USA Equestrian Escapes Antitrust Case

On August 2, USA Equestrian Federation (USEF), Inc., the National Governing Body for "equestrian sports" (such as "jumping," "dressage" and "hunter"), won an antitrust case in the United States Court of Appeals for the 11th Circuit. See Jes Properties, Inc. v. USA Equestrian, Inc., 2006 WL 2136260 (11th Cir. 2006). At issue was the USEF's "Mileage Rule," which

requires that any A-rated recognized competitions held on the same date must be held at least 250 miles away from each other. This is true for all but some Northeastern states, which are subject to a 125-mile radius distance for A-rated competitions. The required distance diminishes as the rating decreases. Unrated or local competitions on the same date can be held within fifty miles of each other. Under the Mileage Rule, an A-rated competition that was held on a certain date in the previous year receives priority.

Florida promoters of for-profit equestrian shows who had lost out on receiving an "A-rating" hoped that the court would declare the Mileage Rule a violation of the antitrust laws. Seems like a pretty clear "territorial allocation," a per se violation of the Sherman Act, right? Not so, says the 11th Circuit. USA Equestrian has "implied immunity" from antitrust laws under the Ted Stevens Olympic and Amateur Sports Act, 36 U.S.C. § 220501 (commonly known as the "Amateur Sports Act," or ASA). That immunity allows a National Governing Body to exercise "monolithic control" over a sport. The court explained:

Therefore, the question for this Court is whether the application of the antitrust laws to the facts of this case would "unduly interfere" with the "operation" of the ASA. . . . Congress has specifically required NGB's to minimize conflicts in the scheduling of competitions and to "develop interest and participation throughout the United States" in their particular sport. The Mileage Rule functions to minimize conflicts and encourages interest in equestrian sports. It forbids competitions of the same rating from being held on the same days within 250 miles of each other. The USEF and the Promoter Defendants adduced evidence that the rule enables the best athletes to compete against each other. If two competitions of the same rating were in close proximity, top athletes may avoid competition against each other and go to different competitions. The USEF and the Promoter Defendants also produced evidence that the rule protects horses from being overworked. If two competitions were very close by on the same dates, horses may be taken from one competition to the next without sufficient rest. Additionally, the rule encourages the spread of equestrian sports throughout the country. If a competition cannot be held in one locality, a promoter may decide to hold a competition in a region in which competition has never been held. Therefore, the Mileage Rule is an exercise of the "monolithic control" Congress conferred on the USEF.

One interesting thing going on here is that evidence that a rule is part of the exercise of monolithic control sounds a lot like evidence that an antitrust violation promotes "on field competition." That kind of evidence has been rejected repeatedly by courts adjudicating sports law antitrust decisions. This decision also makes me wonder how how far "monolithic control" might go. Could USA Basketball, for example, decide to implement a rule that affected NBA competitions, on the grounds that it might increase the popularity of the sport of basketball?

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Deer, Racetracks, and Torts

There is a very unfortunate story out of Road America, a racetrack located in Elkhart Wisconsin:

There are many ways that driver can get injured in an open-wheel racing car. A 100-mph collision with a deer isn't one that usually comes to mind.

But that's the fate that befell Cristiano da Matta on Thursday during a routine test day at Road America. According to witnesses, the 32-year old Brazilian's RuSPORT Racing Lola struck the animal after it darted onto the track from the driver's right on the uphill run to the blind, left-hand Turn 6. The impact knocked da Matta unconscious [and he suffered a ruptured blood vessel on the surface of the brain and remains in critical condition] . . .

Road America media director Julie Sebranek said she had never heard of a similar incident at the track. "The race track has been here for 50 years. It's highly, highly unusual," Sebranek said Friday.

An 8-foot chain link fence topped with barbed wire circles the 628-acre property, which is surrounded by wooded terrain and farm fields.

When asked how the deer got onto the property, Sebranek said: "They have been known to jump the 8-foot fences. It's just a freak thing and we just maintain the property as we do on a daily basis."

Attorney John Powers has some interesting torts questions based on these facts:

1) Does a racetrack owe a duty to its drivers to keep the track in safe condition?
2) Is a deer running onto the track foreseeable?
3) How high are the fences?
4) How high can deer jump?
5) Do racetracks make drivers sign waivers?

