Northwestern Suspends Female Soccer Team Over Hazing Pics

Northwestern University has suspended its female soccer team pending an investigation of hazing of freshman athletes. The scandal erupted after the web site badjocks.com posted graphic pictures of team members, in various states of drunkenness and undress, engaging in simulated sexual activity and other forms of forced humiliation. Team alumni have denied the posted photos represent a longstanding tradition. Northwestern, of course, prohibits hazing, as the Chicago Sun Times reports here.

The San Jose Mercury News draws the obvious parallel to the Duke lacrosse scandal: "Progress was supposed to mean that drunken, ignorant male athletes wouldn't demean or harass women, not that drunken, ignorant female athletes would have equal opportunity to demean and harass one another. But that's how progress happens. For every step forward, there is at least one step backward. Sometimes two or three."

The NCAA and its members schools need to get tough, fast, on student athletes posting albums and other derogatory and demeaning information on photo-sharing web sites (guest blogger Tim Epstein discussed potential issues with such a move here). Badjocks.com got these pictures off of an album posted by the players on the internet. While it may take an athlete only a second to upload a photo to the web, it can take a lifetime to live it down. Loyola University Chicago has banned its athletes from posting on facebook.com. Perhaps other schools, or the NCAA as a whole, needs to consider a similar prohibition.

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The Power of Informal Property Rights Among Sidewalk Vendors

If you've ever been to Fenway Park in Boston, then you know there's nothing better than those Italian sausages sold by sidewalk vendors on Yawkey Way and Lansdowne Street. Granted, we may not know what's inside those sausages, but so long as we pretend that we've never read Upton Sinclair's The Jungle, then we really don't care about their ingredients and instead simply enjoy their taste. The same phenomenon undoubtedly take places around Yankee Stadium, Wrigley Field, and all of the other great ballparks.

But who gets to decide where those sidewalk vendors position their food stands? Is there a formal legal structure, such as zoning laws or a system of licenses, or is there an informal mechanism, such as who gets their first or is who is usually there? Or is there a formal structure that is ignored in lieu of an informal one?

Professor Gregg Kettles of Mississippi College School of Law addresses these types of questions in his paper Formal Versus Informal Allocation of Law in a Commons: The Case of the MacArthur Park Sidewalk Vendors. Gregg, who resided in Los Angeles before moving to Mississippi, conducted an empirical study of sidewalk vendors on Los Angeles' MacArthur Park, which features both illegal and legal/licensed vendors. He found that the "illegal" vendors were far more profitable and organized in their trade, which he explains as consistent with the rational allocation of property rights in a commons:

Each licensed vendor was one of more than thirty graduates of a special government-mandated vending training program, but only a halfdozen of them bothered to show up on the sidewalk on a typical day. Meanwhile, across the street, where vending is against the law, there was a buzz of activity, which continues today. The city enforces the law against illegal vending only sporadically. Soon after law enforcement leaves the scene, illegal vendors re-emerge like flowers after the spring thaw. Dozens of illegal vendors hawk their wares on busy sidewalks that have become a bazaar where anything that can be sold from a cardboard box, a blanket, or a suitcase is there for the asking. Why didn’t more vendors go legal? Why did the legal district fail? Despite efforts to stamp it out, why does illegal vending continue to flourish?

The answer lies in part in property rights. The success of any vendor depends on finding a good spot from which to vend, and choice spots are highly coveted and scarce. The legal vendors in MacArthur Park and the illegal vendors across the street both sell from land that is traditionally open to the public at large—a commons. But how that land is allocated is dramatically different. In MacArthur Park, a system of allocating space among the legal sidewalk vendors who operate there was formally adopted by the city. Across the street, a completely different system for allocating scarce sidewalk space was adopted by illegal vendors on an informal basis. It is the formality of one property system and the informality of the other that substantially explains the different outcomes in these two parts of a commons . . .

Self-interested strangers have coordinated their vending activities to maximize the value of the sidewalk. They have done this not just in the absence of government help, but in the face of government hostility. These illegal vendors developed wealth maximizing order not in the law’s shadow, but rather in its absence.

Particularly given today's debate over immigration policy and protection of our borders from "illegals," I find it interesting that spontaneous cooperation emerges among otherwise-divergent sidewalk vendors--I guess we should never understimate the power of shared opportunities to bring people together, a recurring theme no matter how long one has been in this country. This paper may be downloaded for free from SSRN.

