By Daniel Wallach The debate over whether participants in daily fantasy sports contests are the "actual contestants" in their own distinct game of skill or, as some have contended, are merely passive players whose performance is entirely derivative of the skill deployed by the real-life athletes in the underlying sporting events has finally been resolved in the DFS industry's favor. If you recall, during the early days of DFS, several state attorney general opinions expressed skepticism that DFS participants were the actual contestants in a bona fide contest of skill because their success was tied to the performance of the real-life athletes who were beyond their control or influence. But the pendulum has now swung the other way. Two recent state court appellate court opinions lend support to treating DFS contests as bona fide contests of skill between actual contestants. Those rulings could open the door to other skill-based games tethered to real-life sporting events being similarly treated as bona fide contests of skill between actual contestants, even if some degree of chance determines which contestant prevails. Under the so-called "bona fide contest of skill" exception recognized in many states, the definition of “gambling,” “bet,” or “wager” specifically excludes: “offers of purses, prizes or premiums to the actual contestants in any bona fide contest for the determination of skill, speed, strength, endurance, or quality.” The typical fact-pattern usually involves a contestant who pays an entry fee to enter a contest of skill to win a prize in which they are the actual participant. Oft-cited examples include fishing tournaments, hole-in-one golf contests, spelling bees, hot dog eating contests and baking competitions. In a resounding one-two punch, the highest court of two states would add DFS contests to this expanding list of bona fide games of skill between actual contestants falling outside the purview of state gambling prohibitions. Dew-Becker v. Wu In Dew-Becker v. Wu, 178 N.E.3d 1034 (Ill. 2020), the Illinois Supreme Court concluded that daily fantasy sports contests are predominantly skill-based, and, as such, do not constitute gambling where the applicable definitional test is the "predominance" or "dominating element" standard. The Court began its analysis by recognizing that daily fantasy sports contestants are the "actual contestants" in a DFS contest, implicitly rejecting the notion that they were only passive players whose participation was entirely derivative of the real-world athletes in the underlying sporting events. Id. at 1039. The more relevant inquiry from the Court's perspective was whether the DFS contestants were engaging in a "bona fide contest for the determination of skill " when they competed head-to-head. Id. *(emphasis added). Of the three gambling definitional tests used to determine whether a contest was one of skill or chance, the Court determined that the "dominate factor" test was "the most appropriate" standard since it "provides a workable rule that allows for greater consistency and reliability in determining what constitutes a contest of skill." id. at 140. Citing several recent peer-reviewed studies, the Court concluded that participants in head-to-head daily fantasy sports contests were not engaging in "gambling" because such contests were "predominately determined" by the skill of the participants "in using their knowledge of statistics and the relevant sport to select a fantasy team that will outperform the opponent." Id. at 140-41 (adding that the historically dominant performance of highly skilled DFS players has created a potential revenue problem for the DFS websites since "new or unskilled players are often hesitant to participate.”) (citing Ed Miller & Daniel Singer, For Daily Fantasy Sports Operators, the Curse of Too Much Skill, Sports Bus. J., (July 27, 2015)). White v. Cuomo More recently, in White v. Cuomo, --- N.E.3d ---, 2022 WL 837573 (N.Y. Mar. 22, 2022), the New York Court of Appeals held that interactive fantasy sports contests do not constitute "gambling" within the ambit of New York's constitutional prohibition against gambling. Crucially, New York’s highest court used the “dominating element” standard (instead of the stricter “material degree” test under section 225.00 of the Penal Law) as the “constitutional” standard for determining whether IFS contests are permissible contests of skill or impermissible games of chance. Id. at *7. Applying the dominating element standard, the Court of Appeals concluded that the New York Legislature’s factual determination that IFS contests are a game of “skill,” not of “chance,” has “resounding support” from statistical studies showing that “skilled players achieve significantly more success in IFS contests and that rosters of skilled human players were more successful in IFS contests than randomly generated lineups over 80% of the time." Id. The Court also pointed to a "statistical analytic report" quoted at the legislative public hearing in 2016, wherein an unnamed statistical expert opined that IFS contests 'haver an inherent and vast character of skill where chance is overwhelmingly immaterial in the probability of winning” and winning a prize in such contests “strongly depends more on skill than on chance.” Id. Going beyond the statistical studies, the Court also emphasized that the facts "bear out" that IFS contests "involve a significant exercise of the participants' skills," reasoning that: [p]articipants draw from their knowledge of the relevant sport, player performance and histories, offensive and defensive strengths of players and teams, team schedules, coaching strategies, how certain players on opposing teams perform against each other, statistics, strategy, and the fantasy scoring system in order to exercise considerable judgment in selecting virtual players for their rosters. Id. at *8. While acknowledging that chance plays some role in IFS contests, the Court reiterated that participant skill “plays a substantial role in the outcome of the IFS contest—that is, the competition between IFS participants as to whose roster will yield more fantasy points, a contest which is scored through a metric different from that of the actual sport.” Id. Ultimately, the Court deferred to the findings of the legislature, concluding that, based on the record, the legislature’s determination that IFS contests are predominantly games of skill because they pit the strategic rosters of participants against one another—that is participants have control over their own skill-based roster selection, which substantially determines the outcome of the IFS contest—is firmly grounded in evidence and logic.” Id. The Court cited the Illinois Supreme Court's decision in Dew-Becker approvingly, stating that "it is now 'widely recognized’ that IFS contests are predominantly skill-based competitions” as distinguishable from games of chance. Id. at *7 (emphasis added) (quoting Dew-Becker, 178 N.E.3d at 1041). This is a promising development for those who operate (or seek to launch) DFS products in states where daily fantasy sports contests have not yet been authorized by statute or regulation. Despite the clear win for proponents of daily fantasy sports contests, the White decision is of limited precedential value in assessing the legality of other types of skill-based contests under the New York Penal Law’s definition of “gambling” in Section 225.00(2). That statutory provision incorporates a lower definitional threshold for what constitutes “gambling,” finding it to exist either: (i) when the outcome of the contest “depends in a material degree upon an element of chance,” or (ii) when a contestant stakes or risks something of value upon the outcome of "a future contingent event not under his control or influence." The New York Court of Appeals did not apply this statutory standard in assessing whether the Legislature exceeded its constitutional authority in authorizing IFS contests through a purely statutory