MINNEAPOLIS (CN) – In a hearing on damages, NFL players on Thursday asked a federal judge to deny team owners access to their “$4 billion war chest,” and asked for more than $700 million in damages. The hearing before U.S. District Judge David Doty was one part of a two-track legal struggle between pro football players and the NFL and team owners.
The hearing stemmed from Doty’s March ruling that the NFL had violated a settlement agreement with players, by negotiating a deal with TV networks for more than $4 billion as “lockout insurance,” to sustain the NFL and its owners during the lockout, which the players say the owners had been planning for years.
(The second legal track involves the lockout itself. Players in Tom Brady et al. v NFL claim, in essence, that team owners are keeping their books closed to juggle numbers and deny the players their fair share of revenue sharing.
(The NFL Players Association dissolved on March 11, Tom Brady became the lead plaintiff in an antitrust complaint against the league and the owners of its 32 teams.
(The nature of the Brady complaint has been one of the bones of contention. The NFL claims the dissolution of the players’ union was a sham, intended to bootstrap a labor dispute into an antitrust complaint. A labor complaint, the NFL says, should be heard by the National Labor Relations board – not by a federal judge.
(The players say the owners made that argument because the NLRB process is much slower than a lawsuit, and would allow the owners to lock in place the status quo, while continuing to profit from the players’ work, to breach an 18-year-old stipulated settlement and agreement, and to keep their financial books closed.
(U.S. District Judge Susan Nelson enjoined the owners’ lockout on April 25. The 8th Circuit lifted the injunction four days later.)
The Thursday hearing before Judge Doty did not address the roots of Brady v NFL. It was on damages for the NFL’s breach of the SSA in Reggie White et al. v. NFL, dating back to 1993.
The players’ attorney, Thomas Heiden with Latham & Watkins, told Courthouse News: “What we asked Judge Doty to do today is actually really very simple. We asked him to provide the players some protection in the form of an injunction and to provide the players damages for the illegal conduct that Judge Doty found that the defendants have committed against the players – illegal conduct where they violated the laws of this land and illegal conduct where they violated and breached their own written promises.”
The players say the NFL and team owners have been preparing for the lockout since 2009. They claim the preparations included illegally obtaining $4 billion by renegotiating broadcasting and advertising contracts.
NFL attorney Gregg Levy, with Covington & Burling, responded by saying there was a “contingency plan” for a lockout, but no “commitment.”
The SSA has been in place since 1993, part of the settlement of an antitrust complaint from players, led by Reggie White. The players and the league then entered a collective bargaining agreement, based in great part upon the SSA. The collective bargaining agreement was renewed, extended and amended until the players decertified their union as this crisis approached.
Special Master Stephen Burbank ruled early this year that the NFL was liable for only $6.9 million in damages for breaching its obligations under the SSA.
Judge Doty overturned Burbank’s findings on March 1, finding that the league had negotiated or renegotiated its TV deals to benefit itself, at the expense of its joint interest with its players.
The NFL argued in April that the players never sought damages related to the so-called “‘credit subsidy’ associated with the work stoppage provisions. Now, however, on that same basis, the NFLPA asks for $(REDACTED) in damages … [though] the NFLPA never once claimed, argued for, or briefed the issue of punitive damages. Now it asks the court to award them.”
The league says the players’ waived such a claim before Special Master Burbank. (The citation is from the NFL’s April 24 Memorandum of Law in Reggie White et al. v. NFL.)
In the NFLPA’s reply memorandum, of April 28, the players say their main objective before dissolving was to obtain injunctive relief to prevent the NFL from maintaining collective bargaining “leverage” that it got from breaching the stipulated settlement and agreement.
On Thursday, the players’ counsel argued that denying the NFL access to the $4 billion with which it will sustain itself during the lockout is vital.
The players want the “war chest” held in escrow until the lockout crisis is resolved.
But NFL attorney Levy said the question the court needs to ask is how much the TV networks were willing to pay “to get rid” of the work stoppage provisions, considering the likely outcome of “more losses.”
“We continue to believe that the special master got it right, that Judge Doty’s findings did not give an adequate deference to the special master,” Levy told Courthouse News. “We are hopeful that Judge Doty will look at this record and see that the players’ claims for damages interjectionally should not go beyond what the special master ordered.”
Estimates of damages sought by players range from $955 million to $3.6 billion; the actual amount is unknown because the numbers are under seal.
Levy said: “It’s a big number, but it’s nowhere near $3.6 billion.”
The players and networks agreed to keep “confidential business information” under seal during the proceedings, he added.
The players’ attorney, Heiden, cast some light on the numbers.
Of the “$4 billion 78 million” obtained by the NFL, the broadcasters paid “$1 billion 22 million,” he said.
Heiden said the players’ share is 57.5 percent of total revenue, making the players’ total for that credit subsidy $707 million.
The $707 million does not include additional damages “for the exchange of the Red Zone rights, the digital rights and the extra game to NBC,” he said.
The players also seek exemplary damages.
Players’ attorney Jeffrey Kessler, with Dewey & LeBoeuf, indicated that the players hope for an expeditious decision granting the injunction, because it will “level the playing field.”
The NFL said it was fortunate to receive an expedited briefing schedule from the 8th Circuit, for the Brady case.
Levy said he would not be surprised to see a ruling by July.
“Presumably we’ll know [in] June or July what the court’s ruling is on the judgment,” he said. “But I don’t think that the issues in [White v NFL] are likely to be treated with the same urgency on the same schedule, so we probably won’t know the ultimate outcome of this proceeding for quite some time.”
Judge Doty seemed in high spirits during the hearing, but said he thought the matters would have been resolved by now, and said he was “disappointed” that there was a hearing at all.
On Friday, the 8th Circuit granted the National Hockey League’s motion to file an amicus brief on behalf of the NFL.