Sports Litigation Alert
Volume 17, Issue 22 November 20, 2020


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Table of Contents

Case Summaries

Articles

News Briefs

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:


Susan B. Foster, Ph.D.
Expertise: Negligence in coaching, refereeing, physical education, event/facility management; FLSA & internships; Risk management/safety audits for high school, college, recreational sports, and smaller professional sport venues
(813) 389-4282

Case Summaries

AD’s Race Discrimination Claim Falls Short as Court Deems Evidence Circumstantial

By Michael A. Ross, MS

In September 2020, the United States District Court for the Northern District of Alabama, Southern Division granted summary judgement on behalf of the defendant, the Birmingham Board of Education, while dismissing with prejudice all claims brought forth by Mr. Alfonso Johnson, the plaintiff. The plaintiff would bring forth two claims in which the District Court would consider and analyze. The first claim would be a race discrimination claim, and the second being recognized as a retaliation claim against the said defendant after the plaintiff’s job had been terminated. Both claims by the plaintiff would be analyzed by the court utilizing a three-part framework to establish if summary judgement, proposed by the defendant, could be overturned. The eventual verdict, after considering all evidence and testimony as it was provided to the court, would result in the court granting summary judgement as proposed by the board.

Factual Background

Johnson began his athletic advisory duties in a volunteer capacity and was paid by the Birmingham Athletic Partnership, a local nonprofit, to fill the vacant position resulting from a prior State Board mandated staff restructuring and reduction initiative. While serving in this capacity, Johnson was not employed or provided direction or supervision by the Board. At a later date, 2014, the Board hired Johnson as the official Athletic Director. Johnson would be directly supervised by the Board’s Chief Operations Officer (COO). The initial COO was Colonel Ronnie Leonard and would later be replaced by Dr. Matthew Alexander, both of which are listed as African American. Johnson would also work under Board Superintendent Dr. Kelley Castlin-Gacutan, who is listed as an African American, and Chief of Staff Steve Zimmerman, who is listed as white.

In 2016, Dr. Alexander would propose to the superintendent that Johnson’s employment be terminated because in the following year he would meet the minimum requirements to be considered a tenured faculty member for those who were listed as non-teaching employees. Dr. Gacutan, in agreeance with the proposal by Dr. Alexander, provided reasoning and rationale to justify this motion set forth against the employment of Mr. Johnson in which the Board would consider when voting on the verdict. Dr. Gacutan would provide reasoning depicting Mr. Johnson’s ineffective communication skills as deemed necessary to retain employment, the upcoming achievement of non-probationary status deeming him a tenured non-teaching staff member and provided examples of Mr. Johnson’s inability to meet various established deadlines. It is noted that the Board who voted to terminate Mr. Johnson’s employment consisted of eight black members and one white member.

Shown on record, Mr. Johnson received a reprimand via Colonel Leonard in 2015 after an incident between Johnson and Steve Savarese, the executive director of the Alabama High School Athletic Association (AHSSA). Johnson would later address this incident as overblown and ensure through testimony that there were no hard feelings between he and Mr. Savarese. Mr. Johnson would also suggest that he was assured by Colonel Leonard that there would be no reprimand based on this interaction and that the only reason the actual reprimand did occur was a direct result from Mr. Zimmerman pressuring Colonel Leonard to act in such a manner.

In 2016, Dr Alexander would issue Mr. Johnson another reprimand for sending an email to himself, additional senior staff members and a Board-hired contractor. The issue addressed in the email was directed at the attached Board-hired contractor questioning the contractor’s quality of work on the Board’s athletic fields while also accusing him of trying to fight a Board employee. When addressed about this incident, Mr. Johnson stated he did not mean to attach the contractor to the email. This occurred because he did not understand the difference between the Reply and Reply All function available within the email platform.

Johnson was also documented on multiple occasions to have received reprimands for failing to meet deadlines established and requested by his direct and indirect supervisors that were found within the duties of his position. Johnson would respond to these claims by saying the established timeframe to accomplish the tasks that had been issued to him were unrealistic and unachievable.

The last area warranting additional consideration can be identified through the multiple and public claims that Mr. Johnson states he made it known that the Board-hired contractors performed lower quality work at schools that were known to be predominantly black. It is noted that both aforementioned COOs were in charge and present during these meeting in which these claims were made on multiple occasions. It is also of record through Mr. Johnson’s testimony that multiple school principals and Mr. Zimmerman were present at least once when these claims were made public. Mr. Johnson stated that making these public claims addressing the racial inequality that was occurring was what ultimately led to the termination of his employment.

Case Analysis and Key Factors

The court addresses two claims made by Mr. Johnson; (1) the Board’s termination of his employment was an act of unlawful retaliation (“retaliation claim”) and (2) the board discriminated against him and terminated his employment because of his race (“race discrimination claim”). The court would utilize a three-pronged framework approach when evaluating these claims.

Regarding the retaliation claim set forth by Mr. Johnson, he would need to accomplish the following to justify his claim; (1) prove a prima facie case, (2) the Board offers a nondiscriminatory reason and (3) prove pretext. Thus, Mr. Johnson must prove that the Board fired him based on statutorily protected expression or that his position was terminated as a result of him expressing this protected right. By nature of Mr. Johnson’s claim, the quality of the work being conducted by the contactors and not the hiring practices of the board are under question. Based on the verbiage of Title VII and the evaluation components utilized by the court to address Mr. Johnson’s retaliation claim, the quality of work conducted by the contractors is outside the scope of the court and does not question or provide reasoning to question the racial hiring practices of the board itself. Regarding prima fasci and the occurrence of pretext, Mr. Johnson could not provide evidence to support either of these issues because the Board provided documentation of their reasoning for firing Johnson that was not race related and displayed a more operations and financial reasoning in nature. These facts, of course, referring to Mr. Johnson getting closer to being awarded non-probationary status and the aforementioned reprimands he had acquired over the years. Because of these findings, Mr. Johnson’s claim is found to be not actionable and fails as a matter of law while also failing to provide or achieve substantial evidence to meet the required burden of proof bestowed upon him.

Regarding the racial discrimination claim, Mr. Johnson was granted the burden of proving that racial factors existed as the core reason his employment was terminated. To avoid summary judgement granted by the court, Johnson would need to provide enough evidence supporting his claim. Similar to the three-part framework used to evaluate the retaliation claim, Johnson could utilize the burden-shifting framework established in McDonnel Douglas Corp. v. Green, 411 U.S. 792, 800, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). Here Mr. Johnson has the burden to prove a prima fascia based on discrimination is present through the following: (1) that he belongs to a protected class, (2) that he faced an adverse employment action, (3) that he was qualified to perform the job and (4) that his employer treated “similarly situated” employees outside of his class more favorably. This framework also allows Mr. Johnson the opportunity to provide any circumstantial evidence that demonstrates a “convincing mosaic” warranting additional consideration towards intentional or targeted discrimination.

The evidence and claims provided by Mr. Johnson remain circumstantial, can be described as biased and somewhat questionable when evaluating their validity and accuracy as well. The court finds that the evidence brought forth and provided by Mr. Johnson does not meet the burden of proof warranted to justify an inference of discrimination. With a lack of pertinent evidence, Mr. Johnson was not able to establish prima facie case of racial discrimination. Furthermore, many of those who ultimately decided to terminate Mr. Johnson’s position were identified as being within the same class as himself. None of the evidence provided by Mr. Johnson was sound enough to refute the aforementioned reasons the board listed and documented to justify terminating Mr. Johnson’s position which were established by the court as legitimate and nondiscriminatory. Based on these findings and a lack of evidence to oppose the motion set forth by the board against Mr. Johnson’s claims, the court granted summary judgement.

Application

Stemming from the occurrences and justifications of this case, the need to provide claims based on sound and clear issues is relevant and documented. Differences of opinion and limited testimony do not provide enough concrete evidence to avoid a potential motion of summary judgement or offer justifiable claims warranting further investigation and consideration by the court. It is possible to see future cases of this nature as the influence of Covid-19 has played a drastic impact on the financial wellbeing of many institutions and the potential for employment termination is higher than in less recent times. Documentation of any issues found within one’s employment responsibilities and justification towards hiring and firing practices are also highly suggested to avoid claims made against those charged with governing over a given group or institution.

References

Johnson v. Birmingham Bd. of Educ., No. 2:18-CV-1262-CLM, 2020 WL 5203979, at *1 (N.D. Ala. Sept. 1, 2020)

Michael A. Ross is an Assistant Professor of Sport Management at Shorter University and a PhD student at Troy University specializing in research related to youth sport studies, leadership, social media policies and procedures within athletics and participation motivations in sport and recreation.

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Appeals Court Opens the Door for a Professional Soccer Stadium in Miami

By Robert J. Romano, JD LLM of St. John’s University

The Miami Freedom Park, LLC, a sports business group led by businessman Jorge Mas and international soccer icon David Beckham, overcame what it hopes is the last legal hurdle to continue moving forward with a plan to build a billion-dollar soccer complex known as Miami Freedom Park. The proposed site is where Melreese Country Club is currently located, seventy-three-acres of city-owned property located at 1400 Northwest 37th Avenue, Miami, Florida.

When the City of Miami and MFP began discussing this project in 2018, it attracted significant opposition due to the fact that, a) the proposed site included the only public golf course in the City of Miami, a popular venue for residents and for a wide variety of charitable activities, b) community activists were outspoken in asserting that MFP is trying to capitalize on the relatively cheap price of the land located in a poorer, historically black section of the city, and that c) a significant portion of the costs for the project will be absorbed by the taxpayers for both the land and construction of the stadium, concerns similar to those the citizens of Miami confronted when a new stadium was built for Major League Baseball’s Miami Marlins.

One prominent Miami resident and taxpayer, multi-millionaire Bruce C. Matheson, asserted that the stadium will destroy the neighborhood's quality of life, arguing that, "Twenty-five thousand people entering that neighborhood will wreak havoc with noise, traffic, and pedestrian congestion, because it’s not only a proposed soccer stadium, it’s a proposed concert stadium."[1] Similar concerns were echoed by other neighborhood residents and land owners at various city meetings and public hearings.