enactment. Instead, the Court declared that "the proper benchmark in assessing whether an activity is a 'game of chance' for purposes of the constitutional gambling prohibition is whether chance is the dominating or controlling element." Id. at *7. But this constitutional standard is of no import when assessing the legality of other skill-based contests that have not been legislatively authorized. In all other instances, the Penal Law's "material degree" standard still governs. “Actual Contestants” in “Bona Fide Contests of Skill” Despite the apparent limited impact of the main holding in White, there is another section in the Court's majority opinion that could be helpful outside of the constitutional context, and, in particular, for the operators of other types of skill-based contests that award prizes to contestants who pay an entrance fee in order to participate. While not labeled as such, the Court acknowledged that IFS contests were "bona fide contests of skill" between "actual contestants" irrespective of the definitional standard used. The "bona fide contest of skill" principle is generally recognized as an exception to the definition of "gambling" in a growing number of states (including New York) and is codified by statute in at least nine states. (States which recognize this exception by statute include Colorado, Georgia, Illinois, Idaho, Indiana, New Mexico, Texas, Wisconsin, and Wyoming). But even in the absence of a statutory exception, courts have repeatedly held that contests for which the contestants pay entry fees to participate and for which prizes are awarded are not illegal gambling activities, even if some degree of chance determines which contestant prevails. See, e.g., Las Vegas Hacienda, Inc. v. Gibson, 359 P.2d 85 (Nev. 1961) (hole-in-one golf contest for which contestants paid entrance fee and stood to receive a $5000 prize was not illegal gambling). Rather than constituting gambling, “[p]aying an entrance fee in order to participate in a game of skill, or mixed skill and chance, in the hope of winning prize money guaranteed by some sponsor to successful participants, is a traditional part of American social life." State v. Am. Holiday Assn, 727 P.2d 807, 812 (Ariz. 1986) (“We are reluctant to adopt a statutory interpretation that would turn sponsors of golf, tennis or bridge tournaments, spelling bees and beauty contests into class 6 felons.”). The White court reaffirmed this longstanding principle. (The last time the Court of Appeals had addressed this issue was in 1897; so maybe it was in need of a bit of refreshing). In Section "B" of the opinion, the Court drew a sharp distinction between "permissible contests for prizes," such as spelling contests and golf tournaments, and illegal "bets and wagers," declaring that it has “long distinguished the ‘bets and wagers’ of gambling activities from lawful contests that award prizes to competitors—contests integral to the fabric of American social life, spanning the range from spelling bees to golf tournaments to televised game shows.” Id. at *8. “Permissible contests,” the Court explained, “share the ‘essential particulars’ that ‘one of the parties strives with others for a prize; the competing parties pay an entrance fee for the privilege of joining in the contest, and . . . the entrance fee forms a part of the general fund from which the premiums or prizes are paid.” Id. (citation omitted). “By comparison,” the Court continued, “bets and wagers are ‘agreement[s] between two or more, that a sum of money or some valuable thing, in contributing which all agreeing take part, shall become the property of one or some of them, on the happening in the future of an event at the present uncertain.’” Id. at *9 (citation omitted). “In other words,” as the Court explained, “‘[i]llegal gaming implies gain and loss between the parties by betting, such as would excite a spirit of cupidity’—an element that is notably lacking when entrance fees are fixed, and predetermined prizes are awarded by a neutral party whose monetary stake is limited to the payment of the prize.” Id. (internal citations omitted) (emphasis in original). “Contests charging entry fees and awarding fixed prizes do not constitute gambling prohibited by article I, § 9 of the Constitution,” the Court declared, noting that the IFS contests which were authorized by statute “are structured in the manner of fixed prizes for skill-based competitions—consistent with [New York case-law].” Id. The IFS statute permits only those contests that have prizes which are “[i] predetermined, [ii] announced prior to the start of the contest, [iii] awarded by a neutral operator, and [iv] which do not change based upon the number of participants or the amount of entry fees collected.” Id. With these guardrails in place, the Court determined that “IFS participants are not ‘wagering’ in the hopes of scoring a pool of funds ‘wagered’ by other players.” Id. “Rather, at the outset, an IFS contestant knows the set fee to enter the competition and the sum total of prizes that may be awarded—and that sum must be awarded even if entry fees are insufficient to cover the cost of the prize,” the Court added. Id. The Court also rejected the assertion that IFS contests were “indistinguishable” from traditional sports betting due to the lack of a contestant’s control or influence over the performance of the real-life athletes. The Court found that comparison inapt, stating that “[u]nlike bets or wagers on games of skill in which a bettor takes no part, participants in IFS contests engage in a distinct game of their own, separate from the real-life sporting events, in which they strive against other IFS participants.” Id. (emphasis added). As distinguished from sports betting, “[t]he outcome of an IFS contest turns—not on the performance of real-life athletes, as it would with respect to a bet or wager—but on whether the participant has skillfully composed and managed a virtual roster so as to garner more fantasy points than rosters composed by other participants.” Id. “An IFS contestant’s success is therefore not dependent upon the outcome of any particular real-life athlete’s performance or on the score sheet of any sporting event. Rather, success in IFS contests is relative, measured only by the quantity and quality of skill exercised by other IFS participants,” the Court reasoned. Id. In the majority opinion’s concluding paragraph, the Court summarized its holding in the case as follows: “[T]he prohibition on “gambling” in article I, § 9 encompasses either the staking of value on a game in which the element of chance predominates over the element of skill or the risking of value through bets or wagers on contests of skill where the pool of wagered value is awarded upon some future event outside the wagerer’s influence or control. However, games in which skill predominates over chance and skill- based competitions for predetermined prizes in which the participants have influence over the outcome do not constitute ‘gambling.’” Id. at *10. Takeaways from Dew-Becker and White The Dew-Becker and White decisions clearly reflect a judicial trend towards recognizing DFS contests as legal skill-based contests between "actual contestants," especially in those states which employ the "dominating element" standard for analyzing whether the contests at issue constitute illegal gambling activity. But a strong case could also be made that regardless of the standard employed, Dew-Becker and White amply support the proposition that DFS contests are true contests of skill between the actual contestants, and, therefore, fall outside the scope of the definition of gambling regardless of the standard utilized. And other skill-based competitions not tethered to sporting events could likewise potentially avail themselves of this legal reasoning. Daniel Wallach is the co-founder of Conduct Detrimental. He is a nationally-recognized gaming and sports betting attorney. You can follow him on Twitter at @WALLACHLEGAL.

