Category: Sports

Practice What You Preach – Yoga Remains Uncopyrightable, for Now

bikram yoga copyrightBikram Choudhury is famous for being the world’s most successful – and eccentric – yoga guru, and the pioneer of his self-branded, mass marketed Bikram Yoga. Bikram Yoga consists of a sequence of 26 yoga poses, or asanas, and two breathing exercises, performed in a very hot room (100 degrees!) for 90 minutes. The term Bikram Yoga is protected by trademark, but you will see similar yoga practices referred to generically as “hot yoga.” Mr. Choudhury has also been the subject of certain lawsuits filed by women who attended his wildly successful nine-week hot yoga teacher training course (which can cost up to $10,000). But whatever you think about Mr. Choudhury, one thing is clear – he doesn’t want anybody else teaching his specific hot yoga sequence.

Mr. Choudhury has probably come under more fire for his attempt to lock up his hot yoga sequence than he has for his other legal issues. That’s because yoga and intellectual property rights are not ideal bedmates. Yoga is an ancient practice that teaches liberation and growth, while intellectual property tends to be about what’s mine and not yours. To many, trying to “own” yoga in any way is antithetical to the very spirit and purpose of the yoga practice.

But going against the grain does not bother Mr. Choudhury. Mr. Choudhury owns a copyright registration for his Bikram Yoga sequence, attained as a supplemental registration to a 1979 copyright he owns in his book Bikram’s Beginning Yoga Class, which describes the sequence. He has sued several prior students who took his course, went out on their own, and began teaching a 26-pose “hot yoga” course which, Mr. Choudury alleges, is too similar to his own. In response to Mr. Choudhury’s efforts to lock up this particular sequence of poses, Open Source Yoga Unity, an organization for the “continued natural unfettered development of yoga for all to enjoy,” sought a court’s ruling that Mr. Choudhury does not have valid copyright in the Bikram Yoga sequence.

The details of the various legal battles (many of which resolved by settlement before a decision on the merits) are very well explained on Open Source Yoga Unity’s Facebook page (https://www.facebook.com/yogaunity). The key take-aways, so far, are that each yoga asana, itself, is firmly in the public domain. The dispute is only with respect to the specific sequence of 26 yoga asanas that Mr. Choudhury claims to have been the first to select and arrange, as well as all derivatives that are “substantially similar” to the original sequence. See Open Source Yoga Unity v. Choudhury, 2005 WL 756558 (N.D. Cal. April 1, 2005). Resolution of Mr. Choudhury’s copyright claims revolves around whether his hot yoga sequence is a creative expression, copyrightable as choreography, or merely uncopyrightable functional physical movements. Id. Most team sports activities, for example, aren’t copyrightable because they are unscripted and don’t involve a fixed routine of motions. See, e.g., National Basketball Association and NBA Prop., Inc. v. Motorola, Inc., 105 F.3d 841, 846 (2d Cir. 1997) (no copyright in basketball games). Hot yoga would appear to fall somewhere between basketball and ballet. Exactly where yoga falls on this continuum of creativity remains to be determined.

In 2012, the United States Copyright Office issued a policy statement, stating that yoga sequences are “not the equivalent to a pantomime or a choreographic work” and “could not be protected as compilations[.]” The Copyright Office recognized that it had been an error allowing Mr. Choudhury to file his supplemental registration, and that no other registrations of that type would be allowed. You have to wonder if Mr. Choudhury smiled at that – not only does he own a registration for his yoga sequence, but nobody else ever will!

But, the Copyright Office’s Policy Statement is merely that; it is not law. In Open Source Yoga, seven years prior, the court held that while “application of the law of compilations to yoga asanas appears to violate the spirit of yoga,” it was “unable to locate any authority that precludes such application.”  Therefore, if the trier of fact determined that a sufficient number of individual yoga asanas are arranged in a sufficiently creative manner, copyright protection would be available.  The case settled outside of court. In a case filed after the Copyright Office’s Policy Statement, the court agreed with the Statement, holding that where the poses are said to result in improvements in one’s health or physical or mental condition, as Mr. Choudhury claims they do, they are not copyrightable.  Bikram’s Yoga College of India, L.P. v. Evolation Yoga, LLC, 2012 WL 6548505 (C.D. Cal. Dec. 14, 2012). Mr. Choudhury promptly appealed this ruling and, as of this article, we await a decision from the Ninth Circuit Court of Appeals.

For now, the ancient yoga teachings of liberation, spirituality, and healing carry the day. But, given Mr. Choudhury’s litigiousness and the uncertainty of the pending appeal, yogis still have to look over their shoulders when teaching Mr. Choudhury’s particular brand of hot yoga.

Article By Nadya Davis of Holland & Hart LLP

Copyright Holland & Hart LLP 1995-2015.

Ninth Circuit Rules NCAA Violates Antitrust Law-Strikes Down Proposed Remedy

A three-judge panel of the Ninth Circuit Court of Appeals, in San Francisco, affirmed in part and reversed in part Judge Claudia Wilken’s August 2014 district court decision that NCAA rules restricting payment to athletes violate antitrust laws.

The Ninth Circuit agreed with Judge Wilken’s conclusion that NCAA rules restricting payment to athletes violated antitrust laws and authorized NCAA schools to provide athletic scholarships that cover the full cost of attendance. However, the Ninth Circuit rejected a key component of Judge Wilken’s decision which authorized the payment of $5,000 per year in deferred compensation for the use of individual athletes’ names, images and likenesses.

The opinion, written on behalf of the panel by Judge Jay Bybee, stated,

“NCAA is not above the antitrust laws, and courts cannot and must not shy away from requiring the NCAA to play by the Sherman Act’s rules….In this case, the NCAA’s rules have been more restrictive than necessary to maintain its tradition of amateurism in support of the college sports market.”

A more detailed analysis of the decision and its potential impact will be posted shortly.