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Federal Court Continues to Bar Suspicionless Stadium Patdowns

On July 28, a federal district court refused to lift an injunction barring the Tampa Sports Authority (TSA), which owns the stadium in which the NFL Tampa Bay Buccaneers play. Greg discussed the issues raised by the case, filed by a schoolteacher, here; Mike followed up here. In his latest opinion in Johnston v. Tampa Sports Authority, 2006 WL 2136154 (D. Fla. 2006), Judge Whittemore explained:

The TSA has not established that its concern for public safety is based on a substantial and real risk which would justify a "special needs" exception to the well-established rule that suspicionless searches of one's person are per se unreasonable. Moreover, the TSA has not demonstrated that this case presents one of the very limited instances where the Plaintiff's privacy interest is minimal and the TSA's public safety interest would be jeopardized by prohibiting mass suspicionless pat-downs at the Stadium.
* * *
Defendants contend the "special needs" exception justifies mass suspicionless pat-downs of NFL patrons because of the need to protect patrons against potential terrorist attacks. One cannot seriously dispute the magnitude of the threat of terrorism to this country or the Government's interest in eradicating it. In this regard, the TSA's "special need" to prevent terrorist attacks is "substantial" . . . . Likewise, any reasonable person appreciates the potential harm that would result from a terrorist attack at the Stadium. However, the gravity of the threat cannot alone justify the intrusiveness of a suspicionless search of Plaintiff's person.

The Court concludes:

Particularly after September 11, 2001, Americans are justifiably more sensitive to the need to protect against acts of terrorism. Many Americans have become more tolerant of protective measures such as magnetometers, container searches and pat-downs, rationalizing that the inconvenience is worth the added protection. In fact, pat-downs may not bother the average Buccaneers fan. However, the constitutionality of mass suspicionless searches does not turn on popular opinion. A generalized fear of terrorism should not diminish the fundamental Fourth Amendment protections envisioned by our Founding Fathers. Our Constitution requires more.

It's worth noting that the TSA, as a municipal entity engaging in "state action," is subject to the constitutional prohibition on search and seizure; an entirely privately owned stadium would likely be able to pat down fans without such concern.

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National Sports Law Institute Conference

Here's something that will be of interest to many in the sports law industry (and those who are trying to break into the industry): On Friday October 6, 2006, the National Sports Law Institute will host a conference on "Individual Performer Sports: Current Legal and Business Issues" on the campus of Marquette University in Milwaukee, Wisconsin. There will be five panels, and they will address legal and business issues related to tennis, golf, track and field, poker, swimming and other individual performer sports.

Panelists include:

John Collins--partner, Collins & Collins, Chicago, IL

Adam Epstein--associate professor of finance and law, College of Business Administration, Central Michigan University, Mt. Pleasant, MI

Elizabeth A. (Libba) Galloway, executive vice president and chief legal officer, Ladies Professional Golf Association, Daytona Beach, FL

Jeff Gewirtz, general counsel & managing director of legal affairs, U.S. Olympic Committee, Colorado Springs, CO

Martin Greenberg, partner, Greenberg & Hoeschen, LLC, Milwaukee, WI

Gordon Kirke, Q.C., sports lawyer who also teaches sports law, Toronto, Canada

Richard McLaren, faculty of law, University of Western Ontario, and Chairman, Association of Tennis Professionals (ATP) Anti-Doping Tribunal, London, Ontario, Canada

Jim McKeown, partner, chair Antitrust Practice Group, and member Sports Industry Team, Foley & Lardner LLP, Milwaukee, WI

Barbara Osborne, associate professor in exercise and sport ccience, and adjunct professor in law, University of North Carolina at Chapel Hill

Jill Pilgrim, general counsel & director of business affairs, USA Track & Field, Inc., Indianapolis, IN

Ryan Rodenberg, associate general counsel, Octagon, McLean, VA [and Sports Law Blog guest contributor]

James Sullivan, executive vice president, Poker Royalty, LLC, and founder and president, MVP Sports Group, Las Vegas, NV

For more information, check out this link. It should be a great conference.

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Royals Sign No. 1 Draft Pick to Major League Contract

The No. 1 overall draft pick this year, Luke Hochevar, agreed with the Royals on a four-year major league contract with a guaranteed $5.2 million over the length of the contract and incentives that could push the deal to about $7 million. Major league contracts are not usually given to draft picks. As stated in the linked press release, Hochevar will become the fourth No. 1 selection of the draft to sign a major league deal in the last 20 years. The others were Alex Rodriguez in 1993, Pat Burrell in 1998 and Delmon Young in 2003.

Signing a major league contract can be beneficial to the club because it allows the club to defer payment of the signing bonus by spreading it out over the term of the contract (typically backloaded). Whereas, signing a minor league contract requires the club to pay the entire bonus before the end of the calendar year of the year following the draft (i.e. within 18 months). Major league contracts are beneficial to the player because the player must be placed on the 40 man roster right away and the 3-year option clock starts ticking. In other words, the club has three years in which to get the player on the 25 man roster or risk losing the player to another team through waivers. Although signing a major league contract does not affect the player's eligibility for arbitration or free agency, it can potentially create roster problems for the club if the player is not ready for the big leagues after three years due to the option rule.