(Photo by Getty Images) By Daniel Wallach It was easy for Miami Dolphins owner Stephen Ross to be dismissive of former head coach Brian Flores' bribery and tanking allegation when it wasn't backed up by any documentary evidence or eyewitness testimony. Indeed, Ross called the allegation that he made a $100,000 per loss bribe offer to Flores "false, malicious and defamatory" in his first public statement after Flores included that bombshell allegation in his original complaint alleging racial discrimination against the NFL, the New York Giants, Miami Dolphins, and Denver Broncos. Following that public denial, Flores' attorney, Douglas Wigdor, told CNN that he had "corroborating evidence" to support Flores' accusation. True to his word (sort of), Wigdor referred to that "corroborating evidence" when he filed an amended complaint on Feb. 8. In addition to naming two more plaintiffs--Steve Wilks and Ray Horton--and providing further evidence of a "sham" interview process for Black head coaching candidates in order to nominally satisfy the so-called "Rooney Rule," the amended complaint alleges that Flores detailed the alleged bribe offer in a written memorandum that was sent to the Dolphins' hierarchy in December 2019. As alleged at paragraph 166 of the amended complaint, "Mr. Flores memorialized Mr. Ross’ desire to have Miami lose games in a December 4, 2019 memorandum that was provided to General Manager, Chris Grier; Chief Executive Officer, Tom Garfinkel; and Senior Vice President of Football and Business Administration, Brandon Shore." This new allegation is a double-edged sword, for both sides. First, the decision by Flores' counsel not to attach that Dec. 4, 2019 memorandum as an exhibit to the amended complaint--a "smoking gun" if there ever was one--or to even quote from it strikes me as puzzling, especially when the complaint liberally quotes other individuals such as Patriots head coach Bill Belichick and NFL Executive Vice President for Football Operations Troy Vincent when it was beneficial to do so. Why hold this one back then? Perhaps, as one lawyer on Twitter admonished, the memo is the sole property of the Miami Dolphins and Flores has no right to it, calling this "employment law 101." But Flores wrote the memo! Nonetheless, it seems like a curious choice to tease the so-called corroborating evidence and then not even quote from it after using Bill Belichick's private text messages. From the perspective of the Dolphins and Ross, the existence of such a memorandum (even if the underlying bribery accusation is untrue) could have far more severe consequences. For example, if the alleged bribe offer referenced in the Dec. 4, 2019 memo was a false accusation, then why didn’t the Dolphins fire him right on the spot instead of letting him continue in his current position for two more years and work for an owner whom he just accused of committing a third-degree felony under Florida law. Assuming the memo exists (and aligns with the allegation at paragraph 166 of the amended complaint), it's odd that Ross would continue to employ a coach who accused him of committing a felony and then published that accusation in a memo sent to others. Conversely, if the accusation was true, then you may have both a felony crime and an attempted cover up. Regardless of whether it’s true or false, the Dolphins would seemingly have an obligation to immediately alert the NFL of a head coach's accusation that the team owner had offered him a bribe to lose games on purpose. Besides being a crime, the alleged offense strikes at the very integrity of the league's games, which are marketed as being true sporting competitions and not scripted entertainment a la professional wrestling. The failure to report such an accusation (as evidenced by the NFL only now getting around to investigating Flores’ claim that he was offered a bribe by Ross to lose games) could itself be considered conduct detrimental to the welfare of the league and grounds for severe discipline under the NFL Constitution and Bylaws, including a possible forfeiture of Ross’s entire interest in the team (through a forced sale). And that would likewise doom understudy Bruce Beal’s contractual right of first refusal to buy out Ross’s interest, a right which would not be cognizable in a forced sale situation (as I have previously written for Conduct Detrimental). A lot to unpack here. Daniel Wallach is the co-founder of Conduct Detrimental. He is a nationally-recognized gaming and sports betting attorney. You can follow him on Twitter at @WALLACHLEGAL.

(Photo by Rick Diamond/Getty Images) By Daniel Wallach Bill Belichick's texting misadventures may have gotten the headlines during the initial news cycle surrounding Brian Flores' filing of a class action lawsuit for racial discrimination against the NFL in early February, but it is not even close to being the most legally significant factual nugget in the complaint. To be sure, Belichick's text message sent to Brian Flores in which the legendary New England Patriots head coach congratulated someone he mistakenly believed was Brian Daboll (a white coach) about getting the New York Giants head coaching job that Flores (a black coach) was still interviewing for--may be evidence that the later interview with Flores was nothing more than a "sham" designed to satisfy the NFL's so-called "Rooney Rule," which requires NFL teams to interview at least one Black person in connection with a head coaching vacancy. But that anecdote--which may very well reflect an erroneous and premature assumption by Belichick--is highly specific to Flores and, while potentially helpful to his individual claim of racial discrimination against the Giants, does not implicate other NFL teams and may not even be particularly relevant to the claims of other Black coaching candidates who were not part of the Giants' interview process during the January 2022 hiring cycle. After all, this is a class action lawsuit and not just an individual claim by Flores. Indeed, Flores is purporting to represent the interests of an entire class of Black head coaching candidates who were passed over for the top job by other NFL teams, and not just with the Giants. For that, he'll need 'class-wide' proof of discriminatory intent. The Belichick text--while it may be one small link in the chain of evidence--is not enough by itself to get a class certified in federal court and may not even be enough to get Flores past the expected NFL motion to dismiss the complaint. (Per a recent court order, the NFL's response to the complaint is due on April 11th). Luckily, Flores already has a 'smoking gun' in his arsenal. And it is far more meaningful--and legally significant--than the Belichick blunder. At paragraph 7 of the complaint, Flores' legal team includes NFL Executive Vice President Troy Vincent's recent admission--first reported by Mark Maske of the Washington Post on January 11, 2022--that there is a "double standard" when it comes to the tenures of Black head coaches, citing several examples of Black NFL head coaches (such as Tony Dungy and Jim Caldwell) being fired after a winning season and another Black NFL head coach (Steve Wilks) being fired after only one season. [An even more recent example of that is David Culley, a black head coach who was recently fired by the Houston Texans after just one season at the helm]. "How do you explain that?", Vincent rhetorically asks. Answering his own question, Vincent states that "[t]here is a double standard." He then wonders why some NFL head coaches--namely, white ones--"get the benefit of the doubt to be able to . . . take [their] bumps and bruises in this process of getting a franchise turned around when others [undoubtedly referring to black head coaches] are not afforded that [same] latitude?" Vincent concludes by saying that "we've seen that [throughout] history at the [p]rofessional level." This is tantamount to an admission of guilt. And it comes from one of the highest-ranking executives in the league office. As such, it carries tremendous evidentiary weight. From this lens, it may be enough to allow Flores to overcome the NFL's expected motion to dismiss. To survive a motion to dismiss, a plaintiff alleging 'race-based' employment discrimination must "specifically allege the events claimed to constitute intentional discrimination as well as circumstances giving rise to a plausible inference of racially discriminatory intent." Yusuf v. Vassar College, 35 F.3d 709, 713-14 (2d Cir. 1994) (emphasis added). Two recent decisions in the Southern District of New York shed light on the "plausible inference" standard. In O'Quinn v. City of New York, 2021 WL 4429787, at *8 (Sept. 27, 2021), the Court described this standard as requiring a plaintiff to allege facts "supporting at least 'a minimal inference of discriminatory motivation.'" In Walker v. Triborough Bridge & Tunnel Auth., 2021 WL 5401481, at *3 (S.D.N.Y. Nov. 18, 2021), Judge Valerie Caproni--who is presiding over the Flores case--similarly wrote that a plaintiff alleging 'race-based' employment discrimination "need only give plausible support to a minimal inference of discriminatory motivation." She added that "[a] plaintiff may defeat a motion to dismiss in a discrimination case 'by indirectly showing circumstances giving rise to an inference of discrimination.'" Id. (citing cases). Vincent's admission that there is a racial 'double standard' in the NFL is about as close to an admission of guilt as one can get. To say that it supports a "minimal inference" of discriminatory intent would be the understatement of the year. See Sweeney v. West, 149 F.3d 550, 554 (7th Cir. 1998) ("No admission of guilt is necessary, . . . but the plaintiff must at least raise an 'inference of discrimination,'" inferring that an admission of guilt would easily clear the 'minimal inference' threshold). When combined with the compelling statistical evidence presented in the complaint--detailing the gross disparity between the number of Black head coaches in the NFL (only 1 out of 32 teams when the complaint was filed) and the number of Black players in the league (roughly 70% of the workforce)--Vincent's admission should enable Flores to overcome the NFL's expected Rule 12(b)(6) motion to dismiss for failure to state a cause of action. There is more than enough in the complaint. And if he can survive both that motion and the NFL's motion to compel arbitration, Flores will be able to proceed with the all-important discovery phase of the lawsuit and begin taking the depositions of key witnesses. Daniel Wallach is the co-founder of Conduct Detrimental. He is a nationally-recognized gaming and sports betting attorney. You can follow him on Twitter at @WALLACHLEGAL.