Article By Gregg E. Clifton & Benjamin A. Tulis of Jackson Lewis P.C.
Jackson Lewis P.C. © 2015

Deflategate: A Critique of Judge Berman's Decision

By now, almost everyone is familiar with Judge Berman‘s decision vacating Commissioner Roger Goodell’s award upholding a four-game suspension of New England quarterback Tom Brady in connection with the tampering of air levels in footballs during the 2015 AFC Championship game. Judge Berman found that Commissioner Goodell’s award was deficient in the following respects:

(1) that Brady had no notice that the conduct for which he was suspended — being generally aware of the misconduct of an equipment assistant and locker room attendant who deflated the balls and then refusing to cooperate with the subsequent investigation — was prohibited conduct for which he could be disciplined;

(2) that Brady was denied the opportunity to examine one of the two lead investigators who authored the investigative report upon which Commissioner Goodell relied, namely NFL Executive Vice President and General Counsel Jeff Pash; and

(3) that Brady was denied equal access to investigative files, including witness interview notes.

Judge Berman did not remand to correct these errors, but simply vacated the award.

Did Judge Berman Properly Follow the Standard for Review? How sound was Judge Berman’s decision? 

From an analysis of his opinion and well-established Supreme Court authority he was supposed to follow, it may have been the Judge himself who overstepped his bounds. It is important to remember that Commissioner Goodell’s role was that of arbitrator; the collective bargaining agreement permitted him to assume that role if he so chose and he did so choose. The level of deference that courts must give an arbitrator is extreme: in essence, as long as the arbitrator is arguably construing or applying the contract, and acting within the scope of his authority, a court cannot overturn his decision. While Judge Berman superficially acknowledged this standard, it does not appear that he actually followed it. Instead, he appeared to apply some type of “common law of the workplace” to find that Brady’s treatment was fundamentally unfair.

The first sign that Judge Berman was straying from his role was his failure to cite or acknowledge any of the leading U.S. Supreme Court cases establishing the basic principles regarding judicial review of labor arbitration awards in the collective bargaining context. The Supreme Court repeatedly has emphasized that a court is not authorized to reconsider the merits of a labor arbitration award even though the parties may allege the award was decided on errors of fact or on a misinterpretation of the contract. The Supreme Court has explained this extreme deference as emanating from the federal policy inherent in Section 301 of the Labor Management Relations Act (LMRA) favoring the settlement of labor disputes by arbitration. In essence, the parties contracted for the settlement of their dispute by an arbitrator of their choice; if dissatisfied with his decision, they are free to select a different arbitrator in the future.

The Supreme Court’s Garvey Decision

In particular, Judge Berman did not cite or deal with the Supreme Court’s decision in Major League Baseball Players Ass’n v. Garvey. This was striking, as that case, like Brady’s, arose in the context of the review of an arbitrator’s award under the collective bargaining agreement of a professional players association. The facts and decision the Garvey case are worth reviewing, as they demonstrate just how deferential the Supreme Court expects courts to be:

Steve Garvey, an All-Star first baseman, alleged that his contract with the San Diego Padres had not been extended in the 1988 and 1989 baseball seasons as part of the owners’ collusion in the market for free agents that an arbitrator had found to have taken place. He sought damages under a framework that had been set up to determine and evaluate individual player’s claims for damages due to that finding of collusion. Garvey’s main piece of evidence was a letter from the Padres’ President, Ballard Smith, admitted to the non-extension of the contract due to the collusion. However, the arbitrator rejected Garvey’s grievance by discrediting the letter because it contradicted the President’s testimony in the earlier arbitration in which the collusion had been found to exist. Bizarrely, however, in that earlier proceeding the same arbitrator specifically had found that testimony to be non-truthful in concluding there had been collusion.

Finding the arbitrator’s decision “completely inexplicable and border[ing] on the irrational,” the Court of Appeals for the Ninth Circuit vacated the award, finding the only justification for the arbitrator’s decision was “his desire to dispense his own brand of industrial justice.” Reversing, however, the Supreme Court claimed to be “baffled” by what the Court of Appeals did in light of the clearly expressed deferential standard for reviewing labor arbitration awards under Section 301. The Supreme Court acknowledged that the arbitrator’s ruling may have appeared to the Court of Appeals as “improvident or even silly,” but even so that did “not provide a basis for a court to refuse to enforce the award.” According to the Supreme Court, even when a federal judge considering the arbitration award is “convinced that the arbitrator committed serious error, it does not suffice to overturn [the arbitrator’s] decision.” This is also true when an arbitrator’s “procedural aberrations rise to the level of affirmative misconduct,” for a federal court may not “interfere with an arbitrator’s decision that the parties [players and owners] bargained for.”

Judge Berman Relied More on the Federal Arbitration Act Than Cases Under Section 301

Had Judge Berman paid closer heed to decisions such as Garvey, he might have been less inclined to wade into the weeds of assessing Commissioner Goodell’s claimed procedural aberrations. Judge Berman instead appeared to rely more heavily on cases applying the Federal Arbitration Act (FAA), which establishes four limited statutory grounds for vacating an arbitration award. Judge Berman zeroed in on the FAA’s exceptions allowing vacatur where the arbitrator is “guilty of misconduct . . . in refusing to hear evidence pertinent and material to the controversy” or in “exceeding his powers.”

The problem with relying on the FAA, however, is that the FAA has been held not to apply to labor disputes, although to be sure federal courts have often looked to the FAA for guidance in labor arbitration cases. Section 301, which does apply, does not provide statutory grounds for vacating a labor arbitration award, although, as seen, the Supreme Court has made clear what a court may not do. As the body of case law applying Section 301 has developed, the main reasons a court may vacate a labor arbitration award appear to be if (i) the award does not “draw its essence” from the labor agreement, meaning it conflicts with the express terms of the agreement, imposes additional requirements not expressly provided for in the agreement, or is based on “general considerations of fairness and equity” instead of the exact terms of the agreement; or (ii) it violates a well-settled and prevailing public policy.

The Problems With Judge Berman’s Findings

Judge Berman first found fault in Commissioner Goodell’s award because the Judge found that Brady did not have notice that he could receive a four game suspension for general awareness of a scheme to deflate footballs, or for non-cooperation with the NFL’s investigation. He also attacked Commissioner Goodell’s reasoning in looking to penalties for violations of the league’s steroid policy as a justification for upholding a four game suspension. He further found that Brady had no notice he could be suspended rather than fined. Citing decisions by other arbitrators involving NFL players, Judge Berman concluded that Commissioner Goodell violated the “law of the shop” by failing to find there was inadequately notice of prohibited conduct and potential discipline.

