited available remedies for the company. A company paying for the endorsement services will want a broadly-worded clause that lets the company determine, in its sole discretion, if the athlete’s actions warrant termination, a fine, or some other remedial action. For example, there are many kinds of behavior that fall short of a criminal conviction that could tarnish a company’s image, such as public fights, arrests for drunk driving, drug use, criminal accusations (even if the charges are later dropped), and domestic scandals. A company may also want to be able to take action if the athlete-endorser criticizes its product or management.  

The more successful an athlete, the greater his or her bargaining power when negotiating a morals clause. As Armstrong’s wins accumulated, he might have been able to negotiate a narrowly-worded morals clause in his endorsement contracts. For example, the morals clause in his contracts might have been triggered only if there had been a determination by a judicial body after a contested hearing that he used performance enhancing drugs, and that such a determination had become final and unappealable. If that were the case, then a public perception that Armstrong had engaged in improper conduct or even an investigation by federal authorities would not trigger the morals clause.

Although Armstrong chose to forego contesting USADA’s arbitration proceeding against him, he has not admitted to any wrongdoing, and USADA’s decision to invalidate Armstrong’s victories was not a conviction nor was it a judicial decision. However, based on reports that several of his long-time endorsement relationships have been terminated, it seems likely that there was some language in the morals clauses of his endorsement contracts that allowed these companies to terminate the agreements.

If the morals clause language is triggered, a company may decide to sue the endorser to recoup payments made to the endorser and/or costs of creating advertising campaigns featuring the endorser. In Armstrong’s case, because his alleged use of performance enhancing drugs began many years ago, a company seeking to assert a claim based on a morals clause violation might have a statute of limitations problem, depending on when the conduct at issue occurred and the nature of the claim. For example, would the claim be for breach of contract, which has a statute of limitations of six years in many jurisdictions? Would the claim be for fraud, based on Armstrong's misrepresenting at the time he signed a contract that he was not engaged in doping? Fraud claims often have a shorter statute of limitations, typically three years.

Armstrong won his first Tour de France in 1999 and his last in 2005. If the basis for a breach of contract claim arises from doping during that period, it would appear that any claim would be barred based on the statute of limitations, unless a plaintiff could invoke a tolling doctrine. Certain states allow for an equitable tolling of a statute of limitation if the conduct triggering the claim was concealed. If a company sought to sue Armstrong based on doping tests secured prior to 2005, for example, it might be able to claim that he concealed his doping, and the statute of limitations should therefore be tolled. A number of factual issues have to be determined in order for tolling to be allowed.

Even if a company can legally invoke the morals clause in an endorsement contract, it must still face the question whether doing so is a wise business decision. Is the conduct of the athlete of such a potentially damaging nature to the company that a continued relationship would be detrimental, and if so, what are the consequences to the company for terminating the agreement? In the case of an athlete endorsement agreement, for example, the company will typically consider several issues before terminating the agreement such as (1) the severity of the endorser's transgression and the company’s audience, (2) the company's investment in the ad campaign, including production costs for commercials, purchases of on-air, online and print media space, and event sponsorship fees, (3) whether other commercials or individuals are available to fill the void created by terminating the endorser, and (4) the likelihood of litigation brought by the athlete.

There are alternatives to invoking the morals clause. Sometimes a company prefers not to terminate a contract, but wants to show that it disapproves of an endorser’s actions; some agreements allow a company to levy fines and/or recoup payments rather than terminate for a morals-based contractual violation. The company may also demand a clause recognizing its sole right to pull an athlete’s product from stores, such as happened with Michael Vick, or not using the athlete’s image or likeness in advertisements.

If a company pursues litigation, it would also have to determine the costs and benefits: litigation is costly and can harm both the company and the endorser’s public image and a company might not be able to recover enough in damages to make such investment worthwhile. A company may also have trouble proving that Armstrong was engaging in doping because such proof may not be readily available and because the alleged doping took place so many years ago. In addition, a prolonged, highly publicized lawsuit could suggest to the public that the company was somehow complicit in Armstrong’s activities or that it turned a blind eye to conduct that it should have known about.

Some of these factors may play out in a recently filed lawsuit by SCA Promotions, a company that provides insurance coverage for the payment of prizes and bonuses.

Armstrong’s contract with Tailwind Sports, the owner of the U.S. Postal Service team, apparently promised Armstrong a $10 million bonus if he won a sixth Tour de France title. As is common in the sports industry, Tailwind Sports took out an insurance policy to cover the possible payment of that bonus with SCA Promotions and other companies.  When Armstrong won his sixth Tour de France race in 2004, SCA apparently balked at paying $5 million for the bonus when rumors of Armstrong’s doping gained traction. Armstrong and Tailwind Sports sued SCA, and an arbitration panel ordered SCA to pay the bonus, plus another $2.5 million in interest and costs. SCA has recently stated that it is seeking repayment of several bonuses paid to Armstrong plus interest, totaling nearly $11 million. The outcome of this matter may not depend on the language of a morals clause, but it might provide an indication of what issues regarding doping Armstrong is willing to contest in court, and how vigorously.