By Daniel Wallach If the NFL has learned anything from its recent legal setbacks in a St. Louis courtroom, it is that litigating against an adversary on their home turf in state court is to be avoided, if at all possible. The state court system offers many perceived advantages to local plaintiffs, in that: (1) state court judges are usually elected or appointed for fixed terms, whereas federal judges are appointed for life, presumably leaving them less likely to be biased in favor of a local plaintiff or swayed by local sentiment; (2) the discovery rules may be looser in state court, allowing plaintiffs more leeway and fewer restrictions in obtaining evidence from a defendant, whereas in federal court, district judges and magistrate judges maintain tighter control over both the timing and scope of discovery; (3) more cases go to trial in the state court system, whereas in federal court, pretrial dismissals of lawsuits via a motion for summary judgment are far more common; and (4) state court juries are notorious for awarding higher monetary damages than federal juries. At first glance, Jon Gruden’s lawsuit against the NFL and Roger Goodell appears to be the kind of case that can be “removed” (meaning transferred) to federal court to avoid these potential disadvantages for an out-of-state defendant. After all, Gruden is a resident of Nevada, and both the NFL and Goodell are domiciled in New York. In most normal circumstances, the fact the plaintiff and the defendants are from different states—coupled with the amount in controversy likely being higher than $75,000—would make a case removable to federal court under the diversity of citizenship statute (28 U.S.C. § 1332). But not here. Why? Well, the NFL is not like a regular corporation with shareholders. It is an “unincorporated association” consisting of 32 separately-owned and independently-operated professional football teams. This has consequences in the federal court system. For diversity purposes, an unincorporated association has no citizenship independent of its members. Instead, under longstanding federal case-law, an unincorporated association is deemed to be a citizen of every state in which each of its constituent members is a citizen.[1] Stated another way, an unincorporated association is a citizen of every state in which its members are citizens. In the NFL’s case, that means that the NFL is a citizen of a whole bunch of different states where its teams play. That includes Nevada, the home state of the Las Vegas Raiders. Under this quirky jurisdictional rule, courts must “count every member of an unincorporated association" for purposes of diversity jurisdiction. This is to be contrasted with the treatment of corporations, where citizenship for diversity purposes is confined to the entity's principal place of business and state of incorporation. Thus, if even one member of the unincorporated association defendant is a resident of the same state as a plaintiff, then “complete diversity” is lacking and the case cannot be removed unless there are federal statutory or constitutional claims involved. The NFL should be very familiar with this rule, as they have invoked it in past lawsuits. In 2009, a Minnesota federal district court dismissed a lawsuit brought against the NFL by Minnesota Vikings players Kevin Williams and Pat Williams, who were seeking to overturn their four-game drug suspensions, and had asserted, among other claims, several state-law causes of action. The district court dismissed the Williamses state-law claims on the basis that diversity of citizenship was lacking. In so holding, the Court took note of the fact that “[t]he Williamses are residents of the State of Minnesota . . . , and “the NFL, as an unincorporated association of the member teams, is a citizen of each state in which its members are citizens.”[3] Since the plaintiffs were Minnesota residents and one of the NFL’s member teams—the Minnesota Vikings—“has Minnesota citizenship, . . . there is not complete diversity,” the Court ruled.[4] Jon Gruden’s lawsuit is similarly structured—with a resident of the same state on both sides of the “v.” Gruden, a Nevada resident, is suing the NFL, which is described in the complaint “as an unincorporated association of 32 member clubs organized under the laws of New York.” Relying on the above-cited jurisdictional rule, Gruden’s complaint alleges that “[t]he NFL is a resident of Nevada because, among other reasons, it does business here and derives substantial revenue from its contacts with Nevada, and one of its member clubs is a resident of Nevada.” (¶ 11). And he would appear to be right, given the NFL’s status as an unincorporated association. Which means that, barring some unknown new information about the NFL’s legal status (such as its filing for corporate status under state law),[5] the case will likely remain in a Nevada state court. This could spell trouble for the NFL, which has learned the hard way—especially in St. Louis—that its successes in the federal court system don’t always translate to state court. Daniel Wallach is the co-founder of Conduct Detrimental. He is a nationally-recognized gaming and sports betting attorney. You can follow him on Twitter at @WALLACHLEGAL. [1] See Dix v. Peters, 2020 WL 3792002, at *1–2 (N.D.N.Y. July 7, 2020) (recognizing that “‘unincorporated associations have long been considered to be citizens of each and every state in which the association has members.’”) (quoting Baer v. United Servs. Auto Ass’n, 503 F.2d 393, 395 (2d Cir. 1974); Jaser v. New York Prop. Ins. Underwriting Ass'n, 815 F.2d 240, 242 (2d Cir. 1987) ("The citizenship of an unincorporated association for diversity purposes has been determined for nearly 100 years by the citizenship of each and every member of that association.'"). [2] See Carden v. Arkoma Assocs., 494 U.S. 185, 195 (1990) (adhering to the "oft-repeated rule" that courts must "count every member of an unincorporated association form purposes of diversity jurisdiction."). [3] See National Football League Players Ass’n v. National Football League, 654 F.Supp.2d 960, 972 (D. Minn.), aff’d sub nom., Willams v. National Footbll League, 582 F.3d 863. (8th Cir. 2009). [4] Id. [5] Although the NFL relinquished its tax exempt status in 2015 and began filing returns as a taxable entity beginning that year, it remains an unincorporated association for all other purposes and continues to refer to itself as such in federal court filings. A check of the online records of the New York Department of State and the Delaware Secretary of State does not provide any indication that the NFL has changed its status to that of a business corporation.