In all of this, however, Judge Berman was doing what the Supreme Court has stated a judge should not do: second-guessing the arbitrator. For example, the so-called “law of the shop” is not something akin to the common law that a court must follow. Rather, it is up to the labor arbitrator alone to interpret precedent by other arbitrators or, as the Supreme Court has put it, to simply to conclude “that he was not bound by” a prior arbitrator’s decision. Judge Berman relied heavily on decisions by other arbitrators in other high-profile NFL cases — such as “Bounty-Gate” and the Ray Rice and Reggie Langhorne cases — to find that Brady was entitled to the type of notice that Judge Berman thought he was entitled to. But that simply was not Judge Berman’s role to say.

Moreover, Brady’s notice contentions were acknowledged and rejected by Commissioner Goodell in his post-hearing detailed award that was also based on his assessment of the evidence — including Brady’s credibility and the exhaustive Wells investigative report upon which he relied. There can be no question that in so doing the Commissioner was “arguably construing or applying the contract,” which is all it took to require enforcement of his award. In short, the Commissioner was entitled to disbelieve that two equipment employees would take it on their own to deflate the footballs without the knowledge or involvement of the quarterback of the team, and to conclude that Brady’s awareness was conduct detrimental to public confidence in the integrity of the game. He also was entitled to believe that Brady deserved to be penalized for refusing to cooperate with the investigation and then destroying his cell phone rather than turn it over to the investigators, even if there was no specific rule that said he could not do this.

Judge Berman was on similarly weak footing in attacking the punishment meted out (suspension versus fine) because he thought it was error for Commissioner Goodell to uphold the penalty by borrowing from the schedule of penalties for violations of the league’s steroid policy. Again, such judgment calls are quintessentially for the arbitrator, and the suspension penalty echoed the penalty that the Patriots themselves had issued to its equipment employees for their roles.

Relying on the FAA, Judge Berman further justified his decision to vacate Commissioner Goodell’s award based on the latter’s refusal to allow Jeff Pash to testify at the arbitration hearing. Judge Berman found this to be “fundamentally unfair,” because Pash was the co-lead investigator of the investigation, known as the Wells Report. Commissioner Goodell had excluded Pash because Pash had not in fact played substantive role in the investigation, his role having been limited to comments on the draft of the report. Commissioner Goodell moreover regarded any testimony by Pash  as cumulative, as Wells, the report’s architect, was allowed to testify. But Judge Berman determined that Pash would have had valuable insight into the course and outcome of the investigation and into the drafting and content of the Wells Report. Therefore, he found that Brady was prejudiced because he could not explore how truly independent the report was.

Again, Judge Berman appeared to have simply second-guessed Commissioner Goodell, given that Commissioner Goodell had substantial discretion to admit or exclude evidence without having to “follow all the niceties observed by the federal courts.”  Commissioner Goodell had at least a colorable basis for excluding Pash’s testimony. Indeed, his rationale for excluding that testimony was that which a court might have applied. Further, Judge Berman’s conclusion as to how Brady was prejudiced appeared speculative as to whatever additional value Pash’s testimony would have supplied.

Judge Berman came closest to presenting a valid basis for vacating the award in his determination that Commissioner Goodell had improperly denied Brady equal access to Wells’ investigative files and interview notes. Commissioner Goodell had justified his denial of access to those files, including interview notes, because they had played no role in the disciplinary decisions, which were based on the Wells Report itself. But as Judge Berman observed, the Wells Report was based on those notes. Furthermore, compounding the prejudice to Brady was that Wells’ law firm, Paul, Weiss, acted as both independent counsel and as retained counsel to the NFL during the arbitration hearing. NFL counsel therefore had access to the investigate file for direct and cross examination while Brady had no such access.

These observations have some merit. After all, it does not seem fair that Brady had no access to the notes and interviews upon which the report was based, especially when the same law firm that produced the report also represented the NFL at the arbitration hearing. But Article 46 of the collective bargaining agreement expressly limited discovery to the exchange of exhibits upon which the parties intended to rely at the hearing. The Commissioner’s decision to deny additional discovery was based on his interpretation of that provision, such that it at least arguably “drew its essence” from the collective bargaining agreement. Furthermore, as stated, Commissioner Goodell asserted that the investigation notes played no role in his decision on appeal, and other notes had been provided, such as the interview notes from the NFL’s own investigators.

Judge Berman Should Have Remanded

The final error in Judge Berman’s decision is that he did not remand the case. The procedural and due process errors appeared to be correctable. For example, Judge Berman could have instructed Commissioner Goodell to reconvene the hearing to allow Brady to access the Wells investigative files and to call Pash as a witness. In the Garvey case, the Supreme Court expressly criticized the Ninth Circuit for not remanding, because by not remanding the court in essence was deciding the case. Here, too, Judge Berman in essence was resolving the dispute, and without even making any judgment as to whether Brady did or did not have a role in the tampering that took place.

Immediately after Judge Berman issued his decision, the NFL announced it was appealing. Based on Judge Berman’s apparent failure to properly follow the applicable highly deferential standard, the NFL’s chances for success on appeal appear to be good.

Article By Irving M. Geslewitz of Much Shelist, P.C.
© 2015 Much Shelist, P.C.

Deflategate: A Critique of Judge Berman’s Decision

By now, almost everyone is familiar with Judge Berman‘s decision vacating Commissioner Roger Goodell’s award upholding a four-game suspension of New England quarterback Tom Brady in connection with the tampering of air levels in footballs during the 2015 AFC Championship game. Judge Berman found that Commissioner Goodell’s award was deficient in the following respects:

(1) that Brady had no notice that the conduct for which he was suspended — being generally aware of the misconduct of an equipment assistant and locker room attendant who deflated the balls and then refusing to cooperate with the subsequent investigation — was prohibited conduct for which he could be disciplined;

(2) that Brady was denied the opportunity to examine one of the two lead investigators who authored the investigative report upon which Commissioner Goodell relied, namely NFL Executive Vice President and General Counsel Jeff Pash; and

(3) that Brady was denied equal access to investigative files, including witness interview notes.

Judge Berman did not remand to correct these errors, but simply vacated the award.

Did Judge Berman Properly Follow the Standard for Review? How sound was Judge Berman’s decision? 