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Indiana University Gets Creative in Drafting Coach's Contract

Mark Alesia of the Indianapolis Star reported last week that the contract of newly-hired Indiana University basketball coach, Kelvin Sampson (former Oklahoma basketball coach), contains a provision that permits IU to fire him with no financial obligations if the NCAA "imposes more significant penalties or sanctions than the University of Oklahoma's self-imposed sanctions." Oklahoma's self-imposed sanctions included recruiting restrictions and freezing Sampson's salary at $1.01 million. The NCAA is expected to announce its ruling early next month regarding 550 impermissible phone calls made to Oklahoma recruits from 2000 to 2004. Alesia obtained a copy of Sampson's contract through a public records request.

The contract also contains a provision giving the school the right to fire Sampson without obligation if his assistant coaches or players commit serious or repeated violations of NCAA rules. Last February, Michael McCann discussed on the blog Jim O'Brien's case in which he successfully sued Ohio State for breach of contract because O'Brien's contract with Ohio State did not specify that an NCAA violation could trigger a termination of the contract, and absent that specific language, the judge reasoned that Ohio State could not terminate it. Michael ended his post by stating: "As to the significance of the employment contract's lack of specificity, you can expect...that we'll now be seeing more carefully-tailored deals between colleges and coaches."

Nice prediction Mike....

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Condi Closer to Commish Job?

The New York Post asserts today that Secretarty of State Condi Rice is closer to the NFL Commissioner's job. I was well aware of Secretary Rice's desire for the job; frankly, I never expected the NFL would be interested in someone with no sports industry background and no collective bargaining / antitrust experience or expertise. But according to the article, the league is "panting" for Condoleeza.

Here's more from Cindy Adams:

Condoleezza Rice's future aspirations veer toward even more initials. . . . Next up, the NFL. You've heard she'd love someday to be commissioner of football, right? Well, someday is coming. . . . Paul Tagliabue, also a D.C. insider when he became commissioner of the National Football League, will have been commish almost 20 years by the time the White House changes tenants. . . . What I know is the league is panting for Condoleezza, the headhunters have passed word around that "we're all willing to wait until she's ready."

Of course, how seriously should one take the Post?

Hat tip to Wonkette, one of the funniest people in the world.

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Hawai`i Supreme Court Says No "Fore" is No Breach

In an interesting case picked up by the Journal's Law Blog, the Hawai`i Supreme Court held that a golfer who hits another golfer with a ball is only liable if s/he acts recklessly or intentionally (the original AP story is here and the court's opinion is here). Mere negligence on the links is not actionable. This is of course consonant with the vast majority rule in American law -- that co-participants in sports (at whatever level) may not recover from each other for injuries caused by negligence or resulting from conduct that is "part of the game." See this post by Greg.

Here are the facts of the case: "Tom was about 175 yards away from the hole when he hit his approach shot to the fifth hole green. The ball, however, took flight in an unintended direction. The ball hit the left side of the fairway, bounced into the rough, bounced again on the dirt area, then bounced onto the cart path, sending the ball towards the golf cart in which Yoneda was seated. Yoneda was struck in the left eye as his golf cart emerged from behind the restroom building."

The puzzling thing is the court's analysis of the failure of a player to yell "fore" when hitting a golf ball headed towards another player. The plaintiff in the case was struck in the eye and defendant admitted that he had not called out any warning. The court evidently took judicial notice that "It appears to be common knowledge among golfers that golf etiquette requires that a player shout 'fore' as a warning when his or her shot may endanger another player." However, the defendant's "failure to yell 'fore' when he hit the errant shot cannot be said to have been intentional or reckless conduct that falls outside the range of the ordinary activities involved in golfing. See Dilger, 63 Cal. Rptr. 2d at 594 (holding that golf etiquette, i.e., yelling 'fore' to warn others of errant shots, 'does not necessarily rise to the level of a duty')."

Why isn't a failure to yell "fore" reckless? Why isn't it so far outside the boundaries of what one expects about golf so as to be actionable? In the Hawai`i case, the plaintiff emerged from behind the bathroom building and defendant realized "too late" to shout a warning that plaintiff was likely to be hit. To me, if I hit a ball that's headed towards a restroom building, there is a fairly high likelihood someone will be hit by that ball and seriously injured. Even though I may not know of a specific person likely to be injured, it would seem imperative to call out a generic warning. There are several skiing cases where skiers who went off jumps, unaware that other skiers were in the “landing path”, were nevertheless held to have acted recklessly. Why isn’t that law applicable here?

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The Meritorious Rise of Michelle Wie in a Time of Age-Based Nonsense

David Fay, executive director of the US Golf Association, commenting in today's Boston Globe on the decision by the USGA's Women Committee's Chairwomen to extend a special exemption to a then 14-year old Michelle Wie to play in the 2004 US Women's Open:

"It wasn't even a tough call. To not exempt her, in my view, would be some sort of age discrimination."

