2009 Annual Survey: Recent Developments in Sports Law*
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SURVEY.20-2 (DO NOT DELETE) 5/21/2010 2:14 PM SURVEY 2009 ANNUAL SURVEY: RECENT DEVELOPMENTS IN SPORTS LAW* INTRODUCTION This survey encapsulates sports-related cases adjudicated between January 1 and December 31, 2009. It does not include every decision associated with sports; rather, it is intended to summarize only those cases involving compelling issues that could have an impact on the development of sports law in the coming years. The survey is designed to give the reader brief insight into how much the field has grown and highlight buzzworthy topics. For easy browsing, the survey is divided into sections based on the specific area of the law that applies to the primary issue in each case. ADMINISTRATIVE LAW Administrative law governs the actions of government agencies on local, state, and federal levels. These actions can vary from rule-making to engaging in contractual negotiations to enforcing a regulatory system. Very few major sports law cases involve this body of the law, but, as shown in the following case, the consequences of an agency’s decision can have a powerful impact on the future of a community. Lynwood Redevelopment Agency v. Angeles Field Partners, LLC1 Angeles Field Partners, LLC (AFP) appealed a trial court’s decision to invalidate the Lynwood (California) Redevelopment Agency’s (LRA) approval of two agreements related to a redevelopment project proposed by AFP that included a new football stadium that could be used to lure a National Football League (NFL) team back to Los Angeles. During the contract * This survey was developed and drafted under the supervision of Professor Paul Anderson, Associate Director of the National Sports Law Institute and faculty advisor ot the Marquette Sports Law Review. Both Ethan Rector (L‘10) and Peter Baran (L‘11) were responsible for initially compiling the survey, and various members of the Marquette Sports Law Review editorial staff assisted in editing the survey. 1. No. B210165, 2009 Cal. App. App. Unpub. LEXIS 9770 (Cal. Ct. App. Dec. 10, 2009). SURVEY.20-2 (DO NOT DELETE) 5/21/2010 2:14 PM 498 MARQUETTE SPORTS LAW REVIEW [Vol. 20:2 negotiations, four members of the LRA were also sitting on the Lynwood City Council. Subsequently, the city’s electorate voted to recall those individuals. But before new council members could be sworn in, the outgoing members voted to approve the agreements with AFP. Once they were gone, the newly- constituted LRA sought to invalidate its prior approval of the project. The appellate court reversed, holding that the agreements were valid under state law. It emphasized that (1) the four outgoing members of the city council were still active when the agreements were approved; (2) the LRA did not have standing to sue itself for violating California’s open meetings law, even if it did not give properly notify the public that it would be voting on issues related to the redevelopment project; and (3) the agreements were not unconscionable. In making its third conclusion, the court noted that the LRA was attempting to use a contract theory to try to vindicate social policy, which was impermissible under contract law. ALTERNATIVE DISPUTE RESOLUTION Alternative dispute resolution is an extrajudicial method of settling potentially litigious issues between parties. It usually involves the use of mediation and arbitration, the latter of which is often relied upon to resolve disagreements between employers and employees. Almost every collective bargaining agreement between a professional sports league and a players’ union includes a provision requiring the arbitration of certain types of disputes. The following materials demonstrate some of the issues that courts have faced when assessing settlements between parties or the legal effect of a contractual arbitration provision. This section also includes the cases tackled by the American Arbitration Association in its designated role as the exclusive body to resolve disputes related to athlete-eligibility under the Ted Stevens Amateur Sports Act. (Stevens Act). Bennett v. U.S.A Water Polo, Inc.2 Former Team USA water polo coach Alex Bennett moved to remand his lawsuit against USA Water Polo to state court after it was removed when the national governing body claimed there was a federal question as to whether Bennett’s tort claims were pre-empted by the Stevens Act. The court held it did not have federal question jurisdiction, but granted leave to USA Water Polo to conduct discovery as to whether the amount-in-controversy requirement was satisfied in order to establish diversity jurisdiction. The court emphasized that federal question jurisdiction does not exist if removal is based 2. No. 08-23533-CIV-KING, 2009 U.S. Dist. LEXIS 37753 (S.D. Fla. Apr. 21, 2009). SURVEY.20-2 (DO NOT DELETE) 5/21/2010 2:14 PM 2010] ANNUAL SURVEY 499 on a law that