The National Law Forum

New Antitrust Suit Takes Aim at NCAA Model

The NCAA’s amateurism model is once again under fire — this time in an antitrust lawsuit filed by sports labor attorney Jeffrey Kessler. Kessler, on behalf of four named current men’s basketball and football players (Clemson football player Martin Jenkins, Rutgers basketball player Johnathan Moore, Texas El-Paso football player Kevin Perry, and University of California basketball player William Tyndall), alleges the NCAA and the five major conferences (the Atlantic Coast Conference, the Big 12 Conference, the Big Ten Conference, the Pac-12 Conference, and the Southeastern Conference; these conferences currently include 62 member institutions) have entered into “cartel agreements” that unlawfully cap the compensation paid to student-athletes.

The suit seeks to eliminate current NCAA and conference amateurism regulations and create a market where institutions compete for the services of men’s basketball and football players in a less regulated way. This would be a major shift from the NCAA’s current amateur model to one similar to free agency in professional sports that would permit student-athletes to attend the highest bidding institution.

“We believe that the business has grown so big in Division I men’s basketball and in the football championship series system that we believe that judges, jurors, the public, the media and many in college sports themselves recognize that change has to come,” Kessler told The Wall Street Journal.

Currently, student-athletes are eligible only to receive tuition, room and board, and course-related books from the institutions they attend. The suit refers to these limitations as “an artificial and unlawful ceiling.”

The current restrictions on student-athlete compensation also are characterized in the suit as a “patently unlawful price-fixing and group boycott arrangement.” The suit alleges the NCAA and its member institutions “have lost their way far down the road of commercialism, signing multi-billion dollar contracts wholly disconnected from the interests of ‘student athletes,’ who are barred from receiving the benefits of competitive markets for their services even though their services generate these massive revenues.”

Valuing the current broadcast rights for the NCAA Tournament at $11 billion and the College Football Playoff at $5.64 billion, the suit alleges student-athletes are not sufficiently rewarded for the financial success of men’s basketball and football.

“The main objective is to strike down permanently the restrictions that prevent athletes in Division I basketball and the top tier of college football from being fairly compensated for the billions of dollars in revenues that they help generate,” Kessler told ESPN. “In no other business — and college sports is big business — would it ever be suggested that the people who are providing the essential services work for free. Only in big-time college sports is that line drawn.”

The suit questions why coaches, and not student-athletes, should benefit from the massive, and growing, revenues of college football and men’s basketball. It says that, “flush with cash and unable to compete for athletes on the basis of financial remuneration, colleges have directed their resources and competitive efforts to, among other things, the hiring of head coaches, instead of players.”

The suit seeks to permanently enjoin the alleged antitrust violations and to recover individual damages for the named plaintiffs.

Michael Ackerstein also contributed to this post.

Article by:

Gregg E. Clifton

Of:

Jackson Lewis P.C.

What To Look For Down The Road: France

There is some legislation being debated in the French Parliament. One piece of legislation would encourage fathers to take leave to care for their children. The goal would be to curb the systemic disadvantages that women experience in their careers due to motherhood.

Another bill has been introduced with the goal of reforming the system of continuing vocational training, which could have major financial implications. The bill provides for the creation of a so-called “individual learning account” in which rights to training hours earned each year would accumulate, within a total limit of 150 hours. The account would not be related to the company: it would be personal and “follow” the employee throughout his/her entire working life.

Article by:

Terese M. Connolly

Of:

Sheppard, Mullin, Richter & Hampton LLP

EEOC Sues Wal-Mart Stores East for Disability Discrimination – Equal Opportunity Employment Commission

Cockeysville Store Refused to Accommodate Applicant With End-Stage Renal Disease, Federal Agency Says

Wal-Mart Stores East, LP violated federal law when it refused to employ an individual with end-stage renal disease as a store associate because she needed a reasonable accommodation during the hiring process, the U.S. Equal Employment Opportunity Commission (EEOC) charged in a federal lawsuit it announced today.

The EEOC charges that following a successful interview, the assistant store manager at the Walmart store in Cockeysville, Md., offered Laura Jones a job as an evening sales associate, contingent on passing a urinalysis test for illegal drugs. When Jones said that she cannot produce urine because she has end-stage renal disease, the assistant store manager told her to ask the designated drug testing company about alternate tests.