From an analysis of his opinion and well-established Supreme Court authority he was supposed to follow, it may have been the Judge himself who overstepped his bounds. It is important to remember that Commissioner Goodell’s role was that of arbitrator; the collective bargaining agreement permitted him to assume that role if he so chose and he did so choose. The level of deference that courts must give an arbitrator is extreme: in essence, as long as the arbitrator is arguably construing or applying the contract, and acting within the scope of his authority, a court cannot overturn his decision. While Judge Berman superficially acknowledged this standard, it does not appear that he actually followed it. Instead, he appeared to apply some type of “common law of the workplace” to find that Brady’s treatment was fundamentally unfair.

The first sign that Judge Berman was straying from his role was his failure to cite or acknowledge any of the leading U.S. Supreme Court cases establishing the basic principles regarding judicial review of labor arbitration awards in the collective bargaining context. The Supreme Court repeatedly has emphasized that a court is not authorized to reconsider the merits of a labor arbitration award even though the parties may allege the award was decided on errors of fact or on a misinterpretation of the contract. The Supreme Court has explained this extreme deference as emanating from the federal policy inherent in Section 301 of the Labor Management Relations Act (LMRA) favoring the settlement of labor disputes by arbitration. In essence, the parties contracted for the settlement of their dispute by an arbitrator of their choice; if dissatisfied with his decision, they are free to select a different arbitrator in the future.

The Supreme Court’s Garvey Decision

In particular, Judge Berman did not cite or deal with the Supreme Court’s decision in Major League Baseball Players Ass’n v. Garvey. This was striking, as that case, like Brady’s, arose in the context of the review of an arbitrator’s award under the collective bargaining agreement of a professional players association. The facts and decision the Garvey case are worth reviewing, as they demonstrate just how deferential the Supreme Court expects courts to be:

Steve Garvey, an All-Star first baseman, alleged that his contract with the San Diego Padres had not been extended in the 1988 and 1989 baseball seasons as part of the owners’ collusion in the market for free agents that an arbitrator had found to have taken place. He sought damages under a framework that had been set up to determine and evaluate individual player’s claims for damages due to that finding of collusion. Garvey’s main piece of evidence was a letter from the Padres’ President, Ballard Smith, admitted to the non-extension of the contract due to the collusion. However, the arbitrator rejected Garvey’s grievance by discrediting the letter because it contradicted the President’s testimony in the earlier arbitration in which the collusion had been found to exist. Bizarrely, however, in that earlier proceeding the same arbitrator specifically had found that testimony to be non-truthful in concluding there had been collusion.

Finding the arbitrator’s decision “completely inexplicable and border[ing] on the irrational,” the Court of Appeals for the Ninth Circuit vacated the award, finding the only justification for the arbitrator’s decision was “his desire to dispense his own brand of industrial justice.” Reversing, however, the Supreme Court claimed to be “baffled” by what the Court of Appeals did in light of the clearly expressed deferential standard for reviewing labor arbitration awards under Section 301. The Supreme Court acknowledged that the arbitrator’s ruling may have appeared to the Court of Appeals as “improvident or even silly,” but even so that did “not provide a basis for a court to refuse to enforce the award.” According to the Supreme Court, even when a federal judge considering the arbitration award is “convinced that the arbitrator committed serious error, it does not suffice to overturn [the arbitrator’s] decision.” This is also true when an arbitrator’s “procedural aberrations rise to the level of affirmative misconduct,” for a federal court may not “interfere with an arbitrator’s decision that the parties [players and owners] bargained for.”

Judge Berman Relied More on the Federal Arbitration Act Than Cases Under Section 301

Had Judge Berman paid closer heed to decisions such as Garvey, he might have been less inclined to wade into the weeds of assessing Commissioner Goodell’s claimed procedural aberrations. Judge Berman instead appeared to rely more heavily on cases applying the Federal Arbitration Act (FAA), which establishes four limited statutory grounds for vacating an arbitration award. Judge Berman zeroed in on the FAA’s exceptions allowing vacatur where the arbitrator is “guilty of misconduct . . . in refusing to hear evidence pertinent and material to the controversy” or in “exceeding his powers.”

The problem with relying on the FAA, however, is that the FAA has been held not to apply to labor disputes, although to be sure federal courts have often looked to the FAA for guidance in labor arbitration cases. Section 301, which does apply, does not provide statutory grounds for vacating a labor arbitration award, although, as seen, the Supreme Court has made clear what a court may not do. As the body of case law applying Section 301 has developed, the main reasons a court may vacate a labor arbitration award appear to be if (i) the award does not “draw its essence” from the labor agreement, meaning it conflicts with the express terms of the agreement, imposes additional requirements not expressly provided for in the agreement, or is based on “general considerations of fairness and equity” instead of the exact terms of the agreement; or (ii) it violates a well-settled and prevailing public policy.

The Problems With Judge Berman’s Findings

Judge Berman first found fault in Commissioner Goodell’s award because the Judge found that Brady did not have notice that he could receive a four game suspension for general awareness of a scheme to deflate footballs, or for non-cooperation with the NFL’s investigation. He also attacked Commissioner Goodell’s reasoning in looking to penalties for violations of the league’s steroid policy as a justification for upholding a four game suspension. He further found that Brady had no notice he could be suspended rather than fined. Citing decisions by other arbitrators involving NFL players, Judge Berman concluded that Commissioner Goodell violated the “law of the shop” by failing to find there was inadequately notice of prohibited conduct and potential discipline.

In all of this, however, Judge Berman was doing what the Supreme Court has stated a judge should not do: second-guessing the arbitrator. For example, the so-called “law of the shop” is not something akin to the common law that a court must follow. Rather, it is up to the labor arbitrator alone to interpret precedent by other arbitrators or, as the Supreme Court has put it, to simply to conclude “that he was not bound by” a prior arbitrator’s decision. Judge Berman relied heavily on decisions by other arbitrators in other high-profile NFL cases — such as “Bounty-Gate” and the Ray Rice and Reggie Langhorne cases — to find that Brady was entitled to the type of notice that Judge Berman thought he was entitled to. But that simply was not Judge Berman’s role to say.

