The arbitration was made public in February when SCA Promotions sued Armstrong and his management company, Tailwind Sports, in Dallas County court to confirm the award.
In a 2-1 split decision, the panel said Armstrong must pay the penalties because “perjury must never be profitable,” and condemned Armstrong for “almost certainly” carrying out “the most devious sustained deception ever perpetrated in world sporting history.”
The litigation began in 2004 when Armstrong and Tailwind first sued SCA for refusing to pay him a $5 million bonus for winning the Tour in 2003 because it suspected he had doped.
The dispute went to arbitration in 2005 and Armstrong won, resulting in SCA settling the matter in 2006 and paying Armstrong $7.5 million.
Six years later, SCA sued Armstrong, his agent William Stapleton and Tailwind after the Union Cycliste International stripped Armstrong of his seven Tour de France victories and banned him from the sport for life, citing the U.S. Anti-Doping Agency’s “reasoned decision” that accused Armstrong of running the most sophisticated doping program in sports history.
Armstrong confirmed the accusations in January 2013, in a televised interview with Oprah Winfrey. The interview featured excerpts from sworn testimony Armstrong gave during his lawsuit against SCA that implied he lied while under oath.
The arbitration panel’s $10 million sanctions award to SCA not only exceeds its authority, but is “beyond the scope of any agreement between the parties,” Armstrong contends.
“Moreover, the panel’s issuance of sanctions at this late juncture violates well-established Texas public policies, which favor settlements and arbitrations for efficient and final resolution of disputes, finality of judgments, and the right of corporations to wind up their businesses,” the 71-page motion filed on May 4 states. “This ‘sanctions’ order is unprecedented and insupportable under Texas law.”
Armstrong argues SCA had “sound reasons” to settle Armstrong’s lawsuit in 2006, claiming the confidentiality agreement protected the first arbitration panel’s “finding that SCA had engaged in the unauthorized business of insurance from disclosure” to the Texas Department of Insurance.
“That finding subjected SCA to potential liability of over $22 million, not to mention penalties associated with the many years of SCA’s legal violations,” the motion states. “Texas law provides that (1) an unlicensed insurer can have a retroactive penalty imposed up to $10,000 for each day of violation, and (2) an insurer may be enjoined from continuing the violation. The Texas Insurance Code makes it clear that SCA’s unauthorized practice of insurance is a third degree felony.”
Armstrong says SCA could not ask to vacate the 2006 settlement “it voluntarily agreed to” without exposing the alleged illegal conduct. By filing a new suit against Armstrong and Tailwind, SCA “invited a new problem.”
“The arbitration panel had no power to issue a sanctions award after the settlement and the final arbitration award (which was confirmed) because there was no agreement to arbitrate covering this claim, only a court can vacate a prior confirmed arbitration award, and the doctrine of functus officio ended the arbitration panel’s jurisdiction nearly a decade ago,” the motion states. “Thus, the award not only exceeded the panel’s authority, but was beyond the scope of any agreement between the parties.”
Armstrong argues the arbitration panel should not have imposed sanctions against Tailwind because it is not a party to the arbitration agreement and has since been dissolved.
“As the Texas Supreme Court has recognized, under the common law, ‘dissolution terminates the legal existence of a corporation,” the motions states. “Once dissolved, the corporation can neither sue nor be sued, and all legal proceedings in which it was a party are abated.”
SCA’s attorney, Jeff Tillotson with Lynn Tillotson in Dallas, said Armstrong and “his cadre of lawyers have made these same arguments over and over again.”
“They have been consistently rejected by the court and the arbitrators,” Tillotson said in an email on Tuesday. “It is time for Mr. Armstrong to get off the merry-go-round of denials and accept his punishment.”
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