However, Matheson went further than just voicing his objections, he filed a lawsuit in state court to end the stadium development project altogether. Per his lawsuit, Matheson alleged that the $9 million MFP offered to pay for the land was below market value and that the county could have demanded much more for the property if the proper public bidding criteria were followed. Specifically, Matheson’s suit claimed that granting MFP publicly owned land in a no-bid deal was a violation of law and that the ballot initiative surrounding the proposed stadium and related commercial development was therefore invalidated because of such. On March 21, 2019, however, the trial court did not agree with Matheson’s assertions and granted the City's motion for summary judgment before entering a final judgment in favor of both the City of Miami and MFP.

Undeterred, Matheson continued his fight by filing an appeal with the Court of Appeals of Florida, 3rd District. Per the appeal, Matheson claimed that (a) the trial court applied the wrong standard for reviewing a ballot question challenge[2]; (b) the ballot question camouflaged the chief purpose of the charter amendment, which was to waive the existing charter protections of competitive bidding and fair market value; and (c) the ballot question was defective because the proposed terms were misleading as presented.[3]

The Appeals Court, however, was not persuaded, and the three-judge panel affirmed the lower court’s decision, holding that Matheson’s lawsuit failed to demonstrate that the ballot summary was clearly and conclusively defective and in addition, the ballot summary gave fair notice of its chief purpose and therefore was not misleading to the public.[4]

With no more legal challenges, and since the citizens of Miami previously approved through a referendum vote that the City of Miami can rent the Melreese land for the project, MFP has proposed a lease to the City of Miami which includes the following provisions:

  • A 99-year lease with annual rent payments to the City of Miami of no less than $3.5 million per year, with the total amount being based on a third-party fair-market-value appraisal;
  • The creation of a 58-acre public park and 11 soccer fields;
  • Payment of the full cost of remediation of the property to permit for public use of the park;       
  • The construction of Inter Miami CF's home stadium, entertainment and retail space, office tech hub and hotel at no cost to city taxpayers; 
  • Living-wage salary for employees;   
  • A commitment to complete creation of the public park at the same time or prior to completing construction of the stadium.[5]        

Additionally, MFP will provide, through what is being called a community benefits agreement, $5 million to the City of Miami for a Riverwalk/Baywalk project, $20 million for park maintenance and free access to the soccer fields at Miami Freedom Park for City of Miami youth.[6] The new stadium is scheduled to be completed by the 2021 season, however the additional community benefits will be finalized over the course of the next several years. The draft lease, which still needs the approval of the City, can be found on the Miami Freedom Park website, together with artist renderings of the final project.

[1] https://www.miaminewtimes.com/news/wealthy-miami-heir-bruce-matheson-sues-to-kill-david-beckham-soccer-stadium-deal-9514392

[2] MFP position was that Matheson failed to preserve the argument that the trial court committed reversible error in applying the accuracy test to the referendum. Matheson contends that the accuracy test requires a challenger only to prove that the summary either was not "clear and unambiguous," or was misleading (a disjunctive rather than conjunctive burden), rather than both of these alleged deficiencies.

[3] 2020 Fla. App. LEXIS 11122

[4] 2020 Fla. App. LEXIS 11122

[5] https://miamifreedompark.com

[6] https://www.miaminewtimes.com/news/david-beckhams-stadium-plans-met-with-skepticism-at-first-overtown-meeting-9356613

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District Court Sanctions DNA Sports Performance Lab

By Jeff Birren, Senior Writer

DNA Sports Performance Lab, Inc. and its owner, Neiman Nix, (collectively “DNA Sports”) have been battling Major League Baseball (“MLB”) for its ban of products that contain IGH-1, a performance enhancing substance. These pages looked at the on-going litigation in “Sports Performance Lab Underperforms in Court Battle with MLB” (SLA, V. 17, #18 (9-25-2)). The U.S. District Court in San Francisco had just dismissed the claims brought against the MLB Players Association (“MLBPA”) and scheduled a similar motion brought by MLB. The Court ended with the statement that “[O]nce the pleadings are settled (or abandoned), a further order will address sanctions” (Id.).

Three days later, DNA Sports filed a notice of voluntary dismissal against the defendants. MLB then filed a motion for sanctions, seeking $33,407.17 to cover the cost of a single attorney performing 39.5 hours of work from April 2020 through July 2020. MLBPA moved to recover attorneys’ fees of $104,039.08 for 162.5 hours of work from January 2020 through August 2020. The Court held the hearing on those motions on September 24, 2020 “telephonically due to COVID-19.” The Court ruled on October 27, 2020 and it was not a happy occasion for DNA Sports (DNA Sports Performance Lab, Inc, and Neiman Nix v. Major League Baseball; MLB Advanced Media LP; Major League Baseball Players Association; and Major League Baseball Enterprises, Inc., N.D. Cal, Case No. 20-00546 WHA, Order Granting Motion For Attorney’s Fees (10-27-20)).

The Order stated that on “a Rule 11 motion, we consider all of the circumstances, not just the allegations of the complaint” (Id. at 2). What followed was “DNA Sports’ Harassment of the Baseball League.” The Court recounted the history of DNA Sports prior cases against MLB, filed in various federal and state courts. The Court then reviewed what it called “DNA Sports’ Pursuit of the Baseball Union.” Next came the Court’s review of the “Present Suit. Only on page nine did the “Analysis” begin.

The motions sought monetary sanctions against DNA Sports’ counsel, Lance Reich, under Rule 11 and against DNA Sports pursuant to the Court’s inherent authority, seeking to hold those two “jointly and severally liable for fees and expenses” (Id. at 9). The Court found “DNA Sports’ complaint baseless. That, along with finding Reich failed to conduct an adequate investigation, supports Rule 11 sanctions. And, such baselessness in addition to bad faith, supports inherent sanction of DBA Sports itself” (Id. at 10).

To allege a valid Lanham Act claim, a plaintiff must show that the defendants “made a false statement of fact in a commercial advertisement” whether of its product or that of a competitor; that the false statement “actually and materially deceived its audience” and that the plaintiff had been injured by the statement. The state law false advertising claim “requires a showing that the defendants participated in or had control over the untrue or misleading advertisements” (Id.). However, DNA Sports “admit that their product contain(s) naturally-occurring IGF-1. They concede that the league and the union have banned IGF-1” and that an independent company did the testing. Thus, they brought with claim “without ensuring that they sued the right defendants” (Id.). “Such baselessness supports an inference of improper motive” (Id. at 11).

The Court further stated that MLB’s prior motion for sanctions would also have been granted. The complaint had “recapitulated the misdeeds of the league’s” “prior investigations that inspired” two of DNA Sports’ earlier lawsuits which were previously dismissed “by prior rulings.” Although the plaintiffs claimed that the public statement “essentially banned” them from ever working again in a “league-related capacity” they had previously admitted that they had “‘never sold its supplements to league players on account of a non-competition agreement’” (Id., emphasis in the original). DNA Sports claimed a loss of good will compared to league-licensed products yet “failed to show how the targeted products” compete with the plaintiffs or if they “contain a banned substance.” They also failed to show how the use of these logos “the alleged commercial speech here—diverted sales from DNA Sports to these specific products and how this speech was false. Without these elements, their allegations against the league are baseless” (Id.).

The second point was that the Court “finds that Attorney Reich failed to reasonably investigate these claims” (Id.). Reich and DNA Sports alleged that they “consulted with several experts” as to whether the league-endorsed products contained natural IGF-1, but they “did not test these products for IGF-1 but instead relied on what it and its experts deemed ‘common sense’” (Id. at 12). Even “a cursory investigation into the Lanham Act, false advertising, and unfair competition claims” would have either revealed the missing elements, thus saving “DNA Sports’ complaint, or at least, save the league and the union the trouble of motion practice. Attorney Reich failed in this regard” (Id.).

Finally, the Court “finds DNA Sports filed its complaint to harass the league and the union. DNA Sports’ history of litigation demonstrates both that this suit is brought in bad faith to vex and that dismissal alone will not dissuade DNA Sports from trying again.” This was “the sixth suit arising out of the same original circumstances against the league” and “prior dismissals and sanctions have not tempered DNA Sports’ vendetta against the league” (Id., emphasis in the original). After each dismissal, “DNA Sports has simply developed a different theory in a different court based on the same facts and continued its pursuit of the league.” A prior court had imposed sanctions but as “DNA Sports’ litigation history demonstrates, however, these sanctions have not fazed DNA Sports.” Instead, it “has continued to sue the league, affiliated entities, and now the union, despite the outstanding monetary sanction for troublesome lawyering” and thus “dismissal alone with not deter DNA Sports from filing further baseless and harassing suits” (Id.).

Moreover, DNA Sports had turned down an offer from MLB that it would withdraw its motion for sanctions if DNA Sports would dismiss with prejudice “all outstanding litigation against MLB defendants and agree to bring no further litigation against them” (Id., at 13). DNA Sports and Reich refused to dismiss the “outstanding cases against the league, proving that DNA Sports does not intend to change its conduct.” In light of DNA Sports’ “persistence, it may be that no amount of sanctions will deter it from continuing its crusade. The requested amount of fees, however, will at least compensate the union for the harm done here.” As this was their sixth case against MLB, “a full award is appropriate” (Id.).

The Court thus granted the motions for attorneys’ fees in full, granting $104,039.08 to the MLBPA and $33,407.17 to MLB, and both are due by November 20, 2020. However, since this was “Reich’s first appearance before the undersigned, and given the importance of not dissuading representation of difficult clients” the Order “will be held in abeyance to see the extent to which he engages in ongoing harassment” (Id.). Mr. Reich has some thinking to do.

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Sixth Circuit Affirms Dismissal of Title IX Claim against Kent State, but Reverse Other Claims Against Coach

In a majority decision, the 6th U.S. Circuit Court of Appeals has affirmed in part and reversed in part the ruling of a district court, which dismissed the claim of a student athlete at Kent State University, who alleged that she was raped and that her school and coach, the defendants, were liable for the alleged violations of U.S. Constitution and Title IX.

By way of background plaintiff Lauren Kesterson told her coach, Karen Linder, that Linder's son had raped her. Linder never notified anyone at Kent State, according to the complaint. The university learned about the assault two years later when Kesterson made a complaint to the school's Title IX office. An investigation of the complaint led to Linder's resignation. Kesterson sued Kent State, Linder, and another coach, Eric Oakley, for violating the free-speech-retaliation protections of the First (and Fourteenth) Amendments, the equal-protection guarantees of the Fourteenth Amendment, and Title IX.