Moreover, Brady’s notice contentions were acknowledged and rejected by Commissioner Goodell in his post-hearing detailed award that was also based on his assessment of the evidence — including Brady’s credibility and the exhaustive Wells investigative report upon which he relied. There can be no question that in so doing the Commissioner was “arguably construing or applying the contract,” which is all it took to require enforcement of his award. In short, the Commissioner was entitled to disbelieve that two equipment employees would take it on their own to deflate the footballs without the knowledge or involvement of the quarterback of the team, and to conclude that Brady’s awareness was conduct detrimental to public confidence in the integrity of the game. He also was entitled to believe that Brady deserved to be penalized for refusing to cooperate with the investigation and then destroying his cell phone rather than turn it over to the investigators, even if there was no specific rule that said he could not do this.

Judge Berman was on similarly weak footing in attacking the punishment meted out (suspension versus fine) because he thought it was error for Commissioner Goodell to uphold the penalty by borrowing from the schedule of penalties for violations of the league’s steroid policy. Again, such judgment calls are quintessentially for the arbitrator, and the suspension penalty echoed the penalty that the Patriots themselves had issued to its equipment employees for their roles.

Relying on the FAA, Judge Berman further justified his decision to vacate Commissioner Goodell’s award based on the latter’s refusal to allow Jeff Pash to testify at the arbitration hearing. Judge Berman found this to be “fundamentally unfair,” because Pash was the co-lead investigator of the investigation, known as the Wells Report. Commissioner Goodell had excluded Pash because Pash had not in fact played substantive role in the investigation, his role having been limited to comments on the draft of the report. Commissioner Goodell moreover regarded any testimony by Pash  as cumulative, as Wells, the report’s architect, was allowed to testify. But Judge Berman determined that Pash would have had valuable insight into the course and outcome of the investigation and into the drafting and content of the Wells Report. Therefore, he found that Brady was prejudiced because he could not explore how truly independent the report was.

Again, Judge Berman appeared to have simply second-guessed Commissioner Goodell, given that Commissioner Goodell had substantial discretion to admit or exclude evidence without having to “follow all the niceties observed by the federal courts.”  Commissioner Goodell had at least a colorable basis for excluding Pash’s testimony. Indeed, his rationale for excluding that testimony was that which a court might have applied. Further, Judge Berman’s conclusion as to how Brady was prejudiced appeared speculative as to whatever additional value Pash’s testimony would have supplied.

Judge Berman came closest to presenting a valid basis for vacating the award in his determination that Commissioner Goodell had improperly denied Brady equal access to Wells’ investigative files and interview notes. Commissioner Goodell had justified his denial of access to those files, including interview notes, because they had played no role in the disciplinary decisions, which were based on the Wells Report itself. But as Judge Berman observed, the Wells Report was based on those notes. Furthermore, compounding the prejudice to Brady was that Wells’ law firm, Paul, Weiss, acted as both independent counsel and as retained counsel to the NFL during the arbitration hearing. NFL counsel therefore had access to the investigate file for direct and cross examination while Brady had no such access.

These observations have some merit. After all, it does not seem fair that Brady had no access to the notes and interviews upon which the report was based, especially when the same law firm that produced the report also represented the NFL at the arbitration hearing. But Article 46 of the collective bargaining agreement expressly limited discovery to the exchange of exhibits upon which the parties intended to rely at the hearing. The Commissioner’s decision to deny additional discovery was based on his interpretation of that provision, such that it at least arguably “drew its essence” from the collective bargaining agreement. Furthermore, as stated, Commissioner Goodell asserted that the investigation notes played no role in his decision on appeal, and other notes had been provided, such as the interview notes from the NFL’s own investigators.

Judge Berman Should Have Remanded

The final error in Judge Berman’s decision is that he did not remand the case. The procedural and due process errors appeared to be correctable. For example, Judge Berman could have instructed Commissioner Goodell to reconvene the hearing to allow Brady to access the Wells investigative files and to call Pash as a witness. In the Garvey case, the Supreme Court expressly criticized the Ninth Circuit for not remanding, because by not remanding the court in essence was deciding the case. Here, too, Judge Berman in essence was resolving the dispute, and without even making any judgment as to whether Brady did or did not have a role in the tampering that took place.

Immediately after Judge Berman issued his decision, the NFL announced it was appealing. Based on Judge Berman’s apparent failure to properly follow the applicable highly deferential standard, the NFL’s chances for success on appeal appear to be good.

Article By Irving M. Geslewitz of Much Shelist, P.C.
© 2015 Much Shelist, P.C.

How Deflategate May Affect Your Business

In a closely watched case, federal judge Richard M. Berman of the Southern District of New York vacated the four-game suspension handed down to New England Patriots quarterback Tom Brady by NFL Commissioner Roger Goodell. Relying on Section 10 of the Federal Arbitration Act, Judge Berman’s decision focuses in large part on the discovery aspects of the arbitration proceeding which originally confirmed Brady’s suspension. In vacating the suspension, Judge Berman strikes a blow to those who view arbitration as a low-cost alternative to the traditional expense and burden of discovery, and provides an arrow in the quiver of parties looking to employ discovery costs as leverage in their disputes.

The suspension was originally imposed after the NFL commissioned an independent investigation into whether the New England Patriots, and Brady, tampered with game-used footballs during last season’s AFC Championship Game. Brady’s appeal was initially heard through the arbitration proceedings provided for under the NFL’s Collective Bargaining Agreement, and Commissioner Goodell served as the sole arbitrator. During the proceeding, Commissioner Goodell denied Brady’s request for the files gathered and created during the independent investigation, and also denied Brady’s request to compel testimony from Jeff Pash, general counsel for the NFL. Commissioner Goodell ultimately issued an award upholding the suspension and the NFL sought confirmation of that award from Judge Berman.

In a 40- page written opinion vacating the suspension, Judge Berman not only focused on what he deemed “fundamentally unfair” discovery rulings made by Commissioner Goodell, he also relied in part on the contention that Commissioner Goodell did not provide adequate justification for those rulings, particularly with respect to his decision to preclude the testimony of Pash. By digging into the nuts and bolts of the discovery process, Judge Berman deviated from what is often viewed as the “rubber stamp” process of confirming an arbitration award. Further, by pointing to the reasoning (or lack thereof) behind the arbitrator’s individual discovery rulings, Judge Berman arguably expands the burden on arbitrators to incorporate more formality into their decisions and, in essence, second-guessed the judgment of the Commissioner in his role as Arbitrator. Parties looking to protect future arbitration awards may also now feel the need to demand more formality in the discovery process, and from their arbitrators.