Conclusion

Endorsement contracts are a significant source of income for top athletes and they represent significant expenditures by companies that probably hope for a long and profitable relationship. Because the stakes are so high, morals clauses are integral parts of endorsement contracts. It’s unfortunate when an athlete of Armstrong’s stature falls from grace so swiftly, but morals clauses give companies that hire athlete-endorsers powerful options when an endorser’s actions threaten the goodwill of a company and its products.

Brian Socolow is a partner in Loeb & Loeb’s New York office and a chair of its Sports Practice Group. His practice includes the representation of individuals and organizations in the sports industry in a wide range of legal matters, including intellectual property issues and new media, sponsorships and endorsements, the purchase and sale of sports assets, risk management and sports-related litigation.

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Can an Amusement Park Patron Sue for an Injury Caused By Bumping on a Bumper Car Ride?

By Jill Haley Penwarden

On October 3, 2012, the California Supreme Court heard argument on the question of whether a passenger on a bumper car ride assumes the risk of all injuries resulting from being bumped while on a bumper car ride. (Nalwa v. Cedar Fair, LP, review granted August 31, 2011, California Supreme Court Case No. S195031).

Under California’s assumption of risk doctrine, a defendant owes no duty to protect a plaintiff from risks inherent in a sport or activity in which the plaintiff voluntarily engages. Instead, the defendant’s duty is not to increase the risks to a participant over and above those inherent in the activity. (Knight v. Jewett (1992) 3 Cal.4th 296, 316.)

In the Nalwa case, the California Supreme Court will decide whether this doctrine should apply to “recreational activities” beyond the traditional active sports to which it has been applied (such as touch football, baseball, and competitive swimming), and what duty a recreational provider has (if any) to mitigate the inherent risks of an activity.

The Nalwa case is significant because it is the first California Supreme Court case that will directly address the availability of the assumption of risk defense to a sports or recreation facility operator. (Prior California Supreme Court cases have involved coaches or co-participants in an activity.) The Nalwa opinion may impact the ability of facility operators such as golf courses and ski resorts to defend liability claims of injured patrons.

Dr. Nalwa’s Bumper Car Injury

Dr. Smriti Nalwa, a surgeon, was injured at Great America Amusement Park in Santa Clara, California while riding as a passenger in a bumper car operated by her ten-year-old son. Dr. Nalwa’s bumper car was hit head-on, then immediately hit again from behind. When she reached out to brace herself, she fractured her wrist.

Defendant Cedar Fair owned and operated Great America and four other amusement parks, and allegedly knew that single-direction bumper car travel reduced the number of head-on collisions. At its other four parks, Cedar Fair required the bumper cars to travel in one direction only, and Great America’s rules similarly prohibited head-on collisions. Great America, however, did not post any notice of this rule, although it did post warnings about the possibility of bumping other cars and sudden movement and direction changes.

The Trial Court Held that Plaintiff Could Not Sue for Her Injuries

Dr. Nalwa sued ride operator Cedar Fair for her injuries. The trial court granted summary judgment in favor of Cedar Fair, finding that Cedar Fair had a complete defense to plaintiff’s claims under California’s doctrine of assumption of risk. The trial court reasoned that because bumping was an inherent risk of a bumper car ride, Cedar Fair had no duty to protect Dr. Nalwa from those risks.

The Court of Appeal Held that Assumption of Risk is Not Applicable to Amusement Park Rides

California’s Sixth District Court of Appeal, however, reversed the trial court’s judgment for Cedar Fair, holding that as a matter of public policy the assumption of risk doctrine should not apply to an amusement park ride. (Nalwa v. Cedar Fair, LP (2011) 196 Cal.App.4th 566, 576-578).

The Court of Appeal noted that patrons do not go to amusement parks expecting to be injured; they seek the “illusion of danger while being assured of a ride’s actual safety.” This “thrilling-while-safe” illusion, the court held, is maintained by a regulatory scheme governing amusement parks administered by California’s Department of Occupational Safety and Health. The court found that the very existence of the regulations evidenced a public policy which bars the application of primary assumption of risk to amusement park rides. (There was no evidence that Cedar Fair actually violated any applicable regulations).

The Court of Appeal also held that amusement park rides are not the type of sport or activity that are subject to the application of primary assumption of risk; because riding in a bumper car does not require any physical exertion, skill, or physical prowess, the court found that the activity was “too benign” to be considered a sport, and as a result primary assumption of risk did not apply.

The California Supreme Court Is Considering the Scope of the Assumption of Risk Defense

Following the appellate court decision in favor of Dr. Nalwa, the California Supreme Court granted Cedar Fair’s petition for review. (Nalwa v. Cedar Fair, LP (2011) 258 P.3d 793). After briefing by the parties, the Court heard oral argument on October 3, 2012.