The district court granted summary judgment to the defendants.

The plaintiff appealed.

The court first considered the Constitutional claims against Linder. “Kesterson believes Linder violated her First Amendment right to speak freely and her Fourteenth Amendment right to equal protection of the law,” wrote the court. “Linder faces no liability unless she violated a Constitutional right that is clearly established. Pearson v. Callahan, 555 U.S. 223, 232, 129 S. Ct. 808, 172 L. Ed. 2d 565 (2009). Only when ‘existing precedent’ places the rule at issue ‘beyond debate’ will we consider the law ‘clearly established.’ Ashcroft v. al-Kidd, 563 U.S. 731, 741, 131 S. Ct. 2074, 179 L. Ed. 2d 1149 (2011). That does not mean we need a case ‘directly on point.’ Id. A key consideration is notice. Unless a reasonable official, confronted with the same facts, would know that the challenged actions violate the law, qualified immunity bars liability. District of Columbia v. Wesby, 138 S. Ct. 577, 590, 199 L. Ed. 2d 453 (2018).

“Assessed in the light cast by this standard, one of Kesterson's constitutional claims succeeds at this stage and two fail as a matter of law.”

The court began with the successful claim, involving the First Amendment retaliation challenge.

“To show retaliation, Kesterson must establish (1) that the First Amendment protects her speech, (2) that she suffered an injury that would deter a person of ‘ordinary firmness’ from continuing to speak out, and (3) that Linder's actions were motivated at least in part by Kesterson's speech. Jenkins v. Rock Hill Local Sch. Dist., 513 F.3d 580, 585-86 (6th Cir. 2008).”

The plaintiff satisfied the first element. The court then highlighted the actions of the coach upon Kesterson, such as “Linder chastising her in front of another coach for becoming emotional during a practice. Linder also removed Kesterson from her starting shortstop position in favor of a younger player and limited her playing time. Then there's the fact that Kesterson had to attend multiple events at the Linder home, where (the coach’s son) lived at the time. Kesterson claims Linder made her go even after Kesterson objected that she felt uncomfortable going there. Whether or not these actions would deter an ordinarily person from speaking out turns on a number of things: Is this what really happened? Is Kesterson or Linder more credible? How do the true facts line up with the dynamics of a player-coach relationship? See Fritz v. Charter Twp of Comstock, 592 F.3d 718, 724 (6th Cir. 2010). On the record so far, these are questions best answered by a jury rather than a panel of three judges.” The court wrote that the remaining questions raised on appeal that are relevant to Linder would also be better left for “a jury to decide.”

‘Appropriate Persons’ Test Comes into Play

Turning to the Title IX claim against Kent State, the court noted that Kesterson claims that Kent State violated Title IX in the way it handled her sexual assault report and turned to relevant case law.

“In certain limited circumstances," Davis v. Monroe County Board of Education, 526 U.S. 629, 643, 119 S. Ct. 1661, 143 L. Ed. 2d 839 (1999), a "federally funded university may be directly liable under Title IX for its inadequate response to allegations of student-on-student harassment," Doe v. Univ. of Ky., 959 F.3d 246, 250 (6th Cir. 2020). Schools face liability when they (1) have "actual knowledge" of sexual harassment (2) that is "so severe, pervasive and objectively offensive" that it deprives the student of "educational opportunities or benefits" and (3) act with deliberate indifference to the problem. Davis, 526 U.S. at 650.

It added that Kent State “concedes that Kesterson suffered ‘objectively offensive’ sexual harassment. That leaves two questions: Did Kent State know about the alleged rape? And did it act with deliberate indifference in responding to it?

“Kent State learned about Kesterson's allegations when she reported them to the school's deputy Title IX coordinator in 2015. That's the case even though Kesterson told Linder and a few other Kent State employees before then. Only when an ‘appropriate person’ at a school knows about sexual discrimination does the school have ‘actual knowledge.’ Gebser v. Lago Vista Indep. Sch. Dist., 524 U.S. 274, 290, 118 S. Ct. 1989, 141 L. Ed. 2d 277 (1998); Stiles ex rel. D.S. v. Grainger County, 819 F.3d 834, 848 (6th Cir. 2016); Hill v. Cundiff, 797 F.3d 948, 971 (11th Cir. 2015). An appropriate person is someone who ‘at a minimum has authority to address the alleged discrimination . . . on the [school's] behalf.’ Gebser, 524 U.S. at 290.

“Erin Barton was that person. She was Kent State's deputy Title IX coordinator and counts as an ‘appropriate person.’ She had the authority to take corrective actions on Kent State's behalf to remedy the sexual discrimination Kesterson faced.

“Contrary to Kesterson's argument, the other employees she told lacked any similar powers. Yes, they could have aided her in getting access to helpful resources. And yes, they could have, and should have, reported her allegations to Kent State. But a university employee's ability to mitigate hardship or refer complaints does not make them an ‘appropriate person.’ See Hill, 797 F.3d at 971. Otherwise, every employee would qualify, and schools would face a form of vicarious liability that Title IX does not allow. See Davis, 526 U.S. at 640-41; Gebser, 524 U.S. at 288.”

The court continued, noting that “a school acts with ‘deliberate indifference’ when its reaction to sexual discrimination is ‘clearly unreasonable’ in light of what it knew. Davis, 526 U.S. at 648. Assessed against this standard, Kent State did not act unreasonably. Kesterson told Barton about the alleged rape on August 24, 2015. Barton started an investigation immediately after Kesterson's report. Four days later, Linder was forced to resign or face termination. And a week later, Kent State confirmed that Tucker was not enrolled for the upcoming semester.

“Kesterson counters that we should not apply the ‘appropriate person’ test here. But she argued the opposite below. That amounts to a forfeiture. Harvis v. Roadway Express, Inc., 923 F.2d 59, 61 (6th Cir. 1991). The argument is not persuasive anyway. She points out that in Davis, the case that articulated the standard for student-on-student harassment cases, the words "appropriate person" never appear. That's true, but that's because the school's actual knowledge wasn't at issue. Davis concerned whether a student could sue a school for its deliberate indifference to student-on-student sexual discrimination. 526 U.S. at 643. It adopted the elements of the test from Gebser (decided a year earlier), which dealt with a student's ability to sue a school when it acts with deliberate indifference to a teacher's harassment of a student. See Davis, 526 U.S. at 643, 650; Gebser, 524 U.S. at 290. Gebser of course discussed the ‘appropriate person’ requirement for actual knowledge at length. 524 U.S. at 290. At no point did Davis suggest it disagreed with that analysis or that it had developed a new standard. Every mention of ‘actual knowledge’ in the case is tied to district administrators, not school employees. See Davis, 526 U.S. at 647, 651, 654.

“Every circuit to consider the question agrees that plaintiffs alleging deliberate indifference to student-on-student harassment must satisfy the ‘appropriate person’ standard. Hill, 797 F.3d at 971; Reese v. Jefferson Sch. Dist. No. 14J, 208 F.3d 736, 739 (9th Cir. 2000); Murrell v. Sch. Dist. No. 1, 186 F.3d 1238, 1247 (10th Cir. 1999). We have said the same in dicta. Stiles, 819 F.3d at 848. And in our prior cases where we did not comment on the point, the parties either did not dispute the school's knowledge or did not introduce any evidence related to knowledge. See M.D. ex rel Deweese v. Bowling Green Indep. Sch. Dist., 709 F. App'x 775, 776-78 (6th Cir. 2017); Pahssen v. Merrill Cmty. Sch. Dist., 668 F.3d 356, 363-66 (6th Cir. 2012); Patterson 551 F.3d at 445-46; Winzer v. Sch. Dist. for City of Pontiac, 105 F. App'x 679, 681 (6th Cir. 2004); Vance v. Spencer Cty. Pub. Sch. Dist., 231 F.3d 253, 259 (6th Cir. 2000)”

Still, Kesterson maintained that Linder and the other employees she identified should count as "appropriate persons."

“But Kesterson offers no evidence that these individuals could act on Kent State's behalf. She instead says that the employees could have pointed her to school resources, and they all had an obligation to report her allegations. True. But that doesn't make these errors in judgment or violations of school policy the actions of Kent State or failures to respond by Kent State. An appropriate person is someone ‘high enough up the chain-of-command’ that her decision constitutes the school's decision. Hill, 797 F.3d at 971. That was not Linder or any of the other employees.

“Kesterson says that Kent State acted with deliberate indifference because its employees failed to follow the school's policy and made several mistakes during its investigation. But these kinds of errors do not amount to deliberate indifference by the school. Davis, 526 U.S. at 648; Doe, 959 F.3d at 252.”

Kesterson v. Kent State University et al; 6th Cir.; 345 F. Supp. 3d 855, 2018 U.S. Dist. LEXIS 188973; 7/23/20

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Sports Wagering — An Established Rhode Island Casino Game

By Tyler Charlton, Emory Law 3L

In November 1994, the voters of Rhode Island approved a constitutional provision designed to restrict gambling within the state. Under the state’s new constitutional provision, article 6, section 22, a majority of “electors voting in a statewide referendum” must authorize any new type, or types, of gambling. In addition, the provision stated that a majority of voters in the particular municipality must approve the legislation via a local referendum. Approximately 20 years later, this constitutional provision was amended to further restrict gambling by requiring a vote on any new gambling locations as well.

Even with the state’s constitutional mechanism in place, the Rhode Island General Assembly expanded gambling, in two, separate ways. In 2011 and 2016, legislation was passed that authorized “state-operated casino gaming” at Twin River-Lincoln Casino and Tiverton Casino Hotel (also owned by Twin River), respectively. Each act of legislation (collectively titled the Casino Gaming Acts) received the requisite number of votes and went into effect. In addition to the Casino Gaming Acts, Rhode Island’s General Assembly also passed the 2018 Sports Wagering Legislation and the 2019 Online Sports Wagering Legislation (collectively, the Sports Wagering Acts). The Sports Wagering Acts, however, did not proceed through the established process of voter approval via a state and local referendum. As such, their enactment became the basis of litigation. Specifically, Plaintiff Daniel Harrop alleged the Sports Wagering Acts violated the Rhode Island Constitution. For this reason, Plaintiff moved for summary judgment and sought a declaratory judgment to declare these acts as unconstitutional.