By Daniel Wallach A billion-dollar-plus jury award? A new NFL expansion franchise? It’s amazing what a summary judgment denial will do. It has transformed the once unthinkable into the now plausible. Judge Christopher McGraugh’s denial of summary judgment on Sept. 13 meant that the City of St. Louis’s lawsuit against the NFL over the relocation of the Rams’ franchise would finally be going to trial before a St. Louis jury. And that prospect has unleashed a tsunami of speculation over the recovery potential for St. Louis. But so much of the high upside potential—such as a 10-figure damages award or the promise of a new NFL expansion franchise—is contingent on the NFL’s relocation policy being enforceable in court. That’s because the City’s claims for breach of contract and unjust enrichment—which seek the disgorgement of the $550 million relocation fee paid by the Rams to the NFL as well as the increased value of the Rams franchise resulting from its relocation to Los Angeles (an amount likely exceeding $1 billion), plus other damages (such as lost revenues)—are grounded on their contention that the NFL relocation policy is a binding, enforceable contract to which cities (such as St. Louis) are intended third-party beneficiaries. The NFL has pushed back heavily against that theory, arguing, albeit, unsuccessfully so far, that the relocation policy is simply a “self-imposed" policy that was “unilaterally issued” by the NFL Commissioner and, because it is “subject to change at any time,” cannot constitute a binding contract under Missouri law. On the third-party beneficiary issue, the NFL represented in court filings that “there is no evidence that the Relocation Policy was made for the primary benefit of host cities.” To the contrary, the NFL argued, “the undisputed evidence shows that the NFL’s primary purpose in promulgating the Policy was to benefit the League and its member clubs.” These statements, however, are at variance with representations that the league made to governmental authorities in the late 1990’s, when the relocation policy was last amended. Archival documents obtained by Conduct Detrimental reveal that the NFL's amended relocation policy—the same one at issue in the St. Louis case—was the byproduct of a collaborative effort between the NFL and The United States Conference of Mayors (whose membership included the City of St. Louis) to create objective criteria that would govern franchise relocations. This led to the creation of a joint document entitled The United States Conference of Mayors and The National Football League Joint Statement of Principles (the “Joint Statement of Principles”), which sets out many of the same relocation criteria that are now part of the NFL’s amended relocation policy. In testimony before Congress in June 1999, then-NFL Commissioner Paul Tagliabue acknowledged that the NFL’s amended relocation policy “incorporated” the Joint Statement of Principles. Further, high-ranking NFL executives have stated—both in written correspondence with the U.S. Conference of Mayors and in testimony before Congress—that the NFL’s relocation guidelines were intended to protect cities (and not just the NFL and its member teams). These stunning revelations—which are not mentioned in any of the unsealed court records in the St. Louis lawsuit—can be found in Congressional hearing materials that are publicly available online. The NFL’s collaboration with the U.S. Conference of Mayors on new relocation guidelines Several weeks ago, I began a quest to locate online records that could provide some historical context to the amended relocation guidelines in the hope that there would be some indication that the guidelines were intended to protect home markets, and not just the NFL and its 32 member teams. I hit the motherlode on Oct. 4 when I found 155 pages of hearing materials from a Senate Judiciary Committee hearing on S.952, a bill sponsored by Senator Arlen Spector entitled the “Stadium Financing and Franchise Relocation Act of 1999,” which would have given the NFL an antitrust exemption for franchise relocations and to require, as a condition of such exemption, that the NFL set aside 10% of their national broadcast revenues to finance up to 50% of new stadium construction. S.952 was never enacted by Congress, but the hearing testimony and exhibits that are part of the congressional record—and to which a court could take judicial notice—offer a revealing look at the NFL’s interpretation of its own relocation policy, which perhaps not coincidentally, was amended just one week before the congressional hearings on S.952. (Hearing, at p. 85). Commissioner Tagliabue was one of the witnesses at the June 22, 1999 hearing. His testimony highlights the central role that the U..S. Conference of Mayors played in the conception and development of the amended relocation guidelines. Tagliabue testified that the NFL had “worked for several years with the U.S. Conference of Mayors and [had] come to an understanding on issues of franchise movement.” (Hearing, at p. 78). He then asked the Committee Chair, Senator Spector, to insert into the hearing record an exchange of correspondence between the NFL and the U.S. Conference of Mayors that “reflects this working relationship.” (Id.). This exchange of correspondence—consisting of a June 11, 1999 letter from NFL Senior Vice President Joe Browne to New Orleans Mayor Marc Morial, and a June 21, 1999 letter from Mayor Morial to Commissioner Tagliabue—confirms that the two organizations had "worked closely" on the issue of franchise relocation and had reached an "understanding" on a new relocation framework that provided better protection for cities. The league's correspondence, in particular, contains some candid admissions that contradict its litigation position today. In his June 11, 1999 letter, NFL Senior VP Browne acknowledged that the league and the U.S. Conference of Mayors “have worked for many months to develop an approach to address . . . common concerns” regarding franchise relocations, and noted that “[a] draft Statement of Principles was written to set forth our understanding.” (Hearing, at p. 78). Browne’s letter then states that “consistent with those discussions and grounded in sound business policies, the NFL has amended its franchise movement guidelines,” adding that the amended guidelines “bring to reality our mutual ideas on these issues, and are the direct result of our discussions.” (Id.). Key here is the acknowledgement by Browne that the two organizations worked closely for many months to develop a joint approach to franchise relocations and had reached an “understanding” on the issue which culminated in the enactment of new relocation guidelines that were the “direct result’ of those discussions. Sound like a contract negotiation, doesn’t it? Two parties dealing at arms'-length with one another. Now get ready for the money quote—the one where the NFL openly acknowledges that the amended relocation guidelines were intended to protect municipalities. In the opening sentence of the third paragraph of his June 11, 1999 letter, NFL Senior VP Browne represented to Mayor Morial that “[t]he amended guidelines balance and protect the interests of the cities, the League and individual teams.” (Hearing, at p. 78). He explained that the amended guidelines “establish an orderly process, ensuring municipal interests will be heard and addressed, and that franchise moves occur only after exhausting all reasonable options in a team’s existing home territory.” (Id.). Browne revealingly characterized the relationship between the NFL and the U.S. Conference of Mayors on the issue of franchise relocation as akin to a partnership, stating that “[t]he amended guidelines, and the cooperative discussions that preceded them, reflect the strengthened partnership between our two organizations.” (Id.). Mayor Morial echoed Browne’s characterization of the parties’ collaborative efforts in crafting new relocation guidelines. His June 22, 1999 letter to Commissioner Tagliabue acknowledges that “[t]he United States Conference of Mayors has worked closely with the National Football League to develop mutual positions on matter such as franchise movement,” noting that “these discussions led to a draft Statement of Principles on these and related subjects.” (Id.). Mayor Morial conveyed to Commissioner Tagliabue that the U.S. Conference of Mayors was “pleased to receive the news that the League has amended its franchise movement guidelines in a fashion consistent with our discussions.” (Id.). And just like his counterpart at the NFL, Mayor Morial believed that the league’s amended relocation guidelines were intended to protect home markets. In the last sentence of the second paragraph of his June 22, 1999 letter to Commissioner Tagliabue, Mayor Morial (speaking for the U.S. Conference of Mayors) stated that “[w]e believe these amendments improve upon past policies and should give city interests a greater measure of recognition and protection.” (Id.). These statements bolster St. Louis's contention that the relocation guidelines were intended for its direct benefit and, therefore, create third-party beneficiary rights under Missouri law. See Saint Luke’s Hosp. of Kansas City v. Benefit Mgmt. Consultants, Inc., 626 S.W. 731, 751 (Mo. Ct. App. W.D. 2021) (“A party claiming third-party beneficiary rights has the burden of showing that provisions of the contract were intended for its direct benefit."). The incorporation of the Joint Statement of Principles in the NFL’s new relocation guidelines There is one other crucial piece to Commissioner Tagliabue’s witness appearance before the Senate Judiciary Committee on June 22, 1999. In addition to providing in-person testimony and copies of the June 1999 correspondence between the NFL and New Orleans Mayor Marc Morial, Commissioner Tagliabue submitted a prepared statement to the Senate Judiciary Committee that, among other things, describes the interplay between the Joint Statement of Principles and the league's amended relocation policy. In footnote number 4 of his prepared statement, Tagliabue acknowledged that the Joint Statement of Principles was developed "in conjunction with" the U.S. Conference of Mayors. (Hearing, at p. 85 n. 4). But it's the next sentence in Tagliabue's footnote that has significant legal consequences. In that critical sentence, Tagliabue discloses to the Senate Judiciary Committee that, in the week prior to his congressional testimony, he had "issued an updated set of relocation policies and procedures that incorporates the terms of [the Joint] Statement of Principles and reflects the procedural framework sought by the Conference of Mayors.” (Id.). So, there it is: the NFL commissioner--an accomplished lawyer (and long-time partner at Covington & Burling) who previously served as the league's outside counsel for many years and presumably understands basic contract law--is stating unequivocally to Congress that the NFL’s amended relocation policy "incorporated" the terms of the Joint Statement of Principles between the NFL and the U.S. Conference of Mayors.