That day, Jones went to the drug testing facility as directed and was told that while the facility did offer other drug tests, such as a mouth swab/saliva test, the employer had to order the alternate drug test. Jones then called the assistant store manager, relayed this information and even offered to pay for an alternate test if Wal-Mart would order it. Instead of ordering an alternative drug test as a reasonable accommodation to Jones’s disability, the EEOC charges that the assistant store manager replied that she had “called the corporate office” and that Jones could not be hired if she did not pass a urinalysis test. Jones’s application was closed for failing to take a urinalysis within 24 hours.

Such alleged conduct violates the Americans with Disabilities Act, which requires employers to provide a reasonable accommodation, including during the application and hiring process, unless it can show it would be an undue hardship. The ADA also prohibits employers from refusing to hire individuals because of their disability.

The EEOC filed suit (EEOC v. Wal-Mart Stores East, LP, Civil Action No. 1:14-cv-00862-JKB) in U.S. District Court for the District of Maryland, Baltimore Division, after first attempting to reach a voluntary pre-litigation settlement through its conciliation process. The EEOC seeks injunctive relief prohibiting Wal-Mart from discriminating based on disability, equitable relief that provides equal employment opportunities for individuals with disabilities, and lost wages, compensatory and punitive damages and other affirmative relief for Jones.

EEOC Philadelphia Regional Attorney Debra M. Lawrence pointed out that this is the third lawsuit the EEOC has filed in the last year against employers who refused to provide alternative drug tests, such as a saliva test or blood test, to applicants who requested and needed that reasonable accommodation. The other lawsuits involving this issue are EEOC v. Kmart Corporation; Sears Holdings Management Corporation; Sears Holding Corporation, filed in U.S. District Court for the District of Maryland (Civil Action No. 13-cv-02576) and EEOC v. Fort Worth Center of Rehabilitation, filed in U.S. District Court for the Northern District of Texas (Civil Action No. 3:13-cv-1736).

“While an employer may require applicants to undergo a drug test, these lawsuits should send a strong message to all employers that they simply cannot have a blanket, inflexible policy or practice of requiring only a urinalysis test, regardless of the circumstances,” said Lawrence. “Paying attention to federal disability law and making a minimal effort to accommodate this applicant would have saved everyone a lot of trouble.”

EEOC Philadelphia District Director Spencer H. Lewis, Jr. added, “Wal-Mart evidently thought Ms. Jones was qualified for the position because it made her a job offer. When it refused to permit her to take an alternative drug screening test and revoked the job offer, the company lost the talent and services of a qualified employee as well as violating federal law.”

The EEOC enforces federal laws prohibiting employment discrimination. Further information about the Commission is available at its website, www.eeoc.gov. The Philadelphia District Office of the EEOC oversees Pennsylvania, Maryland, Delaware, West Virginia and parts of New Jersey and Ohio.

Article by:

U.S. EEOC

State Intellectual Property Office of China (SIPO) Announces Graphical User Interface (GUI) Related Design Becomes Patentable Subject Matter as of May 1, 2014

Recently announced by the State Intellectual Property Office of China (SIPO), graphical user interface (GUI) design patent applications will be accepted beginning on May 1, 2014. Revised on March 17, 2014, the amended Patent Examination Guidelines will now include provision for GUI on an electrified device screen as patentable matter, including dynamic or animated GUI. The new standards will exclude applications not related to human-machine interaction, leaving video game interfaces, decoration wallpapers, and web page layouts unprotected under the revised examination guidelines. This change from SIPO comes as increasingly more devices across numerous industries are relying heavily on GUI innovation.

Article by:

Robert Greene Sterne

Of:

Sterne, Kessler, Goldstein & Fox P.L.L.C.

Illinois Whistleblower Awarded $3 Million Following Jury Trial

In what appears to be an alarming trend for employers, the Chicago Tribune recently reported that a former Chicago State University employee was awarded $3 million after a Cook County, Illinois jury found that the University retaliated against him for reporting alleged misconduct by top university officials in violation of the Illinois State Official and Employees Ethics Act (5 ILCS 430/15-5, et seq.) and the Illinois Whistleblower Act. Crowley v. Chicago State University, No. 2010-L-012657.

Background

Plaintiff James Crowley (Crowley) was the Senior Legal Counsel for Chicago State University (University). His responsibilities included reviewing contracts and processing Freedom of Information (FOIA) requests. During his employment, the University hired a new President, Wayne Watson (Watson). Watson did not commence his employment immediately due to a retirement benefits regulation; however, Watson allegedly made official University decisions and moved into the Presidential residence during the interim period. Crowley received several FOIA requests inquiring about whether Watson was working unofficially in contravention of the benefits regulation.