At one time, arbitration was seen as a more informal, yet sophisticated, way for businesses to settle disputes and conserve resources. With the increase in filing fees, the self-expansion of powers (and processes) by the organizations who conduct arbitrations, and now rulings like Judge Berman’s, it may be time to re-evaluate that view.

The NFL already has announced its intention to appeal. This case may go into overtime.

Article By Thomas Haskins of Barnes & Thornburg LLP

© 2015 BARNES & THORNBURG LLP

Let the NFL Season Begin: Judge Overturns Arbitration Award Suspending Tom Brady

Tom Brady will begin the 2015 NFL season as the starting quarterback of the New England Patriots for the 14th consecutive season following U.S. District Court Judge Richard Berman’s grant of the National Football League Players Association’s motion to vacate NFL Commissioner Roger Goodell’s July 28, 2015, arbitration award imposing a four-game suspension on Brady. This forestalled the suspension before it was scheduled to take effect on September 5.

Judge Berman found the NFL failed to show it applied Article 46 of its collective bargaining agreement with the NFLPA fairly and consistently.

This decision is the fourth time a legal authority has challenged the NFL’s application of Article 46, following U.S. District Judge David Doty in the Adrian Peterson case, former Federal Judge Barbara Jones in the Ray Rice arbitration, and former NFL commissioner Paul Tagliabue in his opinion regarding the Saints players in Bountygate.

While judges rarely vacate arbitration awards, Judge Berman identified specific problems with the Brady arbitration hearing held by Goodell, including denial of access to key witnesses, which can be grounds to vacate an arbitration award. He found problematic the denial of NFLPA attorneys’ request to question NFL general counsel Jeffrey Pash, who edited the Wells Report before its release.

In addition, Judge Berman criticized Goodell for using the League’s collectively bargained steroid punishment policy to justify the suspension. Recognizing that the policy’s procedures are irrelevant to the allegations made against Brady, Judge Berman wrote that the steroid policy “cannot reasonably be used as a comparator for Brady’s four-game suspension for alleged ball deflation by others.”

Judge Berman also found decisions cited by the NFL to support confirming the arbitration award to be distinguishable. While Article 46 authorizes the League to use Goodell as the arbitrator for player appeals, Judge Berman concluded the “law of the shop,” requiring fairness and consistency, prohibits Goodell from rendering a decision that may have been compromised by bias.

The next phase of this litigation has already begun. The NFL recognizes that a motion seeking a stay of Judge Berman’s decision would require a showing of “irreparable harm,” and its argument would fall short on this score.

The NFL filed a Notice of Appeal with the U.S. Court of Appeals for the Second Circuit within hours of Judge Berman’s decision.

Therefore, the immediate impact of Judge Berman’s decision is that Tom Brady can play in the first four games of the upcoming NFL season. Indeed, because of the Notice of Appeal, Judge Berman’s decision does not yet have precedential authority. However, the long-term effect of Judge Berman’s decision is far-reaching and considerable for the NFL, the NFLPA, and any private arbitral process governed by a collective bargaining agreement.

The NFL’s appeal faces the burden of convincing two appellate judges that Judge Berman misapplied the law.

Each case presents unique issues and facts, appellate courts typically do not reverse district court judges on their orders to vacate or confirm arbitration awards. The NFL likely will rely on strong legal precedent discouraging federal judges from interfering with a private arbitrator’s decision. In his 40-page decision, Judge Berman reasoned that the NFL failed to provide notice to Brady that being aware of deflated footballs and obstructing an investigation were misconduct justifying a four-game suspension. The NFL will undoubtedly argue that the “lack of notice” argument is irrelevant where the collective bargaining agreement gives the Commissioner complete authority to evaluate the definition of “conduct detrimental” to the League and to issue punishments based upon that determination. This is the authority provided by the NFLPA to the Commissioner under the current collective bargaining agreement and the NFL will argue it was not required to provide such “notice.” The NFL likely will also stress that Judge Berman’s decision to vacate Brady’s suspension reflects a complete disregard of judicial precedents confirming arbitration awards.

Clearly, this matter is not about Tom Brady, deflated footballs, or even NFL’s investigation. Rather, the appeal is about the NFL seeking to protect its internal arbitral process. Indeed, 38-year-old Tom Brady may even be retired by the time the appeals are ultimately resolved and a final determination is made.

Should the Second Circuit affirms Judge Berman’s decision, it will create a stronger precedent for the NFLPA to challenge future discipline issued through the NFL’s arbitral process. The Second Circuit’s precedent also will have potential far-reaching implications on all employers who utilize a private arbitration governed by a collective bargaining agreement, especially in light of the broad authority afforded to the Commissioner in the NFL’s collective bargaining agreement.

Article By Gregg E. Clifton & Benjamin A. Tulis of Jackson Lewis P.C.

Jackson Lewis P.C. © 2015

NLRB Calls Out Punt Team and Declines Jurisdiction Over Northwestern University Football Players

In a mild surprise given the current constitution of the Board (read – majority appointed by President Obama), the NLRB declined to assert jurisdiction in ruling on the petition of Northwestern University’s scholarship football players to unionize.  However, in a display of special teams not seen on a football field in Evanston, Illinois since the days of John Kidd, the NLRB reached its decision without determining if scholarship players were “employees” under the National Labor Relations Act.  Even with this limitation, it is clear competitive balance considerations for NCAA Division I sports has received great deference as a policy matter in a legal dispute.

I will not take this opportunity to point out my initial forecast that the NLRB would find this case extremely unique for its jurisdiction and the original decision by the Chicago NLRB regional office would be reassessed given the potential effect on permissible amateurism.  Not doing it.  It is sufficient to note this decision affirms the desire of the NLRB to see the student-athlete/employee question answered by Congress and/or the NCAA member institutions, although not necessarily in that order.

A fair question in reading the Board’s decision is whether the same result would have occurred if the “Power 5” conferences had not recently enacted measure to provide athletic aid for the full cost of attendance and extra benefits for scholarship athletes.  Since Northwestern University, as a member of the Big Ten, is subject to these new rules, it provided a floor for the enhancement of student-athlete benefits.  The Board noted this enhancement, even though it occurred after the scholarship football players filed their petition and there is no indication it would have been sufficient for collective bargaining purposes.