creates an internal mechanism to resolve disputes arising under it. The court noted that the Stevens Act provided that type of mechanism to USA Water Polo, and even allowed for possible appeals through arbitration. Cayo v. Valor Fighting & Mgmt. LLC3 After the court denied an insurance broker and insurance company’s motion to dismiss claims brought against them by mixed martial arts (MMA) fighter Richard Cayo, the broker moved for a determination that its subsequent settlement agreements with Cayo and MMA event organizer Valor Fighting & Management (VFM) were made in good faith, thereby satisfying claims that had been or could be brought against it due to its alleged failure to procure a policy that would cover any liabilities associated with a VFM-sponsored event. Cayo brought claims against VFM, the broker, and two insurance companies after he suffered injuries in a match at the event and VFM failed to assume liability for them, which was required under their contractual agreement. His claims against the broker arose out of a separate contract between VFM and the host facility, under which VFM was obligated to obtain insurance coverage for any liabilities associated with the event. Cayo alleged he was the intended beneficiary of their agreement, and that he could recover against the broker in tort if it had, in fact, failed to procure a policy for the promoter. However, due to uncertainty about whether a policy had been secured, Cayo also brought breach of contract claims against the insurance companies, who opposed the broker’s motion. The court granted the motion. In approving the settlement with Cayo, the court emphasized that the insurance companies were not challenging the good faith of the agreement, only the broker’s proposed order to bar any future claims against it. The court noted that state law already protected the insurance companies’ interests by continuing to allow claims based on express indemnity agreements. In approving the settlement with VFM, the court concluded that state law did not require the promoter to file a cross-claim before settling with a co-defendant, and that the insurance companies failed to show the combined amount of the settlements was not rationally related to the broker’s share of Cayo’s injuries. Crowell v. U.S. Equestrian Fed’n4 Former Olympian Dorothy Crowell appealed a U.S. Equestrian Federation 3. No. C 08-4763 CW, 2009 U.S. Dist. LEXIS 48201 (N.D. Cal. June 8, 2009), settlement approved, No. C 08-4763 CW, 2009 U.S. Dist. LEXIS 103067 (N.D. Cal. Oct. 20, 2009). 4. AAA 77 190 E 00193 09 (May 3, 2009). SURVEY.20-2 (DO NOT DELETE) 5/21/2010 2:14 PM 500 MARQUETTE SPORTS LAW REVIEW [Vol. 20:2 hearing panel’s decision to disqualify her from being able to participate in an upcoming event. The national governing body’s rules provide that riders and horses must meet qualifying requirements in order to participate at certain levels of competition. One of those rules stipulates that any rider who falls from the same horse twice in a twelve-month period will cause the horse to lose its qualification to compete at the level of the event in which the second fall occurred. In September 2008, Crowell’s horse, Radio Flyer, became entangled in a fence at an event, forcing her to dismount. The governing body labeled the incident a fall. Eight months later, Crowell fell from Radio Flyer in another event, causing the horse to lose its qualification. Crowell argued the rule was being applied retroactively because it did not become effective until December 2008. An American Arbitration Association panel upheld the decision, determining that the rule was not applied retroactively to her September 2008 fall, but following her second fall, which occurred after the rule was enacted. Examining relevant cases under New York law, which was used to interpret the rules, the panel noted that courts have consistently held that a rule is not retroactive simply because its application is based in part on events that ocurred prior to its effective date. Grillier v. CSMG Sports, Ltd.5 After losing its motion for a separate trial on the issue of arbitrability, an athlete representation agency moved to compel arbitration of breach of contract claims brought against it by athlete-agent Kim Grillier after he failed to receive a percentage of the fees generated by National Basketball Association (NBA) clients that he recruited to the agency. The parties executed a written consulting agreement when Grillier originally joined the agency as an independent contractor. The agreement stated that any dispute over its provisions had to be settled in arbitration. But three years later, Grillier allegedly became an official employee under an oral contract. He claimed the contract was consistent with the agency’s prior promise to pay him a percentage of the fees generated by the clients that he recruited, but that it did not provide for arbitration of disputes arising under it.