In response to Plaintiff’s motion, Defendants raised two objections to summary judgment. They were as follows: (1) Plaintiff’s claim is not justiciable; and (2) Plaintiff is estopped from challenging the constitutionality of article 6, section 22. As threshold issues, the Court individually addressed each objection prior to analyzing Plaintiff’s constitutional argument. The Court found neither argument persuasive.

With regard to justiciability, the Court articulated that two requirements must necessarily be met. The first requirement is that a plaintiff must have standing. Previously, the Court already found that Plaintiff had standing and consequently declined to revisit the issue. The second component requires that “the plaintiff ... have some ‘legal hypothesis which will entitle the plaintiff to real and articulable relief.’” Although such relief typically comes in the form of damages, the Court held there was a justiciable controversy because Plaintiff requested both declaratory and injunctive relief. Upon finding a justiciable controversy, the Court next considered the issue of estoppel. Here, the Court simply deferred to the holdings of the Rhode Island Supreme Court. Specifically, the (state’s) Supreme Court had never applied this estoppel doctrine in any context other than in administrative[7] and zoning matters.[8] As a result, the Court declined to extend the doctrine to the present matter.

After resolving the threshold issues, the Court moved to the principal arguments and considered the constitutionality of the Sports Wagering Acts. The Court used a two-step approach, which involved determining whether: (1) sports wagering is a type of casino gaming and (2) the 2012 and 2016 referenda gave Rhode Island voters “fair notice” that they were authorizing sports wagering. The Court also analyzed whether the 2019 Online Sports Wagering Legislation impermissibly expanded the locations of gambling.

In considering the first aspect of the constitutional issue, the Court determined that sports wagering constitutes a form of casino gaming. The Court arrived at this conclusion for two reasons. First, under the Casino Gaming Acts, casino gaming is explicitly defined to encompass “casino-style games played with ... equipment, for money.” Under the Sports Wagering Acts, sports wagering is clearly played with equipment and for money, which places it squarely within the definition of casino gaming. Secondarily, federal regulations explicitly provide that sports betting is included in Class III gaming. Because sports wagering is a type of Class III gaming, which is considered a form of casino gaming, sports betting was effectively authorized through approval of the Casino Gaming Acts.

Having determined that sports wagering falls within the definition of casino gaming, the Court proceeded to the second step of the analysis. As an initial matter, the Court determined that both the public referendum and ballots complied with statutory requirements. Next, the Court considered the fair notice requirement. In general, a referendum is required to accurately present the question or issue and apprise the citizen enough so they may make an intelligent and informed decision. However, fair notice does not necessarily mean that every detail or ramification is explained. Here, the Court held that the Referenda Questions and Handbooks utilized language indicating the list of table games in the legislation was non-exhaustive. As such, the provided definition of casino gaming did not preclude sports wagering and consequently provided “fair notice.” The Court also noted that voters are presumed to know the law. The Court determined voters were provided ample information to understand that sports wagering would be authorized through approval of the Casino Gaming Acts.

Finally, the Court analyzed a secondary constitutional issue created by the 2014 amendment to the constitutional provision. Plaintiff argued the 2019 Online Sports Wagering Legislation permitted gambling in various new locations through creation of a “virtual casino,” which consequently required voter approval under the Constitution. The Court, however, articulated that all sports wagers servers were located at either of the Twin River Facilities. As a result, no gambling activity occurred outside of legislatively approved locations and thus there was no constitutional violation.

In conclusion, the Court determined the Sports Wagering Acts were constitutional and dismissed Plaintiff’s motion for summary judgment.

Harrop v. R.I. Div. of Lotteries; R.I. Super. Ct.; No. PC-2019-5273, 2020 R.I. Super. LEXIS 45; 6/1/20

[7] Easton’s Point Ass’n v. Coastal Res. Mgmt. Council, 522 A.2d 199 (R.I. 1987).

[8] Russell v. Zoning Bd. of Review, 219 A.2d 475 (1966).

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Articles

Breach of Contract Lawsuit by Ex-Coach Holds Potentially Explosive Implications

By Gary J. Chester


Gary Chester

The one-count complaint filed by a former men’s basketball coach against North Carolina State University in the U.S. District Court in North Carolina in August is remarkably short on details. The former coach, Mark Gottfried, alleges that the university breached its contract with him when it stopped making monthly buyout payments to him in 2018. The complaint, Gottfried V. N.C. State, is sparse on factual allegations, even failing to set forth how much money N.C. State still owes Gottfried.[9]

But this seemingly innocuous civil litigation has the potential to be extremely contentious and hugely embarrassing to both parties and to college basketball. Gottfried, after all, was the first coach directly linked to a federal investigation into improper payments made to high school recruits.

The marriage between the parties was consummated in 2011 after N.C. State dispensed with head coach Sidney Lowe, a key player on the Wolfpack’s 1984 national title team who never led his alma mater to the NCAA tournament in five seasons.

N.C. State fell in love with Gottfried, who was a key assistant to Jim Harrick on UCLA’s 1995 championship team and had enjoyed successful head coaching runs at Murray State and Alabama. The marriage had a long honeymoon four consecutive seasons of at least 22 wins and two trips to the Sweet Sixteen — but it soured in two subsequent losing seasons. N.C. State showed Gottfried the door in 2017 after six years.

The Wolfpack finished 22-14 in 2014-2015, garnering a no. 8 seed in the NCAA tournament where they upset no. 1 seed Villanova before falling to Louisville, a no. 4 seed. Gottfried’s fortunes soured the following season, with the Wolfpack finishing 16-17. Beset by player transfers, the team struggled again in 2016-2017. Athletic Director Debbie Yow summoned Gottfried to her office in February 2017 and the university promptly announced that Gottfried would be leaving after the season with three years left on his contract.

A few weeks later, the parties allegedly entered into a Termination Agreement that required Gottfried to continue to coach through the end of the season and to actively seek another coaching job. (He is currently the head coach at Cal State Northridge.) N.C. State allegedly agreed to make monthly buyout payments until April 2020. The university paid several installments before allegedly halting payments in August 2018. Gottfried’s complaint states the following:

22. On May 24, 2018, over 14 months after entering into the Termination Agreement with Gottfried, and having accepted the benefit of Gottfried’s performance during that time, N.C. State sent Gottfried a purported “Notice of Intent to Discharge for Cause.” The Notice stated that Coach Gottfried had “induced the university to enter into payment arrangements” that were memorialized in the Termination Agreement. The Notice outlined the process for administrative review of the proposed action.

23. N.C. State’s allegations of “inducement” were false. The Termination Agreement was conceived, drafted, reviewed, and approved by N.C. State and its attorneys. Gottfried timely commenced the administrative review process.

The complaint and the circumstances behind the Termination Agreement raise a multitude of questions. First, why did the parties enter into the Termination Agreement in 2017 even though Gottfried’s employment contract already addressed this issue? The university’s reported explanation that it wanted to assure that Gottfried finished the regular season seems hollow.

Second, what did the university mean when it asserted that Gottfried (wrongly) induced it to enter into the Termination Agreement in 2017? And finally, on what legal and factual basis did N.C. State claim in 2018 that Gottfried was discharged “for cause?”

The answers may lie within the FBI and NCAA investigations into corruption in college basketball. It has been alleged that basketball coaches at several major programs used their relationships with athletic apparel companies to make illicit payments to high school recruits.

As of January, the NCAA had delivered Notices of Allegations directly tied to the FBI investigation to at least five schools: N.C. StateKansasOklahoma State, USC and Texas Christian. Other schools reportedly under investigation include Auburn, Louisville, LSU, Arizona and Alabama.[10]

The allegations against N.C. State concern a cash payment of $40,000 to five-star high school baller Dennis Smith, Jr. (Smith, a guard with the New York Knicks, played one season at N.C. State and then declared himself eligible for the NBA draft.) The payment was reportedly made by T.J. Gassnola, who started an AAU program for Adidas in Massachusetts in 2002 and operated it until he was caught up in the FBI’s probe. Gassnola cooperated with the investigation after the FBI announced the arrest of four college basketball assistant coaches and three Adidas-connected individuals for fraud in September 2017.

Gassnola testified in one of the federal college basketball corruption trials that he flew to Raleigh, N.C., in November 2015 and gave the money to Gottfried’s assistant coach, Orlando Early, who was supposed to pass it to Shawn Farmer, a trainer for Smith and intermediary between the family and N.C. State. NCAA Enforcement obtained phone records for the involved parties and noted consistent communication around the time of the transaction between Gassnola and Early. On November 2, 2015, the day Gassnola said he delivered the money to Early’s house, Gassnola had a six-minute phone conversation with Gottfried.[11]

In March 2019, Gottfried became the first head coach to be implicated in the FBI’s investigation. According to a disclosure from federal prosecutors, the attorney for Early said his client stated that Gottfried on two occasions gave him envelopes − containing what Early believed was cash − to deliver to Smith’s trainer to ensure he signed with the Wolfpack.

Smith's trainer, Shawn Farmer, was supposed to deliver the envelopes to Dennis Smith Sr., the father of the recruit.

These developments raise the possibility that Gottfried represented to the university during termination negotiations that he was not involved in any activities that might run afoul of NCAA rules. It also begs the question of whether N.C. State sensed in 2018 that it might be a target of the FBI and NCAA investigations that might have some merit and, therefore, asserted after-the-fact that it had cause for Gottfried’s termination.

But it doesn’t explain why the university was so motivated to keep Gottfried as head coach until the end of the 2016-2017 season that it renegotiated the termination terms of Gottfried’s contract.

The NCAA’s case against N.C. State will be resolved under the new Independent Accountability Resolution Process (IARP). The IARP calls for a hearing before an independent panel with outside advocates and investigators in the basic roles of defense (N.C. State) and prosecution (NCAA Enforcement). The IARP is an option for those institutions that prefer not to have the NCAA Committee on Infractions decide their case. However, one feature of the IARP is that the defendant waives any right to an appeal — a requirement that N.C. State could challenge in court.

The civil complaint filed on behalf of Gottfried says nothing of these underlying circumstances. For his part, Gottfried asserted in his Initial Response to NCAA Enforcement that he is “a compliance-oriented head coach” and that if Early made the alleged payments, he did so “directly against Gottfried’s direction.”[12]

Yet, Gottfried’s testimony at the NCAA hearing and in his civil action against N.C. State could prove very interesting. How often is it even remotely possible that a college coach might consider invoking the Fifth Amendment privilege?