Hochevar is represented by Scott Boras. He was drafted out of the University of Tennessee by the Dodgers as the 40th overall pick in 2005, but did not sign. John Manuel and Kevin Goldstein of Baseball America wrote a really interesting article last year (9/5/05) outlining in detail the fiasco that lead to the failure of the Dodgers and Hochevar to reach agreement ("Hochevar Negotiations Get Weird"). In a nutshell, Hochevar (with Boras as his "advisor") was holding out with the Dodgers (imagine Boras doing that!) and they were unable to reach a deal after the 2005 draft. Another agent approached the Dodgers and negotiated a $3M signing bonus. Hochevar then terminated Boras on Sept. 2 before signing the contract, but that evening Boras convinced Hochevar that he was worth much more and convinced Hochevar not to sign and to stay with him. Hochevar decided not to play his senior year at Tennessee and played in an independent league so that he could continue negotiating with the Dodgers up until the 2006 June draft. Since they still did not reach agreement, Hochevar re-entered the draft and was selected by the Royals with the first pick.

From a purely economic standpoint, Boras definitely called this one right. All along Boras had been saying that Hochevar is comparable to 2005 draftee (and Boras client) Craig Hansen, who received a $1.3 million bonus and a guaranteed $4 million major league contract, and to Philip Humber, the Mets’ 2004 first-round pick who signed for a $4.2 million major league deal with a $3 million bonus. On the other hand, Hochevar's holdout prevented him from gaining valuable experience for two seasons playing for an organization in a much more competitive atmosphere than the independent league, which I believe has tremendous value that obviously can't be measured from an economic standpoint.

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California Court to Give Injured Golfer a Trial

A California Court has reversed a lower court's decision granting summary judgment to a defendant who was sued after injuring another golfer. While the defendant may, of course, win at trial, the decision appears to put California at odds with the Hawai`i Supreme Court's decision, which I discussed in this post. (The attorney representing the golfer injured by Jamal Mashburn should get his hands on this California decision).

The case is Shin v. Ahn, 2006 WL 2042891 (Cal. App. 2006), which can be downloaded (free registration required) from Findlaw here, and is covered a news story here. The facts underlying the dispute, according to the appellate court's opinion:

On August 10, 2003, [Ahn], Shin, Jeffrey Frost and a fourth unidentified man were grouped together to play a round of golf at Rancho Park Golf Course. . . .[Shin] stopped on the cart path before the tee box and then got a water bottle out of his bag and checked his phone for messages. In the vicinity of the thirteenth hole, before anyone had begun to tee off, Shin made eye contact with [Ahn] as he stood to the front and left of [Ahn].

[Ahn]'s practice on the tee was to back away from the ball and take one practice swing. When he took his practice swing on the thirteenth hole, he did not know where Shin was. He did not see anyone on the fairway at that time. After his practice swing, he stepped forward and focused on the ball for approximately 15 to 20 seconds until he struck it. [Ahn] did not know where Shin was when he teed off. After he hit the ball, he looked up to see Shin on the ground approximately 25 to 35 feet away; he was to the left of appellant at about a 40 to 45-degree angle from him toward the upper tee box. [Ahn]'s ball had hit Shin in the head.

Applying the doctrine of primary assumption of risk, the trial court granted defendant's motion for summary judgment. On appeal, the appellate court rejected the application of this doctrine to the facts:

the undisputed evidence submitted on summary judgment showed that [Ahn], who was in the same threesome as Shin, failed to establish Shin's whereabouts at the time he teed off. He conceded that there was "[n]o particular reason" why he did not wait to tee off until he knew where Shin was standing. . . . as a matter of law, [Ahn] owed Shin a duty of care . . . This duty included the duty to ascertain Shin's whereabouts before hitting the ball. . . . [I]mposing a duty on a golfer to determine the whereabouts of the individuals in his group before teeing off does nothing to alter or destroy the nature of the activity.

The court's holding is that failing to check for the location of the golfers in one's own group increases the risks inherent in golf, and is thus outside of the primary assumption of risk doctrine.

Is the distinction between Shin and the Hawai`i case regarding whether the injured and injurer are within the same foursome an adequate basis to justify different legal outcomes?

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New Sports Law Scholarship

Newly published this week:

Kristen Boike, Note, Rethinking gender opportunities: non-traditional sports seasons and local preferences, 39 U. MICH. J.L. REFORM 597 (2006)

Also worth a look (via free download at this link):

N. Jeremi Duru, Fielding a Team for the Fans: The Societal Consequences and Title VII Implications of Race-Considered Roster Construction in Professional Sport, 84 WASHINGTON UNIVERSITY LAW REVIEW (forthcoming 2006)

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