Crowley alleged that Watson urged him to withhold certain documents from the FOIA requests, and threatened him by saying “If you read this my way, you are my friend. If you read it the other way, you are my enemy.” Crowley refused Watson’s request, and released all documents relevant to the FOIA inquiry. Crowley reported his concerns about the FOIA requests, as well as concerns about the University’s contracting practices, to the Illinois Attorney General’s Office. The University subsequently terminated Crowley’s employment. Crowley filed suit alleging that he was terminated for refusing to withhold documents from the FOIA requests and reporting the University’s alleged misconduct in violation of the Illinois State Official and Employees Ethics Act and the Illinois Whistleblower Act.

Jury Verdict

The jury found in favor of Crowley, and awarded him $480,000 in back pay and an additional $2 million in punitive damages. The jury also concluded that Crowley should be reinstated to his prior position. After receiving the jury’s verdict, the presiding judge doubled the jury’s back pay award, as permitted under state law, and also granted Crowley $60,000 in interest.

Implications

Multi-million dollar judgments in state court whistleblower retaliation cases are trending at an alarming rate. We recently reported on a $6 million whistleblower verdict in California and other large verdicts in Minnesota and New Jersey. This trend highlights the serious risks employers face under state and federal whistleblower laws, and servers as a wake-up call for employers to carefully review and refine their whistleblower policies and related practices.

Article By:
Steven J Pearlman
Allison Lynn Martin

Of:

Proskauer Rose LLP.

NCAA Compensation Cartel Allegations Take Center Court – National Collegiate Athletics Association

On March 17, 2014, a class action lawsuit was filed against the National Collegiate Athletics Association (NCAA), alleging that capping compensation to college athletes violates Sherman Act Section 1.

The lawsuit was filed on behalf of all Division I college football and men’s basketball players, and named five major conferences within the NCAA as co-defendants: the Atlantic Coast (ACC), Big Ten, Big 12, Pacific-12, and Southeastern (SEC). The suit alleges that “Defendants have entered into what amounts to cartel agreements with the avowed purpose and effect of placing a ceiling on the compensation that may be paid to these athletes for their services.” Currently under NCAA rules, colleges may only compensate student athletes with a “full grant-in-aid” (the amount of tuition, room and board, and textbooks).

The complaint goes on to state that the NCAA “rules constitute horizontal agreements” among the defendants who drafted and agreed upon the rules, yet “compete with each other for the services of top-tier college football and men’s basketball players.” In addition to monetary damages, the plaintiffs are seeking injunctive relief that would allow colleges to freely negotiate with and compensate student athletes. The case is filed in the U.S. District Court of New Jersey.

Article By:

Young Cynn

Of:

McDermott Will & Emery

Register for InsideCounsel's 14th Annual Super Conference – May 12-14, 2014 in Chicago, IL

Happy first day of spring! The National Law Review is pleased to bring you information about the upcoming 14th Annual Super Conference hosted by Inside Counsel.

When

Monday, May 12 – Wednesday, May 14, 2014

Where

Chicago, IL

The annual InsideCounsel SuperConference, for the past 13 years, has offered the highest value for educational investment within a constructive learning and networking environment. Legal professionals will gain the opportunity to elevate the quality of their performance and learn ways to become a strategic partner within his/her organization. In two-and-half days attendees earn CLE credits, network with hundreds of peers and legal service providers and hear strategies to tackle corporate legal issues that are top of mind throughout this comprehensive program. SuperConference is presented by InsideCounsel magazine, published by Summit Professional Networks.

Now celebrating its 14th year, InsideCounsel’s SuperConference is an exclusive corporate legal conference attracting more than 500 senior level in-house counsels from Fortune-1000 and multi-national companies. The three-day event offers opportunities to showcase your firm’s industry knowledge and thought leadership while interacting with GC’s and other senior corporate counsel during exclusive networking and educational opportunities. The conference agenda offers the perfect blend of experts and national figure heads from some of the nation’s largest corporations, top law firms, government and regulatory leaders, and industry trailblazers. The conference agenda and educational program receives consistent high marks.

Leaders in Higher Education Call for Immigration Reform

As the immigration reform debate endures in the House of Representatives, leaders in higher education are continuing their call for improvements to the nation’s immigration system.