[9]https://wwwcache.wralsportsfan.com/asset/colleges/ncsu/2020/09/01/19265992/dkt_1_Complaint-DMID1-5o1rwma24.pdf

[10] https://www.si.com/college/2020/01/31/ncaa-college-basketball-investigation-corruption

[11] https://www.si.com/college/2020/04/08/nc-state-ncaa-investigation-dennis-smith

[12] http://dig.abclocal.go.com/wtvd/docs/Gottfried response to NCAA 12.9.19.pdf

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College Sponsorships in the Time of Covid-19 and What to Consider

By Bruce B. Siegal

As 2020 comes to a close, COVID-19 has caused many intercollegiate athletics conferences across all three NCAA divisions to cancel or postpone events or modify competition schedules through the end of the calendar year, and likely beyond. This has created uncertainty among the NCAA, BCS, conferences and collegiate institutions regarding the available level of revenue streams, including NCAA and conference distributions, sponsorship and game-day revenue. Such revenue streams are critical to funding men’s and women’s sports.

The cancellation or postponement of events can dramatically impact the sponsor’s marketing and brand-building strategies, as well as programs designed around the launch of a new product or service. A sponsor’s ability to execute carefully planned marketing and branding strategies is diminished and the benefits expected for paying significant six to eight-figure sponsorship fees are placed in jeopardy. For example, if a sponsor’s asset portfolio includes game-day exposure, such as sponsored instant replay on the video board, signage or free giveaways, the value of those benefits may be lost.

As such, sponsorship partners may be seeking to cancel, modify, suspend, or re-negotiate payments under existing agreements. Maintaining these revenue streams from disruption may be possible depending on certain factual circumstances, the language and governing law of the contract, and the desire to preserve long term relationship between the collegiate institution and sponsor.

Agreement Review

Collegiate institutions and sponsors are evaluating how COVID-19 may impact each sponsorship agreement. In broad brush terms, review should include key applicable contractual provisions, including force majeure or canceled/altered event clauses and make-good rights; fee and payment breakdown throughout the term of the agreement; asset portfolio (typically a schedule outlining sponsor benefits and how they are exercised — game-day, digital media, etc.); and expiration date of the agreement and termination provisions.

Force Majeure

The force majeure clause is one contract provision in particular that is garnering attention. In the wake of the pandemic, the clause has evolved from a buried boilerplate provision to taking center stage in many contract discussions.

Force majeure means any objective circumstance that is unforeseeable, insurmountable, and unavoidable. Under certain conditions, force majeure excuses a party’s performance due to circumstances beyond that party’s control, and is raised as a defense to excuse a party’s obligation to perform.  Prior to the pandemic, parties may have felt comfortable using generalized, catch-all provisions such as “events beyond a party’s reasonable control,” or “acts of God,” believing that this language was sufficient.

As it turns out, catch-all provisions may be insufficient to enable a party’s nonperformance because of the varying impact of the pandemic and the fact it may hinder but not make performance impossible. In addition, states vary in their interpretation of both force majeure clauses and the legal doctrines of impossibility and frustration of purpose. In general, force majeure clauses should identify the specific event that prevented performance, as they may be narrowly construed by the courts to include only the events that are the same general kind as those specifically identified within the provision. However, even if the force majeure is applicable to excuse performance, such clauses as drafted do not necessarily provide workable solutions.

Moving forward, parties are contemplating force majeure clauses in ways that they never have previously due to COVID-19, and clearly identifying expectations during the contract drafting process will help to alleviate potential headaches and pitfalls down the road.

Taking the Longview

Under the circumstances of collegiate sporting events being cancelled, postponed and rescheduled almost on a daily basis, with certain exceptions, neither the sponsor nor the university is necessarily looking to blow up the entire relationship.

A notable exception, however, involves Under Armour. In June, Under Armour notified UCLA and U.C. Berkeley that it was ending its uniform and apparel supply sponsorships with the schools by invoking a force majeure clause. The schools continue to battle Under Armour over the termination of their respective 15 year, $280 million and 10 year, $85 million deals, in each of which the apparel maker claims termination (rather than re-structure to mitigate losses) was justified 1) due to the universities’ failure to perform their obligations; and 2) under a force majeure clause

Notwithstanding this, sponsorship agreements are often characterized by both parties as “partnerships” which establish valuable, long-term commercial relationships. It is not uncommon for both parties to seek to preserve these relationships during challenging times. Certainly, mutually agreed upon commercial solutions are usually preferred over litigation or arbitrations.

Collegiate institutions and sponsors are looking to maintain the partnership and create a path forward based on flexibility. For example, parties may meet and agree to allow variations relating to term extension, shifting or postponing payment obligations, and finding substitute benefits as they relate to the sponsor’s asset portfolio. And, if that fails, determine how refunds or payment obligations will be determined and valued.

Going forward, parties may construct or refine agreement provisions that provide options for resolution that preserve the ongoing partnership. For example, in the event that particular sponsorship benefits are no longer available to a sponsor due to circumstances beyond the control of either party, an “unavailable benefits” provision may obligate the parties to first consult in good faith to identify substitute or replacement sponsorship benefits which are of substantially equivalent or greater value than the unavailable sponsorship benefits, with such value to be determined by good faith negotiation and agreement by the parties. Should such good faith negotiations fail to render an agreement or such substitute benefits be inadequate to fully replace sponsorship benefits, the parties may agree to apply a pro-rata reduction formula to sponsorship fees payable under the agreement and/or extend the term so that the sponsor is able to capture benefits in the future at a fair value.

In addition, some schools and their sponsorship partners are looking at creative ways to develop new assets. They are creating new virtual elements to provide new sponsorship inventory that can be offered as make-goods because of lost games earlier in the season. For example, programs such as the Penn State “Virtual Valley Experience” and the Minnesota “Gopher Game-Day Live” offer unique content such as tailgate contexts, trivia and video through social media.

As COVID-19 continues to impact the collegiate world and as parties work to establish contingency plans, informed and open discussions should be promptly pursued by collegiate institutions and sponsors to protect their respective interests under various sponsorship and other agreements.


Bruce Siegal

Bruce B. Siegal is a member of Taylor English’s Intellectual Property and Entertainment, Sports and Media Departments, where he focuses on sports brand protection and enforcement, trademark licensing, contract negotiation, marketing and business operations. Formerly the SVP and General Counsel of the Collegiate Licensing Company / IMG College, Siegal has vast experience in trademark enforcement actions and anti-counterfeiting efforts. Contact him via email, bsiegal@taylorenglish.com.

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Concussion Litigation Roundup — the Year in Review

By Anthony Corleto, of Wilson Elser

The past year yielded a few decisions that provide guidance and insight for the defense of sports concussion cases.

NFL CLASS ACTION

For those who need a recap - former players claimed that the NFL mismanaged and hid what it knew about the long-term effects of concussions, “sub-concussive blows” and Chronic Traumatic Encephalopathy (CTE). The Eastern District of Pennsylvania approved class certification for settlement purposes in 2015 (In re NFL Players Concussion Injury Litig., 307 F.R.D. 351) and the Third Circuit Court of Appeals affirmed in 2016 (821 F.3d 410). The court’s key findings starkly illustrate the state of scientific knowledge in this area: (1) the study of CTE is nascent, and the symptoms of the disease, if any, are unknown; (2) medical research has not reliably determined which events make a person more likely to develop CTE; and (3) research has not determined what symptoms individuals with CTE typically suffer from while they are alive. In re NFL Players Concussion Injury Litig. 821 F.3d at 441. Based on the lack of scientific proof, District Court carefully observed that without certification and settlement, many former players would get nothing for their claims.

Since then, there’s been continued litigation about settlement administration, attorney’s fees and opt-out rights. We highlight some recent developments.

Spousal Opt-Out Rights: No Tag-a-Long

Martin v. Kan. City Chiefs Football Club, LLC (In re Nat'l Football League Players' Concussion Injury Litig.), 2019 U.S. Dist. LEXIS 652, 2*, No. 2:12-md-02323-AB (E.D. Pa. Jan. 3, 2019)

From 1988 to 1993, Christopher Martin played for the Kansas City Chiefs. He was married to Anita Martin from 1986 to 2006. In January 2014, Anita sued the Chiefs in Missouri state court for loss of consortium, claiming that their issues arose from post-concussion syndrome CTE and other issues related to multiple concussions Christopher suffered as a linebacker.

The Chiefs timely removed Martin’s lawsuit to the Western District of Missouri, and it was then consolidated with an action brought by other retired Chiefs, including Christopher. The consolidated case was transferred to the Eastern District of Pennsylvania and became part of the NFL Concussion MDL. The Chiefs moved to dismiss Anita’s Complaint because she is a member of the concussion class settlement and did not opt out. Anita argued that she “informally opted out”. Alternatively, she now moves to opt out.

The Court noted that although Christopher timely opted out of the Settlement, Anita did not, and she made no effort to opt out until the Chiefs moved to dismiss. Further, In 2017, three years after the opt-out period ended, Anita’s attorney participated in an opt-out organizational meeting, Martin responded to the Court’s Order for opt-outs to file a short form complaint, along with a motion to join the remand filed by her ex-husband and other plaintiffs.

The Court dismissed Anita’s suit, finding that she was a class member who did not effectively opt out of the Settlement. Her participation in the opt-out meeting 3 years after the opt-out period was not a “reasonable indication of a party's intent to opt out". In re Linerboard Antitrust Litig., 223 F.R.D. 357, 365 (E.D. Pa. 2004) (quoting In re Four Seasons Secs. Laws Litig., 493 F.2d 1288, 1291 (10th Cir. 1974)). "In order for a party to give a 'reasonable indication' of its intent to opt out, the party must perform some action that is unambiguously inconsistent with an intention to participate in the settlement." In re Processed Egg Prods. Antitrust Litig., 130 F. Supp. 3d 945, 952 (E.D. Pa. 2015). This action must take place during the opt-out period. See In re Deepwater Horizon, 819 F.3d 190, 196 (5th Cir. 2016) (refusing to consider post-opt-out period conduct in determining whether a class member had informally opted out).

