DALLAS (CN) – Arbitrators need not review multimillion-dollar Tour de France race bonuses Lance Armstrong was paid before his cheating became public, the disgraced cyclist told a judge.
The case grew out of a $5 million bonus that SCA Promotions had refused to pay Armstrong, because of its doping suspicions, for winning the Tour in 2003.
SCA owed the bonuses under a contingent price contract that required it to indemnify Armstrong’s management company, Tailwind Sports, for race bonuses it would owe Armstrong under his employment contract with his race team.
After Armstrong and Tailwind sued SCA in 2004, the matter went to arbitration and ended with a $12 million settlement for Armstrong in 2006.
Six years later, however, the U.S. Anti-Doping Agency released a “reasoned decision” that accused Armstrong of running the most sophisticated doping program in sports history.
As Armstrong fought the allegations with a lawsuit against the USADA, the Union Cycliste International stripped him of his seven Tour de France titles and banned him from the sport for life.
The cyclist ultimately copped to the allegations in a January 2013 televised interview with Oprah. Noting that these admissions contradicted the denials Armstrong made under oath during depositions for his lawsuit against SCA, the Dallas-based insurer sued him, his agent Bill Stapleton and Tailwind for reimbursement of the bonuses.
“By now, everyone knows that Lance Armstrong perpetuated what may well be the most outrageous, cold-hearted and elaborate lie in the history of sports,” SCA’s complaint alleged. “While he lied to everyone, Lance Armstrong lied to SCA in shocking fashion: while testifying under oath in a legal proceeding.”
Last week Armstrong balked at what he called SCA’s attempt to reconvene the arbitration proceedings that ended with the $12 million settlement for him in 2006.
“The payments SCA made were settlement payments or insurance proceeds – they can be reasonably be described as prize money,” the 22-page motion states. “In any event, a claim for forfeiture of prize money does not fall within the scope of the compromise settlement agreement’s arbitration clause. The face that SCA regrets settling the case and wants its money back – and wants to punish Armstrong for his perceived transgressions – does not make this dispute arbitrable.”
Armstrong said SCA gave up its right to the money by settling his suit in 2006 and agreeing to paying the final arbitration award.
“Because there is no authority under Texas law for, ‘reconvening’ an arbitration six years after it ended with an agreed final arbitration award, Armstrong can only be compelled to arbitrate if the reconvened arbitration is treated as a new proceeding,” the motion to stay states. “And under the applicable legal standards, SCA cannot force Armstrong to arbitrate its current claims because they fall outside the scope of the only arbitration agreement between the parties.”
Armstrong said he is also not subject to arbitration provisions under the insurance policy because he was not a party to the agreement.
The only arbitration agreement that might be enforced against Armstrong lies in the settlement, he added.
“This conclusion eliminates SCA’s apparent contention that it is entitled to recover from $4.6 million in reimbursements (any interest or other amounts related to those payments) that SCA made to Tailwind following the 2002 and 2003 Tour de France races because those payments were solely pursuant [to] the contingent prize contract,” the motion states. “Without a contractual obligation under [the] contingent prize contract … Armstong is not obligated to arbitrate those portions of SCA’s renewed claim.”
Likewise the USADA’s reasoned decision provides no basis for reopening the arbitration, the defendants said.
“Contrary to SCA’s assertions, the reasoned decision says nothing about forfeiting either prize money or insurance proceeds, nor does it specify the entity any such ‘forfeiture’ would benefit,” the motion states. “Thus, a forfeiture request based on a USADA publication adds nothing to the arbitrability debate not already addressed as sanctions.”
SCA Lawsuit Remains Pending
Dallas County Judge Tonya Parker has not yet ruled on an April 2013 motion by Armstrong, Stapleton and Tailwind to dismiss SCA’s complaint against them.
The trio had said that arbitration awards are final under Texas common law unless it can be shown that the arbitrator was guilty of fraud, misconduct or a gross mistake that would imply bad faith or failure to exercise good judgment.
Trial is scheduled to begin on April 7, according to court records.
In November 2013, Armstrong settled similar claims filed by another race bonus insurer, Acceptance Insurance, in Travis County District Court.
Acceptance had filed suit earlier that year over the $3 million it paid for Armstrong’s Tour victories from 1991 to 2001.
The settlement ensured that Armstrong would not face deposition over his use of performance-enhancing drugs and blood doping.
In its lawsuit, SCA called itself “one of the most significant victims” of Armstrong’s deceit, adding that the defendants’ conduct “made a mockery of the legal system.”
SCA boiled its case down to two points: first, that Armstrong told a “critical” lie under oath in saying that he had “never, ever” used performance-enhancing drugs in his entire career. Second, that the defendants allegedly assured SCA and the arbitrators that if Armstrong had cheated, and was subsequently stripped of his Tour titles, he would be obligated to refund the prize money paid by SCA.
“This lawsuit is being brought because the first statement was a deliberate lie perpetuated by Mr. Armstrong and his cohorts in order to win the Tour de France races and, now that he has been exposed and stripped of those titles, it is time to make him live up to what he said in the second statement,” the complaint stated. Armstrong also attacked anyone who questioned him about doping, causing SCA to lose substantial amounts of business and suffer damage to its reputation, the insurer claimed.
“Mr. Armstrong’s camp immediately denounced SCA as ‘shameless,’ untruthful, and a cheat,” its complaint stated. “In an effort to intimidate SCA by hurting its business, Mr. Armstrong and defendant Tailwind (aided by Bill Stapleton) took out an advertisement to publicly humiliate SCA and to proclaim Mr. Armstrong’s innocence in connection with any drug use.” (Parentheses in complaint.)
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