As the National Labor Relations Act does not cover public employees, it is important to remember the majority of Division I student-athletes participating in revenue-generating sports attend state universities.  The ability of public employees to organize for collective bargaining is governed by state law.  While the NLRB’s decision notes that Ohio and Michigan have recently enacted legislation which precludes union organization by student-athletes of their state universities (putting those perpetual lovebirds, the University of Michigan and The Ohio State University in the same basket), keep an eye on states like Connecticut and Pennsylvania which have recently considered legislation that goes the opposite direction to explicitly provide student-athletes the status of employees for purposes of collective bargaining.

Since this legal issue is by no means resolved, private NCAA institutions are still advised to make sure that NCAA and university-sponsored rules which govern practice time, academic advice and progress, athletic-related activities, and student-athlete wellness are monitored for compliance.  As a best practice, institutions should consider third-party compliance audits which not only uncover hidden legal vulnerabilities, but also are helpful in defusing the concerns which could lead to an organizational effort by the football or basketball team.

ARTICLE BY Tyrone P. Thomas of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

©1994-2015 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Second Circuit: MLB “Fanfest” Properly Treated as Exempt Recreational Establishment

Last year, Judge John G. Koeltl of the Southern District of New York ruled that individuals who served as volunteers at the 2013 Major League Baseball All Star Weekend FanFest, a four-day event centered around the All Star Game, were not entitled to minimum wage because they were “employed by an establishment which is an amusement or recreational establishment . . . [which did] not operate for more than seven months in any calendar year.”  On Friday, the Court of Appeals for the Second Circuit affirmed that decision.  Chen v. Major League Baseball, 2014 U.S. Dist. LEXIS 42078 (S.D.N.Y. Mar. 25, 2014).

The appeals court’s ruling focused on what constituted the operative “establishment” for purposes of applying the exemption: Major League Baseball conceded that if the “establishment” included the league along with FanFest, MLB did not meet the criteria. Citing Supreme Court precedent interpreting the now-repealed “retail or service” exemption, the Court concluded that an establishment for purposes of the seasonal amusement or recreational exemption is a “distinct physical place of business.” Because the Complaint conceded that FanFest took place at New York City’s Javits Center, and not at MLB’s offices or any other physical place controlled by MLB, that “physical separation [wa]s determinative.” Having established FanFest as the operative “establishment”, the Court ruled that Plaintiff’s Complaint itself clearly established the two exemption criteria: FanFest operated for not more than 7 months and was “amusement or recreational nature.” As to the latter, Plaintiff’s characterization of FanFest as a “theme park” established its qualifying nature.

Chen is a highly technical ruling, but instructive to employers having multiple establishments potentially qualifying for the exemption. The opinion, like Judge Koeltl’s below, declined to address Plaintiff’s claim that if the amusement or recreational exemption was inapplicable Plaintiff was entitled to minimum wage for all hours worked and could not be treated as an unpaid volunteer.

ARTICLE BY Noel P. Tripp of Jackson Lewis P.C.

Jackson Lewis P.C. © 2015

NFL vs. Brady: NFL Wins Initial Venue Battle

Round One of Deflategate has concluded…it’s now time for Round Two.

The initial battle over judicial forums between the National Football League and the National Football League Players Association (NFLPA) to find the most favorable venue to support their legal position has ended with U.S. District Court Judge Richard Kyle ordering the NFLPA’s Petition To Vacate The Arbitration Award rendered by Commissioner Roger Goodell(Goodell) to be transferred to the United States District Court for the Southern District of New York.

Within hours after Goodell upheld the four-game suspension of New England Patriots quarterback Tom Brady, the League’s Management Council had launched a preemptive strike against the NFLPA by filing a complaint in the U.S. District Court for the Southern District of New York, where the NFL is headquartered, seeking to confirm Goodell’s “Final Decision on Article 46 Appeal of Tom Brady.” (Article 46 of the NFL-NFLPA collective bargaining contract allows discipline of a player for conduct “detrimental to the integrity of, or public confidence in, the game of professional football.”) . The case has been assigned to Judge Richard Berman and he already has ordered the NFLPA to respond to the NFL’s filing by August 13th, well before the standard period to answer a complaint.

Brady and the NFLPA attempted an end run around the New York action in the historically player-friendly federal district court in Minnesota. They filed a Petition To Vacate Goodell’s Arbitration Award. Relying on a history of success in this venue, Brady and the NFLPA sought to vacate Goodell’s award. They were blocked, however, on July 30th when the Minnesota court said the Brady and his union must do battle with the NFL in New York in light of the league’s earlier, first-filed suit.

Absent any change in the NFPLA’s litigation, Brady and the NFLPA may be expected to respond to the NFL action directly, contending (as they attempted to do in Minnesota) that Goodell:

  • disregarded the “law of the shop” which requires NFL players to have advance notice of potential discipline,

  • disregarded the “law of the shop” that conduct detrimental discipline be fair and consistent,

  • denied Brady access to evidence and witnesses central to his appeal and his rights to a fundamentally fair hearing, and

  • was incapable of serving as an impartial arbitrator as a result of his handling Brady’s initial discipline and appeal.

Specifically, the NFLPA asserts that there was no direct evidence of Brady’s culpability cited in the report prepared by NFL-appointed investigator, attorney Ted Wells, and his investigative team, and that Goodell’s discipline was based on a “general awareness” standard created by the Commissioner to justify an “absurd and unprecedented punishment”. The NFLPA also asserts that no NFL player has ever served a suspension for “non-cooperation” or “obstruction,” as Goodell has imposed upon Brady.

The NFLPA had hoped that its action would be heard before U.S. District Judge David S. Doty, in Minneapolis. In February, Judge Doty vacated an award in the Adrian Peterson child abuse disciplinary matter when he determined that the discipline issued to Peterson was inappropriate for lack of notice and that the discipline imposed was based upon a policy that didn’t exist at the time of the Peterson’s alleged rule violation. But Brady’s case was assigned to Judge Richard Kyle, instead, who “perceive[d] no reason for this action to proceed in Minnesota.”