Significantly, the Court observed that, although Anita’s case was consolidated with Christopher’s and he timely opted-out, the right to opt out must be exercised individually. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1024 (9th Cir. 1998). See also William Rubenstein et al., Newberg on Class Actions §9:49 (5th ed. 2013) ("The right to opt out in a Rule 23(b)(3) class action is considered an individual right."); Sloan v. Winn Dixie Raleigh, Inc., 25 F. App'x 197, 198 (4th Cir. 2002) (finding that a class representative could not opt out on behalf of individual class members). As such, Martin’s failure to opt-out of the Settlement was not cured by her ex-husband’s actions. The Court also found that Anita’s failure to opt-out was not due to excusable neglect.

Survivor’s Opt Out Rights: Derivative and Dependent

A.H. v. NFL (In re NFL Players' Concussion Injury Litig.) 2019 U.S. Dist. LEXIS 24088. *2, No. 2:12-md-02323-AB (E.D. Pa. Feb 14, 2019)

A brief recap about Aaron Hernandez. After three seasons with the New England Patriots, Hernandez was released him from his contract in 2013, following a grand jury indictment. In 2015 he was convicted of first-degree murder and sentenced to life in prison. In 2017, Hernandez committed suicide in prison, shortly after he was acquitted in a separate double homicide case. Later that year, the Boston University CTE lab performed a brain autopsy and diagnosed Hernandez with CTE.

Subsequently his minor daughter sued the NFL for loss of consortium, in Massachusetts state court. NFL timely removed the case to the U.S. District Court. The case was transferred to the Eastern District of Pennsylvania, within the NFL Concussion MDL. In July 2018, the daughter moved to remand back to Massachusetts state court. NFL responded with a motion to dismiss A.H.’s consortium claim because she is a member of the concussion class settlement and did not opt out. A.H. argued that the Court cannot decide claim preclusion (class inclusion) before addressing her motion to remand, because to do so would require a finding of fact: whether Aaron was “retired” as defined by the settlement class. In other words, when you challenge a court’s jurisdiction (the motion to remand) its power is limited.

Observing that dismissal on preclusion grounds is “not technically a judgment on the merits.” Hoffman v. Nordic Nats., Inc., 837 F.3d 272, 277 (3d. Cir. 2016) (citing Comm’r of Internal Revenue v. Sunnen, 333 U.S. 591, 597, 68 S. Ct. 715, 92 L. Ed. 898 (1948)), the court determined that it could decide the issue, regardless of the jurisdictional challenge (remand motion).

A plaintiff's claim is said to be precluded when there has been: "(1) a final judgment on the merits in a prior suit involving (2) the same parties or their privies and (3) a subsequent suit based on the same cause of action." Duhaney v. AG of the United States, 621 F.3d 340, 347 (3d Cir. 2010) (internal quotation marks omitted). "It is now settled that a judgment pursuant to a class settlement can bar later claims based on the allegations underlying the claims in the settled class action. This is true even though the precluded claim was not presented, and could not have been presented, in the class action itself." In re Prudential Ins. Co. of Am. Sales Practice Litig., 261 F.3d 355, 366 (3d Cir. 2001).

As a judicially approved settlement agreement, the NFL Concussion Settlement was a final judgment on the merits. See Rein v. Providian Fin. Corp., 270 F.3d 895, 903 (9th Cir. 2001Further, the NFL is a named party in the settlement.

Noting that “the crux of the issue is whether Hernandez was 'seeking active employment' as an NFL football player as of July 7, 2014”, the Court found that Hernandez was retired within the meaning of the settlement: Hernandez had been imprisoned — without bail — for nearly a year.

The Court found that A.H. was bound by the Settlement, as a Derivative Claimant and a Class Member regardless whether she was a named member of the class. See Smith v. Bayer Corp., 564 U.S. 299, 314, 131 S. Ct. 2368, 180 L. Ed. 2d 341 (2011) (noting that “unnamed members of a class action [may] be bound, even though they are not parties to the suit”). A.H.’s action was similar to the actions brought against the NFL by class members. Distribution of the Class Notice was “reasonably calculated to apprise interested parties” and give them an opportunity to object, as such A.H. is a Class member that did not opt-out of the Settlement.

Accordingly, the Court dismissed A.H.’s claims, as derivative claimant, within the settlement class Member, and thus preclude.

NCAA CASES

The original NCAA Student Athlete Concussion Injury class action (“Arrington v NCAA”) was filed in the Northern District of Illinois September 12, 2011. The lead plaintiff, Adrian Arrington, attended Eastern Illinois University and competed on the football team. Without citing a particular injury, he claims to suffer a host of cognitive and emotional issues and seeks certification of a medical monitoring class. On December 18, 2013, the United States Judicial Panel on Multi District Litigation consolidated Arrington with several similar actions against the NCAA, under MDL No. 2492.

The court subsequently certified three claimant classes for settlement of medical monitoring claims. The certification order enjoined further litigation by class members, “except for personal injury or bodily injury class claims on behalf of persons who allege injury resulting from their participation in a single NCAA-sanctioned sport at a single-NCAA member school.” This order set up a series of “single-sport single-school” (“SS”) sub class actions. These actions were consolidated. In re NCAA Student-Athlete Concussion Injury Litigation — Single Sport/Single School (Football), Master Docket Case No. 16-cv-08727.

In late 2016, the court stayed proceedings in the SS cases pending the outcome of class certification motions in four sample cases. The sample cases established in Case Management Order No. 8 are: Richardson v. Southeastern Conference, NCAA, 16-cv- 9980; Rose v. Big Ten Conference, NCAA, 17-cv-1402; Weston v. Big Sky Conference, NCAA, 17-cv-4975; and Langston v. Mid-America Int. Athl. Assoc., NCAA, 17-cv-4978.

Preliminary decisions from the sample cases have been issued.

Jurisdictional Issues

The SS cases invariably name the NCAA and in some instances the conference along with the institution, and are brought in NCAA’s home court, the Southern District of Indiana. Each case is then transferred to the Northern District of Illinois, for handling within the consolidated MDL docket. Conferences and schools located outside Illinois and Indiana are generally interested in moving to dismiss for lack of jurisdiction, forcing plaintiff to either drop the claim against the institution or sue in the school’s home state.

In March 2020, the Court granted Southeastern Conference’s motion to dismiss, finding that there was no personal jurisdiction in Illinois over the Alabama based organization. Richardson v. SEC. 16-cv- 9980.

Timeliness

Plaintiffs in the SS cases are generally living adults who played decades ago, outside the applicable statute of limitation or repose. Defendants are therefore interested in challenging timeliness based on allegations of symptom onset, awareness and diagnosis, in light of the applicable statute in their jurisdiction. This can be done on an early motion to dismiss or on summary judgment after discovery.

In March 2020, the Court denied two motions to dismiss for failing to satisfy statutes of limitations and repose, under Florida (Richardson, 3/30/20) and Kansas (Langston, 3/25/20) law. An earlier decision ruled similarly under Illinois law (Rose, 9/28/18). In each decision, the Court articulated that plaintiff need not plead or prove timeliness at this stage, suggesting that the court prefers to address timeliness at the summary judgment stage, after discovery is completed.

Waiver and Duty

In May 2020, in an unconsolidated case, Bradley v NCAA, 16-cv-346, the United States District Court for the District of Columbia issued an order resolving several motions for summary judgment. Bradley played Field Hockey at American University from 2009-12. After taking a head strike, which she passed off as “not more extreme” than other routine hits”, she exhibited signs and symptoms of concussion, claiming post-concussion syndrome including cognitive and emotional issues. The federal government was sued as the employer of one of the school physicians, Aaron Williams. During Bradley’s time at AU, Dr. Williams served as director of the U.S. Peace Corps, in the Obama administration. The court (i) denied the government’s motion for judgment on the “borrowed servant” rule, on the issue of plaintiff’s contributory negligence and on the negligent infliction of emotional distress claim; (ii) granted the University Defendants’ motion for judgment on the participant waiver, finding that the contract was not an unenforceable contract of adhesion, that there was nothing procedurally unconscionable in its procurement or substantively unconscionable in its terms; and (iii) granted NCAA’s motion for judgment on the negligence claim, finding that NCAA owed no duty and did not proximately cause plaintiff’s injuries.

HELMET CASES

Prior Disability Claim Distinct from Latent Injury Claim

Recognizing a distinction between accrual for acute injuries and latent injuries, the Illinois courts found that a former NFL player’s suit against a helmet manufacturer timely, even though it was filed years after his disability claim. Following precedent in Connecticut and Ohio, the court determined that the player’s disability claim for a severe concussion in 2013 was unique from his long-term injuries that arose as a result of “several ostensibly innocuous circumstances.” The court stated, “The knowledge of having suffered one severe concussion does not mean that the person has knowledge of all brain related injuries, including those that generally require multiple traumas to actualize.” Nakamura v. BRG Sports, LLC, 144 N.E.3d 610, 2019 Ill App. LEXIS 844 (2019).

Accrual for Neurodegenerative Disease Claims

Giving deference to the “harsh consequence” of requiring plaintiffs to sue before the extent of their injuries is known, the Illinois appellate court considered Plaintiffs’ argument that their claims for neurodegenerative disorders did not accrue until receipt of a formal diagnosis. However, the court affirmed dismissal because plaintiffs could have brought their claims against the helmet manufacturer when they joined in the NFL class action, more than two years prior, where the exact same claims were asserted for present and future head injuries. Butler v. BRG Sports, LLC, 141 N.E.3d 1104, 2019 Ill App. LEXIS 841 (2019).

Accrual by Actual Knowledge of Negligence

Trying to avoid dismissal for failure to timely file, plaintiff claimed that his school medical records were wrongfully withheld for “years” after his graduation. However, the court determined that Plaintiff’s actual knowledge of the school’s tortious conduct in encouraging him to play despite his concussions and without a doctor’s release was sufficient: withholding of the records did not conceal the accrual of a claim.. Boland v. Parkrose Sch. Dist., 2019 U.S. Dist. LEXIS 224149, Case No. 3: 19-cv-01049-SB (U.S. Dist. Ct. Dist. Ore.) (2019)

CRIMINAL DEFENSE

After a trial and conviction for first degree murder, defendant sought continuance of his sentencing so he could retain new counsel to assert, for the first time, a CTE defense. The court denied the request, noting that defendant already had extensive psychiatric evaluation and the only proof of CTE was the opinion of his new attorney. Reviewing the petition for writ of habeas corpus, the United States Magistrate Judge agreed that the mere claim petitioner suffered concussions playing football, without more, was insufficient to grant the continuance. Humphries v. Sherman, 2019 U.S. Dist. LEXIS 88116, Case No. CV 18-5748-JFW (U.S. Dist. Ct. Cent. Div. Cal.) (2019)

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FEI Mandates Protective Headgear

BY John T. Wendt

We have all seen the results of a dangerous concussion in football, hockey, soccer, and other sports. Now imagine that you are riding and falling off of a 1400-pound horse onto the ground, and the only thing protecting your head is a top hat. Would you be safer with a helmet? Should a helmet be required? That is the debate that is going on right now in Equestrian Dressage.

