Fight Over Pro Soccer in Oklahoma City
OKLAHOMA CITY (CN) - A group trying to bring professional soccer to Oklahoma City asked a judge to toss out a no-compete provision in a franchise agreement the group signed with the United Soccer League.
Sold Out Strategies et al. sued the United Soccer League in Federal Court. It seek reliefs from a franchise agreement, claiming the USL misled it about its chances of bringing a professional team to Oklahoma City.
Managers Brian Lund and Debray Ayala and city residents Sean Jones and Donna Clark are co-plaintiffs.
The USL operates men's and women's professional and amateur leagues throughout the country.
The plaintiffs, who formed OKC PDL LLC, signed a franchise agreement with the USL on Dec. 11, 2012 to bring an amateur team to Oklahoma City.
The agreement contains a provision prohibiting OKC PDL from owning any soccer team - professional or amateur - in a rival league for two years after the expiration or termination of the franchise agreement, the complaint states.
The plaintiffs say Sold Out Strategies, Jones and Clark were required to sign the agreement, but Lund and Ayala were not.
The plaintiffs say asked the USL both before and during the creation of the amateur team if they could bring a professional team to Oklahoma City. They claim the USL told them "they did not need to worry; OKC PDL and the USL were now 'partners;' and OKC PDL needed to focus on getting its amateur team up and running."
Then a third party entered the picture, and submitted an application to bring a professional team to Oklahoma City.
"Obviously, as an existing franchisee and 'partner,' OKC PDL expected its
application would at least be given a good faith consideration," the complaint states. "OKC PDL also expected its application to be held in strictest confidence.
"However, when OKC PDL got the official notice that someone else had
submitted an application, they also discovered that the USL had doubled the franchisee fee from $250,000 to $500,000.
"Not to be dissuaded, plaintiffs and another party, [nonparty] Tim McLaughlin, submitted an application to the USL for a men's professional franchise."
The plaintiffs say the USL went silent after they submitted their application.
"After finally resigning themselves to the fact that something wasn't quite
right, the group began looking at the possibility of obtaining a men's professional
franchise from the North American Soccer League," the complaint states. "The North American Soccer League or 'NASL' is defined as a 'Rival League' in the Franchise Agreement.
"The group knew they were going to need a larger stadium in order to obtain
a men's professional soccer team, so they decided to submit a proposal to the Oklahoma City Board of Education to lease Taft Stadium. Their competitor for the USL professional franchise also submitted a proposal to the Board.
"The competing proposals were presented to the Board on June 17, 2013. In
a case of unusual timing, the USL announced less than an hour before the presentations that it had decided to give the USL professional franchise to the other party," the complaint states.
By that time, the plaintiffs say, they figured that their best shot at landing a professional team would be with NASL, and the board accepted the plaintiffs' lease proposal for Taft Stadium over the third party's proposal.
"Four days later, OKC PDL, Mr. Jones, Ms. Clark, Mr. Lund and Mr. Ayala each received a letter from the USL's attorneys threatening to sue each of them if they did not immediately abandon the idea of a NASL men's professional team in the Oklahoma City area," the complaint states.
"The USL contends that a NASL men's professional team would be in competition with OKC PDL's amateur team, even though the USL apparently sees no problem with the USL putting a USL men's professional team in OKC PDL's Protected Territory.
"In addition to threatening to sue plaintiffs, the USL has sent letters to both the Board and Mr. McLaughlin. The USL threatened to sue Mr. Laughlin if he did not immediately 'disassociate' himself from plaintiffs. The USL tried to persuade the Board to change its mind and give the Taft Stadium lease to the USL's new franchisee."
In the face of the threats, the plaintiffs say, they have backed away from their pursuit of a NASL franchise until they can obtain a judge's order stating that the USL franchise agreement's restraint of trade provision is unenforceable.
"Even though the Franchise Agreement states it is to be governed by Florida
law, plaintiffs are each residents of the State of Oklahoma," the complaint states. "In Oklahoma, the provision the USL is threatening to enforce is against the public policy of the State of Oklahoma. As a result, it is void and unenforceable.
"Even if Florida law was applicable, the provision is unenforceable in this case. Under Florida law, a restraint of trade is enforceable only if it is signed by the party to be bound; the time of restraint, geographic scope and 'line of business' to be restrained is reasonable; and enforcement is necessary to protect a 'legitimate business interest.'
"In this case, Mr. Lund and Mr. Ayala did not sign the Franchise Agreement or a guaranty.
"Moreover, two years is an unreasonable period of time; a geographic scope
that includes anywhere there is a USL-franchised team in the United States, Canada and the Caribbean is patently unreasonable; and, with all due respect to OKC PDL's amateur team, men's amateur and men's professional soccer are simply not the same 'line of business.' In addition to the obvious differences between amateur and professional athletics, the fact that these are different 'lines of business' is highlighted by the USL's apparent belief that it is entirely appropriate to allow someone else to establish a men's professional team in what it characterizes as the 'Protected Territory' of OKC PDL's amateur team.
"The USL's decision to place a professional team in the Oklahoma City market also demonstrate that the USL is not truly concerned about 'competition' for OKC PDL's amateur team. The USL is concerned that its newly-granted USL Pro franchisee will have to compete with a 'Rival League;' namely, the NASL.
"Finally, the restraint of trade in the Franchise Agreement is unenforceable because the USL has failed to honor its own obligations under the Agreement. As a franchisee and 'partner,' OKC PDL was entitled to expect that its application for a USL professional team would be held in confidence and receive at least a good faith review by the USL."
The plaintiffs seek declaratory judgment.
They are represented by Mitchell D. Blackburn with Conner & Winters.