Most recently, presidents of 28 Catholic and Jesuit colleges and universities united in a fast for immigration reform on Ash Wednesday (March 5, 2014). In doing so, they joined the “Fast for Families” movement, which reignited the immigration debate last fall when the movement’s leaders, supported by many members of Congress and The President, fasted for twenty-two days on the National Mall in Washington, D.C. Students have not been far behind in the campaign to reform the nation’s immigration system. In February, one hundred and fifty students from nine Catholic colleges and Universities held a Student Summit on Immigration Reform.

These are just a few of the continuing calls made by members of the higher education community for Congress to pass immigration reform. In late 2013, leaders of more than one hundred colleges and universities across the United States wrote to their Congressional representatives to support the overhaul of the immigration system.

In many ways, our nation’s colleges and universities are on the front lines of our broken immigration system. Roughly a third of their graduate students in STEM fields are foreign nationals – in some states it is well over half. Leaders in higher education see how often our immigration policies prevent the nation from retaining and capitalizing on these talented individuals and create obstacles to growth.

The higher education community is hopeful that its continuing efforts will prompt the Congressional leadership to renew its efforts to pass meaningful immigration reform.

Article by:

Nataliya Rymer

Of:

Greenberg Traurig, LLP

Drinker Biddle & Reath LLP

Quiznos, the toasted sandwich chain based out of Denver, CO, filed for prepackaged bankruptcy protection within days of Sbarro. The company foresees this restructuring cutting $400 million of debt. In its bankruptcy protection the company listed liabilities between $500 million and $1 billion.

In recent years, Quiznos has faced stiff competition from long-time rivals such as Subway as well as from new entrants to the market like Potbelly Corp. Subway has over 41,000 restaurants in more than 100 countries, while Quiznos has only 2,100 locations. All but seven of these restaurants are owned by franchisees. There are over a dozen locations in New Jersey. Similar to Sbarro’s bankruptcy, Quiznos franchise locations should not be directly affected by the bankruptcy.

Quiznos’ senior lenders have committed $15 million in debtor-in-possession financing to support ongoing operations during the bankruptcy.

The company plans to implement a franchisee rebate program as part of its restructuring. This program will include investments in advertising, new technology at the restaurants and new incentives for prospective franchisees. The company has requested that the locations honor all outstanding gift cards.

Though the bankruptcy may not directly impact Quiznos’ franchisees, this is a sign of things to come. Landlords and franchisees alike should brace themselves for a bumpy road if Quiznos cannot turn operations around.

The case is In re: The Quiznos Global LLC, U.S. Bankruptcy Court, District of Delaware No. 14-10557.

Article by:

Donald F. Campbell Jr.

Of:

Giordano, Halleran & Ciesla, P.C.

United States Expands Sanctions in Response to Activities in Ukraine, Names First SDNs (Specially Designated Nationals)

Early March 18, 2014, President Obama signed an Executive Order (E.O.) expanding on E.O. 13660, which was issued on March 10, 2014. In addition to naming specific persons subject to the restrictions of E.O. 13660, including former Ukrainian President Viktor Yanukovych, the new E.O. expands the sanctions previously announced in response to recent actions of the Government of the Russian Federation in Crimea to include any person who is determined to:

Be an official of the Government of the Russian Federation;
Operate in the arms or related materiel in the Russian Federation;
Be owned or controlled by, or to have acted or purported to act for or on behalf of, directly of indirectly:
- a senior official of the Government of the Russian Federation; or
- a person whose property and interests in property are blocked pursuant to this order; or

Have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of:
- a senior official of the Government of the Russian Federation; or
- a person whose property and interests in property are blocked pursuant to this order.

Effective immediately, all property and interests in property that are in the control of U.S. persons (including foreign branches) will be blocked, and subject persons will be prohibited from entry to the United States. The complete list of blocked persons is available here.

As the situation in Ukraine continues to unfold and sanctions are expanded, U.S. companies should be particularly cautious in screening transactions in the region and maintaining records. In addition, companies with affiliates in the European Union should be mindful of changes to EU sanctions that could impact business in the region.

Article by:

Joan Koenig

Mollie D. Sitkowski

Of:

Drinker Biddle & Reath LLP

The National Law Forum

New Antitrust Suit Takes Aim at NCAA Model

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What To Look For Down The Road: France

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EEOC Sues Wal-Mart Stores East for Disability Discrimination – Equal Opportunity Employment Commission

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State Intellectual Property Office of China (SIPO) Announces Graphical User Interface (GUI) Related Design Becomes Patentable Subject Matter as of May 1, 2014

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