[1] Talk about burying the lede. A billion dollar-plus footnote (potentially). Why is this revelation so important? Several reasons. First, it elevates the importance of the Joint Statement of Principles, and gets that document properly before the jury. Under basic contract law principles, when a contract expressly refers to and/or incorporates another document, that other document becomes constructively a part of the writing, and in that respect the two form a single instrument. The incorporated matter is to be interpreted as part of the writing. (See Saint Luke’s Hosp. of Kansas City v. Benefit Mgmt. Consultants, Inc., 626 S.W. 731, 747 (Mo. Ct. App. W.D. 2021)). This interpretive principle--recognized by Missouri's appellate courts--will allow the jury to consider the Joint Statement of Principles as part and parcel of the NFL's amended relocation policy. This will be helpful to the St. Louis plaintiffs because the Joint Statement of Principles includes numerous statements that bolster their contention that they are intended third-party beneficiaries of the NFL’s amended relocation policy. For one thing, the Joint Statement unequivocally shows that the cities (through the U.S. Conference of Mayors) played an active and influential role in crafting the amended relocation guidelines. Not only did the cities have a seat at the table, but they helped formulate the new relocation criteria that were incorporated into the NFL’s amended relocation policy. As shown on page 2, the Joint Statement of Principles specifies ten (10) “objective criteria” that are to govern league decisions on requested franchise relocations. And almost all of these criteria were carried forward and included in the NFL’s amended relocation policy—nearly verbatim. In other words, the cities (through the U.S. Conference of Mayors) jointly created the league’s new relocation criteria. But it gets even better. The Joint Statement of Principles also puts the “public interest” regarding franchise relocation on equal footing with the league’s interest. It makes this clear in several places. In the Preamble, the Joint Statement recites that “’[c]ommunities, teams and the National Football League should work together and identify and resolve issues pertaining to team relocations . . .” (Joint Statement, at p. 1). Next, in the section entitled “Team Movement,” the Joint Statement specifies that “[c]ommunities, stadium authorities and team owners should deal with each other in equitable and fair ways.” (Id.). The section on "Team Movement" also includes two explicit references to the “public interest.” (Remember, the NFL is arguing that the relocation guidelines serve only to advance “the league’s interest” in the home market—a subtle, yet important, distinction). In the second paragraph of the section entitled “Team Movement,” the Joint Statement emphasizes that “[i]t is important that the League maintain rules and procedures to regulate the movement of teams consistent with this Statement of Principles. Such rules should recognize both the private interest of team owners to maintain a profitable business and public interest to enjoy the direct and indirect benefits of having a professional sports franchise.” (Id.). And then to hammer the point home even more, the Joint Statement refers to the ten “objective criteria”—most of which are expressly incorporated in the NFL’s amended relocation policy— as “account[ing] for the interest of fans, communities, taxpayers and owners.” (Id.). Of the four constituencies mentioned, three are local interests. Given that the NFL is the co-author of the Joint Statement of Principles, this is yet another admission by the league that its amended relocation guidelines advance the interests of cities (and not just those of the NFL and its 32 member teams)—to go along with the league’s June 11, 1999 representation to Mayor Morial that “[t]he amended guidelines balance and protect the interests of the cities, the League and individual teams.” (Hearing, at p. 78).[2] The Rams relied on the Joint Statement of Principles in seeking league permission to relocate The Joint Statement of Principles remains a living, breathing document. Besides being incorporated into the NFL’s amended relocation policy (as acknowledged by Commissioner Tagliabue), the continued vitality of the Joint Statement of Principles is also reflected in the fact that the St. Louis Rams franchise explicitly relied on that document to support its requested move to Los Angeles. In its “Statement of Reasons in Support of the Rams’ application to relocate to Los Angeles,” dated January 4, 2016, the Rams referred to the “guidelines for community engagement’ specified in the Joint Statement of Principles in arguing that it “exceeded any good faith requirement” to engage with the City of St. Louis and other governmental authorities in accordance with the NFL’s relocation guidelines, stating: The NFL: and the United States Conference of Mayors (“USCM”) have issued a Joint Statement of Principles providing guidelines for community engagement for NFL teams considering relocation. The NFL/USCM’s Joint Statement of Principles states: Communities, stadium authorities, and team owners should deal with each other in equitable and fair ways. Teams should give a fair and reasonable opportunity and time frame, for example, six months, to communities to respond to economic and facility issues before filing for a possible relocation. Such a time frame should be sufficient to allow for reasonable negotiations and, where appropriate, political process to occur that may obviate the need for a possible relocation. By any measure, the Rams have satisfied this community engagement guideline. The Rams’ reliance on the Joint Statement of Principles to support their requested relocation to Los Angeles—coupled with the affirmative vote of three-fourths of the other member clubs and the NFL’s granting that request –is further evidence that the Joint Statement of Principles was incorporated within the NFL’s amended relocation policy and remains in effect, and that both documents are to be considered together in determining the intent of the relocation guidelines. This could prove especially helpful to St. Louis on any appeal by the NFL following the trial, when a central issue will be whether the NFL relocation policy creates third-party beneficiary rights in cities. The inclusion of the Joint Statement of Principles-- a city co-authored document which ties the relocation guidelines to the "public interest" more explicitly than the NFL policy does----widens the lens by which an appellate court would assess whether the NFL and its member clubs intended to create third-party beneficiary rights in cities, and, in this author's view, would greatly enhance the City's prospects of surviving an appellate challenge on that issue. Consider this unforced error a parting gift to St. Louis from Rams owner Stan Kroenke. Daniel Wallach is the co-founder of Conduct Detrimental. He is a nationally-recognized gaming and sports betting attorney. You can follow him on Twitter at @WALLACHLEGAL. [1] The NFL’s amended relocation policy expressly acknowledges that the Joint Statement of Principles is the source material for the league’s new relocation criteria, stating in a footnote that “[t]hese factors are also contained” in the Joint Statement of Principles. (Policy, at p. 3 n.1). [2] By the way, this isn’t the first time that the NFL admitted that its relocation guidelines were intended to protect cities. In 1985, NFL officials testified before the U.S. Senate Judiciary Committee as part of a hearing entitled “Professional Sports Antitrust Immunity,” which addressed the antitrust implications of relocating professional sports teams. At a February 6, 1985 hearing, NFL Executive Vice-President Jay Moyer testified that the NFL’s original relocation criteria—which supposedly provided less protection to cities than the amended criteria that were enacted in 1999—required that any club proposing to relocate must justify any relocation according to specified factors “bearing on League, club, fan and community interests.” (See Hearing at pp. 80-81; and here). Moyer explained that “Commissioner [Pete] Rozelle has bitten the bullet because we believe . . . that the current community’s interests are valid and essential considerations in any responsible league decision on a move.” (Id. at p. 62).