Much of the attorneys’ argument, and the Justices’ questions, were focused on the issue of whether assumption of risk applies only to “active sports,” or to any recreational activity with a potential risk of injury. Chief Justice Cantil-Sakauye pointed out that in Knight v. Jewett (1992) 3 Cal.4th 296, the leading case on assumption of risk, the California Supreme Court left open the possibility that assumption of risk could apply to both types of activity. The Chief Justice also pointed out that a number of things, such as the presence of interior padding, a seatbelt, and a large rubber bumper gave the participant clues as to the potential risks of bumper cars. Justice Corrigan asked about whether a risk must be obvious to be considered “inherent,” and Cedar Fair’s attorney argued that the risk should be either apparent or discoverable to the participant. In response to a question by Justice Baxter, Cedar Fair’s attorneys explained that in their view, the risk of an equipment malfunction or an electric shock would not be a risk assumed by the participant, because those risks were not inherent to the activity and also were within the complete control of the operator. Justice Liu asked what kind of injury resulting from bumping would give rise to a lawsuit; Cedar Fair’s attorneys argued that no bumping-related injury would prevent the application of primary assumption of risk, because bumping is an inherent risk of the ride.

Nalwa’s attorney, on the other hand, argued that head-on collisions between bumper cars were not an inherent risk because they could be prohibited and in fact had been prohibited at Cedar Fair’s other bumper car ride locations. Justice Corrigan pointed out that in Avila v. Citrus Community College District (2006) 38 Cal.4th 148, the Court applied the doctrine of primary assumption of risk to bar a claim by a batter hit by a pitch and observed that “brushing back” a batter with an inside pitch, while against the rules of baseball, is still common in the sport. Justice Corrigan questioned whether this was not the same situation. Nalwa’s attorney responded that Cedar Fair had a “special knowledge” that head-on collisions increased the risk of injury, because it required one-directional travel of the cars at other rides. (He conceded, however, that there was no evidence in the record supporting the argument that there is a higher risk of injury from head-on collisions). Justice Baxter asked whether assumption of risk would apply to same-direction collisions; Nalwa’s attorney argued that the Court should rule that primary assumption of risk is never applicable to amusement park rides, because the operator controls aspects of the ride. Justice Werdegar pointed out that a participant has much more control over a bumper car than, for example, a roller coaster.

A second area of argument concerned whether a recreation provider has a duty to minimize the risks of an activity, or simply a duty not to affirmatively increase the risks. Cedar Fair’s attorneys argued that a recreation provider has no duty to minimize inherent risks under current California Supreme Court precedent, and Justice Corrigan agreed that this is the current standard. Nalwa’s attorney argued that public policy requires that amusement rides be made as safe as possible, and therefore the operator should have a duty to minimize both inherent and non-inherent risks of the ride.

Based on the tough questioning of plaintiff’s counsel by the Justices, it would not be surprising if the Court finds that Cedar Fair had no duty to protect Nalwa from her injury, and therefore overturns the Sixth District Court of Appeal’s opinion. The impact of the decision on other recreational providers will depend on whether the Court limits its scope to amusement park rides or makes a broader pronouncement as to the duties of recreational providers.

The California Supreme Court is expected to render a decision by January 3, 2013.

Jill Haley Penwarden is a Partner in the Lake Tahoe, California office of Duane Morris, LLP. She specializes in Sports and Recreation Liability and Sports Products Liability. Duane Morris, LLP filed an amicus curiae brief in the Nalwa case on behalf of the California Ski Industry Association and the National Ski Areas Association.

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Mancina v. Goodell and NFL: Aggrieved Fan Sues

By Ryan M. Rodenberg and Yoon Tae Sung

On October 15, 2012, David Mancina, a fan of the New Orleans Saints filed a lawsuit against Roger Goodell, commissioner of the National Football League ("NFL") and the league itself. Mancina's complaint was framed as a class action lawsuit representing all season and single ticket holders for the Saints games during the current 2012-2013 season. The premise of the lawsuit stems from the NFL's punishment in connection with the purported Saints bounty program scandal, an on-going issue that is being separately adjudicated. On March 21, 2012, following an internal investigation, the NFL meted out punishment against the New Orleans team, with the head coach, assistant coach, general manager, and several current and former players being suspended. Moreover, the team was required to forfeit its second round of draft choices in 2012 and 2013.

Mancina contended that the tickets he and other fans purchased were devalued since the quality of the Saints games would be lower than expected due to the punishments by Goodell and the NFL. Furthermore, as a result of all of the suspensions, he alleged that the quality of the team has been depreciated making the Saints less competitive and more likely to lose their (home) games. Additionally, he asserted that Goodell and the NFL did not consider fans who purchased tickets before he reprimanded the team.