Dressage is considered the most artistic of the equestrian sports testing the ability of horse and athlete to display both athletic prowess and supreme elegance by evaluating, for example, an athlete’s ability to make their horse move quickly from side to side, transition into a gallop or rapidly change direction, using subtle commands.[13] It is steeped in tradition and history. Dressage tradition also requires riders to wear elegant formal dressage show attire with a top hat.

Courtney King-Dye is an American Olympian and competed in not only the 2008 Olympic Games but also the 2007 and 2008 World Cups, the pinnacle of success.[14] In 2010 while practicing, her horse tripped and King-Dye, who was not wearing a helmet, fell and suffered a traumatic brain injury. It was an accident.

But her accident sent shockwaves through the sport. Equestrian federations from the United States, Canada, and Great Britain all instituted rules changes mandating protective headgear in practice. The equestrian international governing body Fédération Équestre Internationale (FEI) “strongly recommended” that all riders wear helmets in training and pre-competition warm-ups at all international Dressage shows. But riders in the competition arena still had a choice of wearing a helmet or the traditional top hat.[15]

At the 2016 Olympic Games in Rio some riders wore helmets others top hats. Edward Gal of the Netherlands said, “I always wear the top hat. I think with dressage it looks nicer. My face isn’t made for a helmet. With the young horses at home I wear the helmet. I don’t think I will fall off in an arena with (his horse) Voice.” While Kasey Perry-Glass of the United States said, “I’ve always worn my helmet. I’ve never been a big advocate for not wearing a helmet. I wanted to wear my helmet here. It’s very important, and I want to stay healthy. Anything can happen at any time. Dublet is a pretty sensitive horse—you just never know. I use one on any horse, at home too. It’s very important.”[16]

At their November 2019 General Assembly, based on a recommendation from the FEI Medical Committee, the FEI approved Article 140 of the General Regulations mandating protective headgear as of January 1, 2021 for all dressage riders any time that they are mounted, inside and outside the competition arena. Riders may remove the protective headgear during ceremonies, when accepting prizes and during the playing of National Anthems.[17] Frank Kemperman, Chair of the FEI Dressage Committee said, “Tradition is important in our sport, but it’s difficult to not follow the medical community’s advice...There’s no really strong argument against the use of protective headgear in dressage, except that it’s a tradition.”[18]

150 of the leading dressage riders petitioned the FEI to reverse the decision and give senior riders the option of wearing helmets or top hats. And that list includes some of the greatest riders in the world including Isabell Werth of Germany who is regarded as the Queen of Olympic Dressage with a record 10 medals, six of them gold over five Olympic Games. The petition was sent to the FEI for consideration at the 2020 FEI General Assembly to be held online in November 2020. In the petition the riders state, “There has never been a serious accident at an International Dressage competition, and the riders believe there is no reason to change that for Senior competitors at CDI4*/5*, Games and Championships on GP level. The top hat is an essential part of the identity of dressage. The dress code makes us unique and we feel very strongly that the top hat remains as optional to use, but only at the highest level of competition...”[19] 

In contrast a group of more than 170 physicians calling themselves “Physician Women Equestrians” sent a letter to the FEI to maintain the mandate for protective headgear. The group said, “We, the undersigned, are an international group of physicians who ride in all equestrian disciplines, at all levels of the sport...We also treat brain injuries from the emergency room to the intensive care unit, from rehabilitation to psychiatric care, and we believe this petition, if granted, is a disservice to individual riders and to the sport of dressage.”[20]

While the FEI acknowledged they received the petition, a spokesperson indicated that it was sent in too late to be placed on the agenda. The FEI also noted that during the rule review period they did not receive any request to change the proposed helmet rule from the 137 National Federations or the International Dressage Riders Club.[21] It will be interesting to see if the riders bring forth their petition at the 2021 FEI General Assembly or if a helmet becomes the new tradition.

John T. Wendt is a Professor Emeritus of Ethics and Business Law at the University of St. Thomas and a member of the Court of Arbitration for Sport (Lausanne).

[13] Tokyo 2020, Equestrian, Tokyo 2020 (2020), https://tokyo2020.org/en/sports/equestrian/ (last visited Oct 30, 2020).

[14] Courtney Dye-King, Ckd Dressage, Ckd Dressage (2020), http://ckddressage.com/ (last visited Oct 29, 2020).

[15] Fédération Équestre Internationale, Safety Helmets Strongly Recommended By Dressage Committee, FEI (2010), https://inside.fei.org/news/safety-helmets-strongly-recommended-dressage-committee (last visited Oct 30, 2020).

[16] Molly Bailey, Top Hat Or Helmet? (2016), http://www.chronofhorse.com/article/top-hat-or-helmet (last visited Oct 29, 2020).

[17] Fédération Équestre Internationale, FEI General Regulations, 24th edition (2020), https://inside.fei.org/sites/default/files/FEI General Regulations effective 1 January 2020 - Final Version for Website - Clean.pdf.

[18] Eurodressage, Top Riders Sign Petition to Retain the Choice for a Top Hat in Grand Prix Competition, Eurodressage (2020), https://www.eurodressage.com/2020/10/26/top-riders-sign-petition-retain-choice-top-hat-grand-prix-competition (last visited Oct 29, 2020).

[19] Id.

[20] Dressage-News, Over 170 Physicians Involved in Horse Sports Appeal Against Move to Permit Top Hats for Senior Riders in High Level Competition (2020), https://dressage-news.com/2020/10/29/over-170-physicians-involved-in-horse-sports-appeal-against -move-to-permit-top-hats-for-senior-riders-in-high-level-competition/ (last visited Nov 1, 2020).

[21] Pippa Cuckson, Top Hats Set for Extinction Despite Dressage Petition, Horse Sport (2020), https://horsesport.com/horse-news/top-hats-set-extinction-despite-dressage-petition/ (last visited Oct 29, 2020).

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Canadian Hockey League Class Action Settlement on Thin Ice

By Jon Heshka, Associate Professor at Thompson Rivers University

The Canadian Hockey League (CHL) agreed in February 2020 to pay $30 million to settle three class action lawsuits which claimed its underage players are employees and entitled to statutory minimum wages plus back pay, overtime pay and vacation pay. The settlement and its terms were conditional upon final approval by the Courts of Ontario, Alberta and Quebec.

The CHL is made up of the Western Hockey League (WHL), the Ontario Hockey League (OHL) and the Quebec Major Junior Hockey League (QMJHL) and is comprised of 1400 players competing on 52 Canadian teams and 8 US-based teams.

The three certified class actions — one in relation to each of the three leagues comprising the CHL — Walter v. Western Hockey League, Berg et al. v. Canadian Hockey League et al. and Walter c. Quebec Major Junior Hockey League Inc. were fundamentally similar insofar as the players argued they are employees for the purposes of provincial employment standards legislation while the league argued they are student-athletes.

There is case law supportive of the players’ position that they are indeed employees. The Ontario Court of Appeal in Toronto Marlboro Major Junior A Hockey Club et al. v. Tonelli[22] characterized the relationship between the player and the club as a contract of service, which is an employer/employee relationship.

Similarly, the Tax Court of Canada in McCrimmon Holdings Ltd. v. M.N.R.,[23] ruled that major junior hockey players were employees for purposes of federal employment insurance and pension legislation. The court observed: “... the business of the Wheat Kings [a WHL franchise] is simply the business of hockey. It is a commercial organization ... carrying on business for profit. The players are employees who receive remuneration — defined as cash — pursuant to the appropriate regulations governing insurable earnings.”

There are potentially 4200 former CHL players eligible for the settlement. How much each player would receive depends on how many file claims and their how long they played in the CHL.

It was reported that each of the teams would pay about $250,000 apiece and that the league and its insurer would pay for the balance.

Despite the courts approving of the fairness of the settlement and its distribution, they refused to sign off on it in October 2020. It is now in jeopardy due to 11th hour objections raised by class members Kobe Mohr and Anthony Poulin. They objected because it appeared to them that the Release would discharge the CHL from liability for one or more class actions that had already been commenced against the league.

As a result of the objections, the courts learned that on January 9, 2019, James McEwan filed a class action lawsuit against the WHL, CHL and Hockey Canada in connection with fiduciary duty breaches for all players who played hockey and suffered concussions or chronic traumatic encephalopathy.[24] The courts also learned that on June 18, 2020, Daniel Carcillo and Garrett Taylor filed a statement of claim in Ontario against the CHL, WHL, OHL, QMJHL and their respective clubs.[25] The claim is on behalf of players for alleged sexual abuse suffered by them under the age of eighteen. The Carcillo and Taylor action is based on systemic abuse by the defendants and breach(es) of contract. The objection was that the Release contained in the Settlement Agreement would, or could, discharge the CHL from liability for these class actions.

Justice Perell of the Ontario Superior Court of Justice held that it was not plain and obvious that the Release might not bar some class members from advancing claims in the other actions.[26]

Justice Hall of the Court of Queen’s Bench of Alberta was similarly unable to approve the proposed settlement because the “Released Matters” definition in the agreement is overly broad and were he to approve of the Release, the league could argue that the release terms have released them from liability for some or all of the other class action lawsuits now in existence, or for further class actions not commenced. "The class members cannot be unwittingly releasing the defendants from other claims beyond the one being settled," Hall J. wrote.[27]

Quebec Superior Court Justice Chantal Corriveau expressed similar views.

Each of the three judges strongly indicated that they would have approved the Settlement Agreement but for the wording of the Release. They even advised that if agreement could be reached on a revised Release which was more narrowly worded so as to clearly apply only to claims like those raised in the actions, the motion for approval of the Settlement Agreement with the revised Release could be made in writing, with no need for another approval hearing.