Image from The Undefeated The sneaker game has become bigger than ever, with an approximate value of 79 billion as of May 2021 (https://www.fastcompany.com/90637534/how-sneakers-became-a-79-billion-business-and-an-undisputed-cultural-symbol-for-our-times), and like any large company, Nike wants to keep expanding their piece of the market, which already totals to 31 billion. In a newly filed lawsuit in the Central District of California, “The Swoosh” is attempting to put an end to the many artists who make their livelihood off of buying genuine Nike products and putting their own twist on the shoes. Customizers typically do this through creative methods such as painting, changing around the midsole of shoes (a practice known commonly as “sole swapping”), among other creative methods. In the lawsuit, the behemoth from Beaverton, Oregon alleges that an influx of custom sneakers into the market will create a classic trademark confusion as consumers will not be able to discern what is a genuine product. This isn't the first time in the past year that we have seen a large fashion company attempt to forbid a repurposing of genuine goods, when earlier this year we saw Polo Ralph Lauren attack upcyclers who transformed old Polo apparel into hats. However, this is the first time it could have a major impact on sports. Custom shoes have become commonplace in major sports, especially in Basketball, Football, and Baseball for quite a few years now. A quick image search of “Custom Shoes NBA'' will bring up the bevy of players who don bespoke kicks on the court, including Suns Guard Langston Galloway. The NFL even has a grace week where it allows players to wear whatever crazy cleat designs they want for the benefit of charity under their “My Cause, My Cleats'' program (usually the NFL only allows for customs during warm-ups). (Houston Texans Wide Receiver DeAndre Carter My Cause, My Cleats” in support of the Juvenile Diabetes Research Fund. NFL/Houston Texans) So where does this go from here? If they win, Nike could corner the custom market, and make their athletes play by their rules, and shut out any non-endorsees or anyone who doesn’t want to play by their game. They could destroy a main part of the business of people who rely on their artistic visions to make ends meet - people like Mache Custom Kicks or Kickstradomis who have been paving their own paths for the last decade. A win for Nike would be a loss for creatives everywhere and could trickle to other sectors of sports business such as custom jerseys, and repurposed vintage clothing - which has seen an uptick over the last year. As for the Athletes and Creators, they have been looking at ways to also pave their own, to create their own IP, and to control their own brand. Namely, this includes the aforementioned Galloway who launched his own brand “Ethics” which he debuted during the NBA Finals, and New York Mets Pitcher Marcus Stroman who added to his clothing line “HDMH” (standing for Hype Don’t Measure Heart) with his new cleat line “SHUGO.” which he debuted at the beginning of the 2021 MLB season. On the creator's end, Mache Custom Kicks has been putting out his own designed shoes for the past couple of years on a pre-order basis, so perhaps the bespoke route will be the next wave in order to avoid potential trademark infringement. TOP - Ethics by Langston Galloway (ESPN) MIDDLE - SHUGO. by Marcus Stroman (@_SHUGO on Twitter) BOTTOM - The Mache Runner Centralia by Mache Custom Kicks (https://machecustoms.com/) It will be interesting to watch how Nike’s attempted bust on Custom Sneakers develops over the next few weeks and months. If they get their way it could ultimately lead to more players wanting to create their own way, and more customizers to get on board with them as well. The case is Nike, Inc. v. Customs By Ilene, Inc., 5:21-cv-01201 (C.D.Cal.)

Service Academy Recruiting Prepares to Take an NIL Hit (Photo Credit: FanDuel) In comparison to their Division I (D-1) counterparts, service academy football programs face a unique myriad of additional recruiting hurdles. For example, service academy commits not only sign on to play D-1 football for four years, but also to at least another five subsequent years of military service after graduation. This obligation precludes the overwhelming majority of NFL prospects from being draft eligible; short of those who receive the Secretary of Defense's express permission. Other than for the rarest of circumstances, academy athletes are not permitted to redshirt, starting their eligibility clock day one. Last but certainly not least, in addition to the demanding life of a D-1 athlete, they’re faced with a grueling academic and military schedule. These non-negotiables are viable elements of concern to particularly talented high school recruits who believe a shot at the NFL is in their future. While taking this into account appears to be a statistically misguided mistake for most recruits, the limitation is still plausibly on the minds of many when signing day comes. Recent NCAA rule changes allowing collegiate athletes to sell rights to their names, image and likeness (NIL) will act as yet another barrier to service academies’ recruiting. Under federal law (5 C.F.R. § 2635.702 ) “An employee may not use his public office for his own private gain or for that of persons or organizations with which he is associated personally. An employee's position or title should not be used to coerce; to endorse any product, service or enterprise; or to give the appearance of governmental sanction.” One would presuppose the athletes will be even less inclined to the idea of playing at these programs knowing the opportunity for NIL compensation is definitively off the board. The lack of opportunity for NIL compensation is amplified by the key role social media plays in recruiting. It remains to be seen how many D-1 football athletes will take home considerable coin in exchange for their NIL, but if the instant notoriety of Barstool's Dave Portnoy’s press conference and Hercy Miller's widely publicized deal are any indication of how widespread these contracts will be, it is safe to assume the belief of an opportunity to be significantly compensated will play a role in the recruiting process. Ken Niumatalolo, Jeff Monken and Troy Calhoun, head coaches of Naval, Military and Air Force Academies respectively, will inevitably face more of an uphill battle convincing recruits to sign. Let’s illustrate the new thought process coaches will be up against through a quick thought experiment-- while controlling for those who have NFL aspirations and presumably wouldn’t choose a service academy regardless of NIL. I’m a three star high school recruit. For the sake of the experiment (and to control for the aforementioned restraints), I’m a rational kid who has no dreams of Roger Goodell calling my name from his creepy leather chair in April. I’ve been offered a full ride at comparable American Athletic Conference football programs- the Naval Academy and Memphis. Faced with an opportunity to earn an endorsement deal at Memphis and no such opportunity at Navy, what’s an average high schooler going to choose? Think back to yourself as an 18 year old and be honest about what sounds more appealing: 'Plebe Year' with no NIL or a BBQ with Lamborghinis and the chance for an NIL endorsement? Service academy sports, particularly football, play a highly visible role in the Department of Defense’s recruiting efforts. The Army/Navy Game has 7-8 million plus viewers each year. If NIL significantly dilutes the talent pool of incoming recruits and quality of play leading to a decrease in viewership, at what point would legislatures or the President step in to consider making an exception to 5 C.F.R. § 2635.702 ? You can find Rob Williams on Twitter @RobWilliams804