Mancina believed that there was not sufficient evidence or due process to warrant the suspensions. In his complaint, Mancina also argued that "no opponent team member, news media representative, or NFL professional reviewer of game films of the New Orleans Saints for the years 2008-2011 reported any evidence of unusual, prohibited, or abnormal" performance by the Saints players, so the punishments and suspensions were groundless decisions by the defendants. Mancina further contended that the team could have been punished in an alternative way that would not have influenced the quality of play and caused harm to innocent ticker holders. Mancina concluded that he and the class of ticket purchasers should be monetarily compensated.

Mancina's complaint can generally be described as one falling under the "disappointed sports fan" umbrella and is by no means the first to do so.[4]  At least two sports-specific lawsuits decided in the past six years have helped define the legal rights of aggrieved fans.  The most recent example of such a lawsuit was based on the so-called "Spygate" scandal involving clandestine videotaping of opposing teams by New England Patriots employees working for head coach Bill Belichick. Plaintiff Carl Mayer, a New York Jets season ticket holder, sued Belichick, the New England Patriots, and the NFL alleging that such conduct "violated the contractual expectations and rights of New York Jets ticket-holders who fully anticipated and contracted for a ticket to observe an honest match played in compliance with all laws, regulations, and NFL rules."[5]  Mayer's amended complaint included nine counts, largely a mix of state and federal breach of contract, fraud, and racketeering claims.[6]  The Third Circuit Court of Appeals affirmed the District Court's dismissal of the suit, rationalized that Mayer "possessed nothing more than a contractual right to a seat from which to watch an NFL game between the Jets and the Patriots, and this right was clearly honored."[7]

Bowers v. Federation Internationale de L'Automobile stemmed from irate fans filing suit after "Indygate," a debacle at the Indianapolis Motor Speedway when only six of the twenty cars slated to race actually took part after tire problems sidelined the other drivers and their vehicles.[8]  Bowers and other facing fans sued, claiming that they should be refunded the price of their ticket and other expenses (e.g. travel and lodging) incurred in connection with the event.[9]  The plaintiffs' claims were based on theories of negligence, promissory estoppel, and breach of contract.[10]  The Seventh Circuit Court of Appeals considered and rejected each, although the court did recognize that plaintiffs may have been justifiably upset based on what transpired at the race.[11]

The non-plaintiff-friendly result in each of the foregoing related cases does not bode well for Mancina in his suit against Goodell and the NFL stemming from "Bountygate." Defendants will almost certainly file a motion to dismiss for failure to state a claim under Federal Rules of Civil Procedure 12(b)(6), as Mancina's complaint includes fewer details than either of the complaints filed in the two tangentially analogous cases. In addition, Goodell and the NFL may seek sanctions in connection with Mancina's lawsuit. 

Ryan M. Rodenberg is an assistant professor of sports law analytics at Florida State University. Yoon Tae Sung is a doctoral student at Florida State University. He earned his master's degree from University of Illinois at Urbana-Champaign. © Ryan M. Rodenberg and Yoon Tae Sung 2012.


4 For a discussion of related lawsuits pertaining to non-sports live entertainment (e.g. music concerts), see Brian A. Rosentblatt, I Know, It's Only Rock and Roll, but Did They Like It?: An Assessment of Causes of Action Concerning the Disappointment of Subjective Consumer Expectations Within the Live Performance Industry, 13 UCLA Entertainment Law Review 33 (2005-2006).

5 Mayer v. Belichick, et al, 605 F.3d 223 (3rd Cir. 2010).

6 Id.

7 Id.

8 Bowers, et al v. Federation Internationale de L'Automobile, et al, 489 F.3d 316 (7th Cir. 2007).

9 Id.

10 Id.

11 Id.

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The NHL Lockout: A Tale of Two Nations

By Sahil Jani

Hockey. Canada’s passion. America’s afterthought. Some might even claim it be a relic of the Cold War. Regardless your feelings towards the sport, the current lockout imposed by the National Hockey League poses an interesting conundrum in relation to the legal standard of choice when it comes to multi-national sporting leagues. The NHL lockout—with games currently suspended until November 1—is in limbo over several key issues regarding, for starters, the veracity of the claims in support of said lockout. The NHL and National Hockey League Players Association (“NHLPA”) have both previously utilized Canadian and US law to enforce and adjudicate disagreements through their storied history, culminating into the mess we see today. The Alberta Labour Relations Board released their October 10 decision in support of the NHL’s position for a lockout. But was it the right decision?

Which Authority Has Jurisdiction?