As a result of the courts’ decisions, and unless the parties can reach an agreement on a properly worded Release, the Settlement Agreement can be terminated within 30 days of the courts’ decisions by either the plaintiffs or defendants. If the Settlement Agreement is terminated, the three class actions will resume at the stage they were at before the mediation, moving eventually to a trial or motion for summary judgment.

[22] [1979] 23 O.R. (2d) 193, 96 D.L.R. (3d) 135

[23] 2000 CanLII 460 (TCC)

[24] James McEwan v. CHL et al., Supreme Court of British Columbia, No: S-190264

[25] Daniel Carcillo v. CHL, Ontario Superior Court of Justice, CV-20-00642705-00CP

[26] Berg v. Canadian Hockey League, 2020 ONSC 6389

[27] Walter v. WHL, 2020 ABQB 631

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Executive Summary - 3rd Annual Esports Survey

By Jonathan L. Israel, Julie A. McGinnis. Bobby Sharma, Michael J. Wall, and Kevin R. Schulz, of Foley

At the end of March — amid the first wave of COVID-19-related shutdown orders — an esports record was broken when 1.3 million broadcast television viewers tuned in to watch professional NASCAR drivers compete in a virtual race on FOX and FS1.

To the broader market, it was a clear signal that life under the coronavirus might be accelerating the industry’s expansion. Earlier that month, Verizon observed a 75% increase in video game internet traffic during peak hours and, in the second quarter, when live traditional sports were in lockdown, Twitch reported a 56% viewership rise year-over-year.

As the pandemic wears on, the 3rd Annual Esports Survey, conducted by Foley & Lardner LLP and The Esports Observer, draws on responses from hundreds of executives to explore perceptions on the current state of esports and what lies ahead at a crucial moment in its evolution.

Though still a young and growing industry — and one dwarfed by the $159 billion video gaming industry within which it sits — esports is expected to generate revenues of $950.3 million globally in 2020. While this may be less than the industry’s pre-pandemic forecast, it represents only a 1% decline from 2019, underscoring the strength of esports even in the face of widespread economic turmoil. In fact, the majority of our survey respondents (73%) expect the pandemic to generate greater investment and deal activity in esports in the near-term.

But while the industry has managed to thrive in a year that has wrought havoc in so many other areas, even esports isn’t immune to the impact of COVID-19. This year’s survey saw a decrease in the level of esports investment expected from private equity and venture capital firms (40% expect increased investment from this group, down from 47% in 2019). And the inability to hold live large-scale events was the top factor cited among respondents who expect decreased investment in esports in the near-term.

The pandemic and related economic issues aren’t the only areas affecting the industry’s evolution. Take gambling, for example. Even amid the pandemic, legalized sports (including esports) betting in the United States has brought certain states sorely needed revenue. With more and more dollars on the line, however, survey respondents expressed concerns about high-profile match-fixing cases and a lack of adequate tools to detect fraud and cheating.

Legal risks also abound, with cybersecurity, intellectual property, licensing, and labor and employment matters among the top areas of concern identified in the survey. The latter has become increasingly prevalent of late, as popular players dispute contract terms with esports teams, organizations, and streaming platforms, and as #MeToo continues to send wake-up calls throughout the male-dominated industry.

Finally, this year’s survey suggests heightened tension around the small number of game developers who exert significant control over the industry. At the same time, respondents are more conflicted than ever when it comes to the need for, or practicality of, a single, overarching esports governing body — suggesting, perhaps, that as the industry grows, it’s also fragmenting and developing increasingly complex and varied business models.

Looking at the prior three years of survey data at a high level, it’s clear that executives involved in esports are becoming increasingly comfortable that the industry is on a strong footing, as well as more sophisticated about navigating the obstacles facing esports. While there are still challenges ahead, respondents are optimistic that COVID-19 has not derailed — and may actually accelerate — the industry’s growth prospects.

COVID-19 has been a boon for esports — but it's not all smooth sailing

Nearly three-quarters of respondents (73%) believe the pandemic will lead to more investment and deal activity over the next six months (Q4 2020 and Q1 2021).

More than half cite the drivers of this trend as being continued social distancing boosting engagement with video games and esports (61%), the growth of online streaming platforms (61%), and the increased movement of big brands into esports sponsorships (52%).

This type of bullish sentiment may be expected for an industry that was already largely virtual. But responses from the 21% of respondents who believe investment in esports will decrease over this six-month period as a result of COVID-19 illustrate that the industry is not immune to the pandemic.

For instance, a significant number of respondents in this group cited challenges stemming from the inability to hold large in-person events (77%), continued declines in spending on advertising and sponsorships (65%), and a hesitancy to invest in esports teams due to continued esports market uncertainty (46%). The latter factor coincides with the 31% who also noted the difficulty of sourcing capital beyond internal raises with existing investors.

Meanwhile, frozen marketing budgets may contribute to the fact that while advertising and sponsorships ranked as the top area expected to drive revenue growth for the third straight year, the percentage of respondents selecting it as the most promising area actually decreased from 51% in 2019 to 41%. On the bright side, most respondents expect new technology developments will lead to more sophisticated advertising in esports over the next year, be it enhanced data analytics (67%), integration of ads within games and streaming platforms (64%), or advanced behavioral analytics that enable advertisers to better target their ads (63%).

In-game purchases and revenue once again took the second-ranked spot among areas expected to drive revenue growth, followed by media rights. 

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Latham & Watkins Grows Sports Practice, Adds Proskauer Rose Attorney

Latham & Watkins LLP1 has announced that Frank Saviano has joined the firm’s New York office as a partner in the Corporate Department and member of the Entertainment, Sports & Media Practice.

Saviano has built a strong reputation in the sports and media industry advising clients in a wide array of corporate matters, including media rights, team acquisitions and sales, strategic investments, joint ventures, arena and stadium development, sponsorships, and other significant commercial transactions.

Joseph Calabrese, Global Chair of Latham & Watkins’ Entertainment, Sports & Media practice said that Saviano “is another first-rate addition to our expanding global ESM team. He has an outstanding reputation and exemplifies the skill and know-how needed to lead clients through their most complex, high-profile deals in the ever-changing sports and media sector. His presence in New York further reinforces the geographic reach of our global practice.”

Saviano noted that “Latham is well renowned as a leading entertainment, sports and media practice and I am excited to join this incredible team and help contribute to its continued growth and global reach. I look forward to collaborating with my colleagues in New York, and around the globe to continue providing the highest level of service to Latham’s sophisticated base of clients.”

Saviano joins Latham & Watkins from Proskauer in New York. He received his JD from the University of Virginia Law School and his BA from Trinity College.

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Proskauer Promotes New Partner to Sports Group

Proskauer, and its internationally recognized sports practice, has announced that Jason Krochak has been promoted to partner within Sports Group, part of a promotions class of 12 lawyers from across the Firm’s practices and offices.

“Jason is an outstanding lawyer who has shown a tremendous commitment to serving the needs of our clients. He has developed a deep understanding of the sports industry having represented leagues, teams, private equity firms, financial institutions, gaming companies and corporate sponsors in a wide variety of matters,” said Joseph M. Leccese, Chairman Emeritus of the Firm and Co-Chair of the Sports Group.

Krochak has been with Proskauer since he joined as a summer associate in 2011 and has worked on many transformative deals, including the formation of “FOX Bet”, a first-of-its-kind media and sports wagering partnership in the U.S. between The Stars Group and FOX Sports, multiple MLS expansions, the sales of the Carolina Panthers and Miami Marlins, the creation of All Elite Wrestling, and the acquisition by OL Groupe of Reign FC in the NWSL.

In addition, he regularly represents the National Basketball Association, Major League Soccer, Soccer United Marketing, the Atlantic Coast Conference, and the WTA Tour, as well as a number of professional sports teams and their owners.

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News Briefs

Spry Payment Systems Announces Oral Roberts University Athletics Will Test Its NIL Platform

Spry Payment Systems, Inc. (Spry), a technology company that creates a way for colleges and student athletes to embrace the Name, Image, and Likeness (NIL) movement, has announced that Oral Roberts University Athletics will test its NIL platform. Spry is unique in that its platform “was built from the ground up to simplify a complex problem, while at the same time addressing the needs of multiple stakeholders,” according to the company. "Through our strategic partnership, we (Spry and ORU) will work together to tailor Spry's functionality and features to meet ORU's specific needs," said Spry CEO Lyle Adams. “While the regulations and requirements are still uncertain, I commend ORU's for its commitment to being prepared administratively and for setting up its student-athletes for success." Adams, a former student athlete and professional soccer player who parlayed that experience into a successful 10-year career in , added that Spry “helps compliance teams navigate the administrative burden that comes with monitoring hundreds, if not thousands of student-athletes.” Spry also announced last month that Wake Forest University would be using its platform. He added that he expects more announcements about new schools joining the Spry network in the coming weeks.

Jim Perzik, long-time Los Angeles Lakers GC, Dies of COVID

James L. (Jim) Perzik, a sports lawyer who was active in leadership roles with the Los Angeles Lakers has died at the age of 91. The cause of death was reportedly complications arising from COVID 19. Perzik began his career with the Lakers in 1991 as the team’s general counsel. In a statement, the Perzik family noted: “While he had numerous high prolife clients, Jim was especially proud of his relationship of many years with the late Dr. Jerry Buss with whom he worked with for over 50 years.” J. Tullos Wells, a friend of Perzik and the former general counsel of the San Antonio Spurs, told the media that Perzik was “the smartest, most gracious man I’ve ever known.”

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Accused of Recruiting White Athletes over Black, Kansas College Settles Lawsuit

Highland Community College (HCC) has settled a lawsuit in which it was accused of directing coaches to recruit more white athletes, while directing excessive scrutiny at black athletes. The American Civil Liberties Union of Kansas got involved in the litigation after specific allegations surfaced that the coaches, sic months ago, began conducting more background checks of the black athletes than their white counterparts. The college was also accused, overall, of employing a strategy that reportedly involved expelling black students for minor or made up infractions and singling them out for dorm room and vehicle searches, discriminatory surveillance, and harassment. HCC has more than 3,000 students, the vast majority of which are white. However, the vast majority of the players on the football team are black.

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Sports Litigation Alert is a bi-monthly publication of Hackney Publications. Copyright 2020. All Rights Reserved.

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