Here, based on its previous Minnesota claims, the NFLPA had hoped to reprise a similar argument on behalf of Brady. Now the union will be forced to assert those arguments in the NFL’s selected venue. The union will assert similar arguments to U.S. District Court Judge Richard Berman and allege that Brady was never informed he could be punished for his refusal to turn over his cellphone to Wells and his team. It may also ask the New York court to vacate the Goodell arbitration decision before the Patriots’ regular-season opener against the Pittsburgh Steelers — or issue an injunction that allows Brady to play.

The dual filings of the NFL and NFLPA presented an interesting legal issue: which lawsuit has priority? Typically, when federal judges are faced with the issue of deciding which of twocompetinglawsuits filed in separate federal jurisdictions has priority, they usually invoke the first-to-file rule. While this rule is not codified, the rule is generally considered an appropriate case management mechanism within the federal system. In general, the first-to-file rule gives priority to the first action filed over the subsequent action. The general judicial interpretation of the rule gives the decision making authority of the precedence of the first filed action to the district court judge assigned to that suit.

Federal courts have applied exceptions to the first-to-file rule if its application would create an injustice upon the party that filed the second action. One such exception that presents a strong argument against giving the first filed suit priority is the “anticipatory suit” exception. The purpose of this exception is to discourage procedurally unfair suits filed to frustrate settlement discussions, or to engage in brinkmanship, or to transform a party from defendant to plaintiff not to pursue a claim or right.

One specific rationale that supports the application of “anticipatory suit” exception is the court’s pursuit of procedural fairness. This specific rationale reflects the general judicial concern that a plaintiff should not lose its choice of the forum because the defendant anticipated the impending suit and preemptively struck by filing suit first in a different court.

Here, Judge Kyle specifically acknowledged that the NFL’s filing of the New York action “triggered application of the first-filed rule.” Judge Kyle acknowledged that the rule recognizes “comity between coequal federal courts and promotes the efficient use of judicial resources by authorizing a later-filed, substantially similar action’s transfer, stay or dismissal in deference to an earlier case”.

Judge Kyle concluded that the actions filed in Minnesota by the NFLPA and the NFL’s action filed in New York were almost duplicative and that the two cases and the issues presented in both were “flip-sides of the same coin.” In conclusion, Judge Kyle stated that the “cases are part and parcel of the same whole and should be heard together in the most appropriate forum: the Southern District of New York, where the arbitration occurred, the Award issued, and the first action concerning the Award was commenced.”

While acknowledging the order that the case should be heard in New York, NFLPA attorney Jeffrey Kessler stated, “We are happy in any federal court, which unlike the arbitration before Goodell provides a neutral forum, and we will now seek our injunction in the New York court.”

ARTICLE BY Gregg E. Clifton of Jackson Lewis P.C.

Jackson Lewis P.C. © 2015

Minor League Baseball Players’ Minimum Wage, Overtime Claims Proceed to Class Certification Stage

Former minor league baseball players are one step closer to gaining class certification of their wage and hour lawsuit against 22 Major League Baseball (“MLB”) franchises. The players allege that the franchises have been paying them less than minimum wage, denying them overtime pay, and requiring them to train during off-season without any pay. They contend the MLB and its clubs violated the FLSA, as well as similar state wage and hour laws in eight states by paying them a total of only $3,000 to $7,000 over the course of a five-month season despite workweeks of 50 to 70 hours.

On July 13, a California federal district court denied a motion by the baseball franchises to dismiss the high-profile suit for failure to pay minimum wages and overtime pay under the Fair Labor Standards Act and state wage and hour laws, allowing the players to proceed to discovery “to determine whether certification is appropriate and whether the proposed class representatives have standing to represent the various proposed classes.” Senne v. Kansas City Royals Baseball Corp., No. 3:14-cv-00608 (N.D. Cal. July 13, 2015).

On May 2, the court dismissed claims against eight of the MLB franchises, finding they did not have sufficient contacts with California, where the suit is pending, to establish personal jurisdiction over them. In the July 13 ruling, however, the court denied Defendants motion to dismiss stating that “the named plaintiffs who are proposed as class representatives of the various state classes seek to represent unnamed plaintiffs who were employed by these other franchise defendants on the basis that they suffered a similar injury.  As to these claims, the court ruled that it is appropriate to defer addressing the question of standing until after class certification.” (Senne, p. 25). As a result, the players have established sufficient standing to pursue discovery by claiming that at least one of the named plaintiffs was denied minimum wages or overtime pay from each of the remaining 22 defendants, and that at least one of the named plaintiffs was employed in each of the states for which the players assert state wage and hour violations.

The franchises have yet to reveal their defense to the specific claims; however, they may argue the players are exempt from FLSA’s minimum wage and overtime requirements because they are employed by a “seasonal amusement or recreational establishment.” Employees of establishments that operate for up to seven months per calendar year, or whose average receipts for any six months of the calendar year are not more than one-third its average receipts for the other six months of the year, are exempt from the FLSA’s minimum wage and overtime requirements.

Rulings on the applicability of the exemption to non-player employees in baseball have been inconsistent.  In 1998, members of the Cincinnati Reds maintenance staff sued the team, demanding overtime pay. An Ohio district court initially ruled in favor of the Reds, describing the team as “an amusement or recreational establishment” that played its games during a season that lasted seven months or less. That decision was overruled when the United States Court of Appeals conducted a detailed accounting analysis of the team’s operation and determined that the Reds did not qualify for a seasonal exemption.

The Detroit Tigers won a similar lawsuit in 1997 when bat boys sought overtime pay for their work in excess of 40 hours in a week. The Tigers claimed the seasonal exemption as a defense and were successful as the court recognized that Tiger Stadium only operated on a seven-month schedule, making its operation seasonal.

The Sarasota White Sox, a former minor league franchise in the Florida State League, also won a lawsuit by claiming a seasonal exemption in 1995 when a groundskeeper sued for overtime. The court ruled that the team played in a six-month season and made 99 percent of its revenue during that time period.

The question of whether the franchises will be safe from potentially significant wage and hour liability in this latest litigation may be a close call.

ARTICLE BY Keith L. Hammond & Gregg E. Clifton of Jackson Lewis P.C.
Jackson Lewis P.C. © 2015