What can be attributed to ostensibly a strategic decision, rather than one of uniformity, certain Canadian and US authorities have jurisdiction over disputes between the NHL and NHLPA. The doctrine of primary jurisdiction “applies where a court has jurisdiction of the action but faces an issue where an agency’s expertise on the issue, not within the court’s general competence, might warrant the court staying the action while it refers the issue to that agency.” Brady v. NFL, 779 F. Supp. 2d 992, 1013-1014 (D. Minn. 2011). Here, the Alberta Labour Relations Board (“ALRB”) and the United States National Labor Relations Board (“NRLB”; via the National Labor Relations Act) have both a genuine claim for ownership of this issue. In a decision (“An application brought by the National Hockey League Players’ Association...”)The ALRB specifically mentions that they “received lockout vote applications on behalf of the NHL...despite the NHL filing for a lockout with the NLRB,” indicating the presence of mind for these professional organizations to utilize all legal avenues available to them. National Hockey League Players’ Association v Edmonton Oilers Hockey Corp, CanLII 58944, 3 (AB LRB, 2012). One cannot be surprised that a matter of jurisdiction is subsequently questioned by the losing party in such a case. Ironically, the purpose of primary jurisdiction is to “ensure uniformity of results” and where the circumstances demand “the expert and specialized knowledge of the agencies involved.” United States v. Western Pac. R.R. Co., 352 U.S. 59, 64 (U.S. 1956).

The Cobra Effect

Not surprisingly, the noncommittal nature of both the ALRB and NRLB not only keeps both parties relevant, but quite significant in affording a “second avenue” of application for the NHL and NHLPA. The reasoning behind the genesis of the NRLA was to protect the rights of employees and employers, to encourage collective bargaining, while ensuring that the general welfare for those contributing to US economy was sufficiently met. National Labor Relations Board, National Labor Relations Act (2012). But the applicability of two governing organizations has led to a burgeoning of the cobra effect, where a plausible solution to an issue—here, a labor dispute—has led to a problem that has the potential to make things worse. We know the ALRB classifies this case as “sui generis,” or “of its own kind of class,” in an effort to mitigate the novelty of its ruling by effectively defenestrating precedent, while cleverly eschewing the need for any outside participation by any third party (read: NLRB). Edmonton Oilers Hockey Corp., at 2. We’ve seen this type of latent activity lead to further disputes before (as evidenced in the NFL lockout scenario).To clarify, this is not an argument to publicize the vindication or vilification of a particular side, but to highlight the difficulty of managing venue and jurisdictional bias.

Brady v. NFL

The NFL and NFLPA have a long history of litigation over collective bargaining agreements stemming decades. Brady v. NFL, 640 F.3d 785, 787 (8th Cir. Minn. 2011). Understandably, both parties wish to secure rights and obligations best suited to their position. In their most recent dispute, like in Edmonton Oilers, the NFL wished to lockout the Players in order to proffer economic leverage over negotiations. The NFL used the auspices of the Norris-LaGuardiaAct to buttress support for a lockout against the union-represented Players to preclude an injunction ordering the contrary. Brady, 640 F.3d 792. In response, the Players decertified their union and brought forth an antitrust suit against the NFL, practically, an identical claim in a round-about fashion to avoid the Act. But one of the justifications for the creation of the Norris-LaGuardia Act in its “broad language” was to “take out the federal courts ‘out of the labor injunction business.’” Jacksonville Bulk Terminals, Inc. v. Int'l Longshoremen's Ass'n, 457 U.S. 702, 712, 102 S. Ct. 2672, 102 S. Ct. 2673, 73 L. Ed. 2d 327 (1982) (emphasis omitted) (quoting Marine Cooks & Stewards v. Panama S.S. Co., 362 U.S. 365, 369, 80 S. Ct. 779, 4 L. Ed. 2d 797 (1960)). This was done intentionally to limit the scope of multi-jurisdictional locales (ie. eliminating the courts from jurisdiction would allow for the NLRB to take sole control over adjudication) which if not done, in some form or another, could contribute to the desalination of uniformity among its holdings. And indeed this did happen when the NLRB was bypassed for a court decision. The lower court’s injunction to estop the lockout was overruled by the US Court of Appeals for the Eighth District. The injunction order was stayed and an employer-friendly lockout ensued. Brady at 794.A similar situation occurs in Matthews v. National Football League Management Council, 688 F.3d 1107, 1116-1117 (9th Cir. Cal. 2012). Bruce Matthews, a former NFL player, filed for workers’ compensation in California where the labor code is construed more liberally than his contractually obligated state of Tennessee. Because CA law allowed for the “minimum contacts” test, allowing for filing there if there was sufficient contact with the state, Matthews was presented with a “choice of law” (based on the jurisdiction selected) circumstance. The court was forced to adjudicate in determining the appropriate venue because of competing jurisdictions and opted to hold for his contractually bound obligations to file a claim in Tennessee.

Jurisdiction as a Matter of Public Policy

Venue selection—and by extension, jurisdiction—is important not because of geographic filing convenience to the moving party, but because it best presents the ability for a particular entity to prevail in court. The NHL and NHLPA “have never established definitely which jurisdiction’s labour laws govern their relationship,” naturally leading to confusion over which board is “empowered to adjudicate their disputes.” Edmonton Oilers, CanLII 58944 at 2. The Alberta Board was very careful in declaring that this particular case “involves a unique set of circumstances involving a unique work environment” which is “not intended to have broader application.” Id. at 3. But this inherently does have a broader implication in multi-jurisdictional politicking. It’s not in the best interest of public policy for a ruling body when faced with the decision to recuse itself from a particular case to fail to do so because of the protections offered to it by a lack of administrative oversight. This author believes that in cases where a secondary authority is best suited to presiding over a particular issue, there ought to be a heightened sense of justification to remove the authority from its duty. In the instant case, the ALRB recognized the difficulty of the particular circumstances, but opted to hear the arguments anyways. Fortunately, they took care not to greatly expand the powers given to the organization.