Fay is then cited for the USGA's recent decision to grant Wie a special exemption at a US Open qualifier in Hawaii:

Fay was adamant that the special exemption was deserved and if there were any critics, they surely had to be silenced when Wie outplayed a field of men (and one other teenage girl) at Turtle Bay Resort & Golf Club in Hawaii. . .

Fay was referring to the fact that Wie -- who turned pro in October -- has not yet reached the minimum age of 18 for LPGA Tour membership, so her prize money is not official. To Fay, however, it's impressive -- $181,449 in two tournaments, which would have Wie 16th on the money list. The top 35 as of May 29 are eligible for exemptions and ''that's why it's such an easy decision," Fay said.

So because Wie is such an outstanding golfer, and because excluding her would seem illegal, the USGA and LPGA are willing to overlook their age eligibility policies. Funny how an exemption policy grounded on merit-based thinking makes so much intuitive sense, and yet the NBA would rather have an absolute, bright-line rule that prevents a player like Greg Oden--perhaps the best NBA prospect since Lebron James--from entering the league straight out of high school or earlier. As to the NFL, it also has a bright-line rule, unless, of course, it chooses to not apply it for whatever reason (see e.g., Larry Fitzgerald, who the NFL allowed to participate in the 2004 Draft, even though only two and a half years had passed from the date of his high school graduation and the date of the draft, and he was thus a half-year short of meeting the required three years for draft eligibility. His father, a well-known sports journalist, would later credit the “relationship” he and his attorney had “built over the years with commissioner Paul Tagliabue” as crucial in obtaining a waiver. See this law review article for more).

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Is There a Disney Case Against Cablevision Over the Larry Brown Contract?

For the last several days, it’s been widely reported that the New York Knicks will buy out the remaining four years of coach Larry Brown’s contract for something like $40 million. See here, here, here, and here. In all, Brown will have earned $50 million for less than 10 months service. In this coverage, James Dolan is often referred to as the “owner” of the Knicks, but the Knicks are actually owned by Madison Square Garden, which is in turn owned by Cablevision, a publicly traded corporation. Dolan may run these various entities, but there are other shareholders to whom the various officers and directors owe fiduciary duties. I wonder whether these other shareholders might be able to sue the board of MSG / Cablevision for a fiduciary duty breach. The leading case on point is Disney.

In addition to sports law, I also teach and write about corporations. The corporate law community is currently waiting with baited breath for the Delaware Supreme Court’s decision in this case, which was argued in January. There’s good commentary on the case (and predictions about it) here, here and here. Here’s a quick summary of that litigation. The Disney saga began when Michael Eisner hired his good buddy Michael Ovitz, a Hollywood talent agent, to be his number #2 at the Disney corporation. Ovitz turned out to be woefully unqualified, and quickly began planning his exit. He departed the company after 14 months service and collected a shocking $140 million. Shareholders sued, claiming corporate “waste.” The initial complaint was dismissed with leave to amend because it failed to plead that Ovitz’s compensation bore no relation to the services rendered (the current Delaware standard for a waste claim in the executive compensation context). Shareholders did a bit more digging, and uncovered evidence that the Disney board(s) had abdicated responsibility for negotiating the terms of Ovitz’s contract and then deliberately ignored its obligations in relation to Ovitz’s departure from the company. The court found that this new complaint stated a cause of action on which relief could be granted under a fiduciary duty breach theory. The new complaint was less about waste than it was about severe procedural defects in the board’s decision-making (reminiscent of the famous corporate law case, Smith v. Van Gorkom). Under the new complaint’s theory, shareholders went to trial and lost; their appeal is what the Delaware Supreme Court is currently considering.

Under the still-good law Disney opinion recognizing severe procedural defects in executive compensation decisions as actionable under a fiduciary duty theory, Cablevision/MSG/Dolan need to tread carefully in solidifying the terms under which Brown will depart. The parallels between Ovitz and Brown should be fairly clear: Subpar performance and tens of millions of dollars in compensation for just a few months work. Of course, there are some differences. While Ovitz had no studio experience when he took the Disney job, Brown has a pretty solid record as a coach. While Ovitz made more money than Brown from the deal, coaches are generally paid a lot less than top executives at multi-national corporations. Dolan might take some solace that the Disney directors won at trial, but I don’t think I’d want to take that risk. Perhaps concern for Disney-type litigation explains the delay in resolution of the Brown matter?

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