Final Considerations

Ultimately, the ALRB held in favor of the lockout. But not exactly. The ALRB chose to decline to adjudicate on the manner claiming that there is “no dispute the lockout declared by the NHL is legal and pursuant to the NLRA,” but then also went on to state “we are of the opinion this is a case where it makes labour relations sense to exercise our discretion not to make a declaration of unlawful conduct and not to issue any remedy.” Edmonton Oilers, CanLII 58944 at 12. The concluding arguments prima facie from the ALRB indicate a strong consideration to not have to deal with questions such as: “Do Canadian labor laws apply to the US?” (or visa-versa); or “Is it amendable to bypass US legislation to hear a case in Canada?”; or for a more practical matter, “If the lockout is not deemed valid (at least in Canada), is it reasonable for US teams to have to travel to Canada to solely play the Canadian teams?”

Was this the right decision? Probably. But only because anything else would’ve opened up a firestorm of legal complexities and arguments. Plus, someone has to think of the fans.

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Reliability of Concussion Baseline Testing Company's Product Challenged in Court

By Paul Anderson, Esq.

ImPACT[12] is used by the big four professional sporting leagues, colleges and thousands of schools across the country. ImPACT dominates the market when it comes to sideline assessment and concussion evaluation. In fact, it has become so popular its use is encouraged in Rhode Island's return-to-play law.[13]

According to ImPACT's website, it is "the most-widely used, and most scientifically validated computerized concussion evaluation system." The software has become the go-to tool to determine whether an athlete should be allowed to return-to-play after suffering a concussion.

Recently, though, ImPACT has drawn fire from the scientific community for failing to identify concussions and prematurely allowing athletes to return-to-play. According to ESPN's Peter Keating, a series of studies concluded, "the false positive rate appears to be 30 percent to 40 percent of subjects of ImPACT...[it] may even increase th[e] risk" of returning to play too soon.[14]

The family of one former high school student alleges[15] that ImPACT failed to diagnose their son's traumatic brain injury. During a junior varsity game in South Texas, left tackle Oscar Cordova, III suffered a "hard hit to the head." Although he felt a little woozy, he remained in the game. Oscar continued to have headaches the following day, but he didn't report his symptoms to the school's athletic trainer (AT) until 13 days after the injury.

Oscar complained that he felt nauseous and that he had constant headaches. The school's AT performed the ImPACT test, which resulted in Oscar scoring below average on all portions of the exam. The AT called Oscar's mother and informed her that he probably suffered a concussion during the game, and that he should refrain from football-related activities until he was symptom free.

The following day, Oscar told the AT that his symptoms had subsided, so the AT re-administered the ImPACT test. The test results showed that Oscar had performed average on the verbal memory portion but below average on visual memory. Since Oscar's results had improved, the AT allowed him to engage in exercises, but he advised, if symptoms persisted he should immediately cease activities.

A week later, Oscar returned for another ImPACT test. This time he scored above average on verbal memory and average on visual memory. Oscar told the AT that he felt better but when he jogged he experienced headaches. The AT advised Oscar to engage in exercising and report back to him if he experienced headaches. Shortly thereafter, Oscar complained that his headaches became more severe while engaging in physical activity. The AT advised Oscar to refrain from all activities for 24 hours and to report back to him the following day. As instructed, Oscar met with the AT and explained that he still had a persistent headache. Accordingly, the AT ordered Oscar to seek medical attention to "rule out more serious complications."

Later that evening, Oscar was examined by a neurosurgeon and it was discovered that he had a hairline-skull fracture and brain bleed. Oscar underwent emergency surgery and subsequently made a full recovery, though he was, and allegedly still is, unable to engage in physical activity.

With mounting medical bills and believing some party was at fault, the Cordova family decided to lodge an attack against the "cash-flow juggernaut," that is ImPACT.

On September 8, 2011, a product liability and personal injury lawsuit was filed against Mission Consolidated Independent School District and ImPACT Applications Inc.[16] The complaint asserts theories of strict liability against ImPACT for allegedly supplying a defective product.[17]

ImPACT successfully removed the case to federal court arguing that the court had subject-matter jurisdiction pursuant to Section 1332(a).[18] The school district was later dismissed as a party due to its broad shield of immunity.

The plaintiffs alleged that the school district was negligent in providing, supervising and administering a defective product to Oscar. Under Texas Law, a school's immunity is waived only when the alleged personal injuries arise from the use of a motor vehicle. See Tex. Civ. Prac. & Rem. Code §§ 101.021, 101.051 Likewise, a school does not waive its sovereign immunity for allegations of negligent supervision. See City of Waco v. Williams, 209 S.W.3d 216, 232. Even without the shield of immunity, the school district likely would have avoided liability since its AT acted reasonably under the circumstance, and the school had a finely tuned concussion protocol in place.

ImPACT has not been as lucky. Following the exchange of written discovery and depositions of the injured party, the AT and ImPACT's corporate representatives, ImPACT filed a motion for summary judgment on August 27, 2012.

ImPACT argues, inter alia[19], that the plaintiffs' claims are fatally flawed because they are unable to prove ImPACT's alleged wrongful conduct caused Oscar's brain injury.

In order to establish liability, an essential element in all product liability and personal injury cases requires the plaintiff to prove causation. See Sims v. Washex Machinery Corp., 932 S.W.2d 559, 562 ("the failure to warn and/or instruct must constitute a causative nexus in the product user's injury") According to ImPACT, "the Plaintiffs have completely failed to show that ImPACT's software caused any brain injury to Plaintiff."

Based on ImPACT's motion for summary judgment and the attached exhibits, it appears that the plaintiffs' have a mighty burden to show that there are genuine issues of material fact in dispute.

ImPACT relies on the copious injury report created by the AT and computer records from the ImPACT system — which details the specific dates Oscar visited the AT and the results of each ImPACT test — to show that the tests, and administration thereof, worked as advertised. Oscar repeatedly failed the tests; he was never allowed to return to contact sports; and he was advised to see a doctor for further evaluation. More importantly, the brain injury occurred on October 2, 2008, and the three tests were administered after this date. According to ImPACT, it is temporally impossible to prove ImPACT caused Oscar's skull fracture.

Moreover, in order to counter a theory of false representation, ImPACT points to the service agreement entered into between Veteran Memorial High School and ImPACT which states, "Customers and all end-users should use the data received as a result of using the product to consult with qualified medical personnel. The product is only one component of a concussion management treatment and must be used in combination with the advice of qualified medical personnel."

The plaintiffs have until December to respond to ImPACT's motion for summary judgment. Unless the plaintiffs are able to produce expert testimony to show that it's plausible Oscar's skull fracture occurred sometime after the administration of the exam, it's doubtful the plaintiffs will be able to survive ImPACT's motion.

Fortunately for ImPACT, it looks like it is going to be able to successfully defend this lawsuit primarily because the AT did an outstanding job of documenting each exam, which was also corroborated by the ImPACT clinical report. Acting with due care, the AT didn't rely solely on the results of the exam. Rather, he used his clinical judgment and took into account Oscar's symptoms and complaints about headaches.

Nonetheless, it is easy to see how this lawsuit could have cost ImPACT millions. After Oscar scored average on his third ImPACT exam, a busy, and arguably negligent, AT could have ignored the patient's symptoms and allowed Oscar to return to contact sports. An athlete in the future might not be as lucky.

The school was also able to avoid an expensive legal fight and the threat of a million dollar judgment due to its broad shield of immunity. Surprisingly, ImPACT's service agreement does provide for a pretty customer-friendly indemnification agreement,[20] though triggering the clause may be a difficult task. ImPACT will indemnify and hold harmless a customer — including paying for all damages and attorney's fees — if a third party is able to prove his/her claims are a result of ImPACT's negligence or willful misconduct. This may, however, allow ImPACT to shift the blame to the person administering the test, or in the very least, open the door to the empty-chair defense.

As ImPACT notes, its system is not to be used as the sole indicator of whether an athlete can return-to-play. No machine should replace the clinical judgment of a skilled athletic trainer or medical professional. Although Oscar suffered short-term serious injuries, the safety valves in place -- via the school district and ImPACT -- prevented this case from turning into a complete tragedy.

Update: At presstime, the parties filed a notice with the court stating that the parties had reached a settlement. The terms of the settlement are currently unknown.


[12] Immediate Post-Concussion Assessment and Cognitive Testing

[13] See Rhode Island's School and Youth Programs Concussion Act ("School districts are encouraged to have all student athletes baseline or "impact" tested.)

[14] Quoting from Current Sports Medicine Reports, a review of research on ImPACT.

[15] The following factual allegations are a summary of the AT's injury report, the plaintiff's second amended complaint and the factual allegations in Defendant's motion for summary judgment.

[16] Oscar Cordova, Jr. et al v. Mission United School Dist. et al. Cause No. C-2436-11-G, 370th Judicial Dist. of Hidalgo County, Texas.

[17] The complaint does not list specific counts, but it appears that the claims are based on failure to warn.

[18] The plaintiffs are citizens of Texas and ImPACT is a citizen of Pennsylvania.

[19] ImPACT also asserts that Oscar's parent's claim for medical expenses are barred by the two-year statute of limitations — this will likely be a successful argument.

[20] 7.1 Indemnification by ImPACT: ImPACT hereby agrees to indemnify and hold harmless Customer from and against all damages, settlement amounts, costs and expenses (including reasonable attorney's fees) that Customer may be required to pay to third parties to the extent such damages, settlement amounts, costs and expenses are attributable to claims: (a) resulting from the negligence or willful misconduct of ImPACT...

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News Briefs

Tennessee Will Keep Nonsectarian Prayer before Football Games

The University of Tennessee and the Freedom From Religion Foundation have reached a compromise when it comes to clergy members offering a prayer before home football games. The practice will continue since the prayers carefully worded and do not show a preference for one religion over another. Chancellor Jimmy Cheek, who led Tennessee’s effort on the matter, changed the policy after the Foundation complained that the traditional prayer offered before games was “exclusive” and violated a 1997 U.S. 6th Circuit Court of Appeals decision in Chaudhuri vs. State of Tennessee, which struck down sectarian prayers at public universities.

F1 Race Organizer Sues Former Web Host over Unauthorized Email Blast

Organizers of the F1 Circuit of the Americas in Austin, Texas have sued a Dallas-based company, Rocket Red, in state court, alleging that the defendant took a subscriber list of 12,000 email addresses and sent out an unauthorized message last month. The email message, which was titled “Must See — Circuit of the Americas History Video!”, included a link to a YouTube video. The video, according to the Austin America Statesman, showed “former circuit partner Tavo Hellmund talking during several press conferences and interviews.” In a statement, COTA claimed that “the unauthorized email has caused COTA’s subscribers to believe that COTA is violating the law, the terms of its privacy policy and the express representations on its website. The inference is extremely damaging to COTA’s reputation and goodwill and will likely reduce the effectiveness of subsequent COTA mailings using its subscriber list.”

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Vikings’ Warren Appointed to the Board of Grand Canyon Education

Minnesota Vikings Vice President of Legal Affairs and Chief Administrative Officer Kevin Warren has been appointed to the board of Grand Canyon Education Inc., parent company of Grand Canyon University in Phoenix. Warren graduated from the school in 1986. While there, he also played on the GCU basketball team and was recently inducted in to the GCU Athletics Hall of Fame. Warren earned his law degree from the University of Notre Dame School of Law.

Consent Decree Mandates Equal Scheduling among Indiana’s Girls and Boys Prep Basketball Teams

A federal judge has approved a consent decree in which 10 high schools in Southeastern Indiana agreed to schedule girls and boys basketball games equally on Friday and Saturday nights, which could have far-reaching implications in the basketball-crazed state, according to attorney William Groth. Groth, who represented former girls basketball coach Amber Parker in her Title IX lawsuit against Franklin County Community School Corp, told the media that the decision sets a solid legal precedent across the 7th U.S. Circuit Court of Appeals, since a panel of judges in the 7th Circuit ruled earlier this year that equal scheduling for both genders is required under Title IX. That decision “sent a clear message not only to the lower federal courts, but to all high school athletic directors that Title IX requires equality in all phases of high school athletics, including the scheduling of athletic contests,” Groth told the Associated Press. Marcia D. Greenberger, co-president of the National Women's Law Center, called the settlement “a great victory for the Indiana girls affected by their school's unfair scheduling practices. It is simply unacceptable that as standard operating procedure a school would consistently prioritize boys' athletics schedules over that of the girls. This case sends a strong reminder to all schools that they must treat girls fairly in all aspects of athletics."

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Settlement Reached Between College and Basketball Coach

A settlement has been reached between a basketball coach, who sued her employer -- Riverside Community College District, a now-retired athletic director and other athletic department officials. Plaintiff Alicia Berber, who alleged sexual harassment, discrimination on the basis of her ethnicity and a hostile work environment, has reportedly received a $250,000 settlement. She will also continue to coach of the women's basketball team at Riverside City College and teach on a part-time basis.

Basketball Player’s Father Sues School District

The father of Missouri high school basketball player has sued the school district in which his daughter competed, alleging racial discrimination, harassment, retaliation and civil rights violations. Plaintiff Fred Lane alleged that his daughter, Cloe, was “swept off her feet” on a team-sponsored rafting trip and that no one came to her aid. He also charged that a white player made an Internet video in which Lane’s face and others were superimposed over cartoon images of monkeys in a video called a Monk-e-Gram. The defendant coaches allegedly thought the video was funny and showed it to their respective classes. The school has countered that Lane never complained about the incidents until his daughter was benched several months later. “I want to stress that because someone files a lawsuit citing racial discrimination and harassment doesn’t necessarily mean that it is true,” Blue Springs district activities director Mark Bubalo said in a statement. The Lanes are represented in the case by Gene Graham of the Independence-based law firm White, Allinder, Graham, Buckley & Carr.

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Sports Litigation Alert is a bi-monthly publication of Hackney Publications. Copyright 2012. All Rights Reserved.

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