Even though his Showdown with unified World Welterweight Champion Errol Spence is not for another couple of weeks, on Friday eight-division world champion and future Hall-of-Famer Manny Pacquiao got a big victory outside of the ring as a California judge denied an injunction trying to stop the Spence fight from happening. Pacquiao’s defense team revealed mid-day Friday Pacific Time that judge Walter Schwarm of Orange County Superior Court has denied the attempt at an injunction for Paradigm Sports trying to stop the Pacquiao – Spence fight for Las Vegas on August 21st. “As Senator Pacquiao correctly said after this lawsuit was filed in June, he has an absolute right to participate in the August 21 bout with Errol Spence. Today the Court agreed and resoundingly rejected Paradigm’s injunction publicity stunt in a strong and detailed decision. Senator Pacquiao looks forward to his bout with Mr. Spence on August 21.” As we have written, Paradigm is upset because they believe that Pacquiao went back on their agreement for a two fight deal to be promoted and arranged by them. They further want to be refunded what they say was a $3 million+ purse advance to Pacquiao for the proposed first fight of the deal. Pacquiao and his legal team countersued last week and they contend that the $3 million+ was not tied as part of advance payment for a proposed upcoming bout with Paradigm. But, rather it was a signing bonus to do a deal with them. Pacquiao further believes he was lied to about the making of a fight with UFC star Conor McGregor, also repped by the Los Angeles-based Paradigm. And, that Paradigm also didn’t live up to the lucrative endorsements they promised Pacquiao to sign with them. Paradigm filed their multi-million dollar lawsuit in late June against Pacquiao in Orange County civil court, claiming breach of contract among other things. They further claimed in writing that they were able to negotiate a $25 million fight purse for Pacquiao for a bout with former Jr. Welterweight World champ Mikey Garcia that would have taken place May 15, 2021, in Dubai, United Arab Emirates. Paradigm further contends Pacquiao was to receive a $5 million purse advance for the proposed Garcia fight. That deal fell apart after Pacquiao attempted to make that $5 million advance a guarantee, even if he did not compete, per the complaint. “Pacquiao knew full well that Paradigm had exclusive rights to schedule his next two immediate fights,” Paradigm attorney Judd Burstein wrote in the complaint. “Nevertheless, in bad faith and material breach of the parties’ contracts, Pacquiao, upon information and belief, had surreptitiously entered into a contract to fight Spence.” Obviously, Judge Schwarm, who heard arguments on virtual video call Thursday, did not agree enough to give the agency their injunction. This paves the way for Pacquiao to fight for the first time in over two years against Spence at the T-Mobile Arena in Las Vegas. Pacquiao’s last fight was also in the desert, defeating previously unbeaten Keith Thurman in a spectacular 12 round performance. As for the wrangling on the money that was advanced to Pacquiao, that will take months and maybe years to figure out and settle between Paradigm and Pacquiao’s lawyers. As seen on Big Fight Weekend: Manny Lawsuit Tossed Out

Going head-to-head with Darelle Revis in his prime as the NFL’s premier shutdown cornerback was never a quarterback’s idea of a fun Sunday afternoon. And for years, Revis’s agents and attorneys, Neil Schwartz, Jonathan Feinsod, and Schwartz & Feinsod, LLC, profited handsomely from negotiating his NFL contracts and endorsement deals off the field. But when Revis discovered that Schwartz had unilaterally negotiated a provision in an endorsement deal that would have given Schwartz’s half of the money, rather than the 10% they had previously agreed upon, he fired Schwartz and sued him for fraud. Revis’s only written agreement with Schwartz, however, was the NFLPA standard representation agreement, which is a preprinted form that contains a fairly broad arbitration clause sending all disputes arising under the agreement to arbitration. At the time he signed the SRA, Revis also orally agreed that Schwartz would represent him in negotiating off the field endorsement deals in exchange for a 10% contingency fee. The SRA notes that Revis and Schwartz had entered that separate agreement for legal services at the same time as the SRA. Revis’s SRA When Revis sued for fraud, Schwartz responded by moving to compel arbitration under the SRA, even though the dispute centered on the off the field endorsement deal and not the contract negotiations with NFL teams. Schwartz argued, the SRA was the parties only written contract and it incorporated the terms of the oral legal services agreement, so the arbitration clause should force Revis to arbitrate his claims, rather than pursue them in court. When Supreme Court, Westchester County agreed, Revis appealed to the Second Department. In an order with two Justices dissenting, the Appellate Division majority held that the broad SRA arbitration clause left the question of arbitrability to the AAA arbitrators and, under those rules, “neither the Supreme Court, nor this Court, nor any court, has the authority to decide whether and to what extent these parties’ disputes are arbitrable” (Opn, at 13). Thus, the majority reasoned that it was powerless even to inquire whether Revis’s fraud claims fell within the scope of the parties’ arbitration clause in the SRA. The dissenting Justices, however, didn’t feel as powerless. As they saw it, it is a misreading of the contract documents to draw a line from the SRA to the NFLPA Regulations to the AAA Rules, and then, upon examining them collectively, to conclude that the separate Marketing and Endorsement contract (hereinafter the M&E) must initially go to an arbitrator in the event of a dispute between the parties over the M&E. Notably, Paragraph 8 of the SRA only incorporates the arbitration procedures of the NFLPA Regulations to the extent of resolving disputes over the meaning, interpretation, application, or enforcement “of this Agreement,” meaning the SRA only (emphasis added). By the plain language of the SRA, the NFLPA Regulations are not incorporated for the resolution of disputes that arise outside of the SRA. They could be incorporated for other agreements if the other agreements were to so provide, but here, the M&E was not in writing and, therefore, did not provide so. If the NFLPA Regulations do not extend to the M&E, then the terms of the AAA Rules are also not reached. (Dissenting Opn, at 17). With the two Justice dissent on a question of law–the proper interpretation of the SRA’s arbitration clause and its applicability to the separate legal services agreement for endorsement deals–providing an appeal as of right to the Court of Appeals, Revis now asks the Court to reverse the Appellate Division majority’s opinion and limit the scope of the SRA’s arbitration clause to only an agent’s services in negotiating contracts with NFL teams. Separate agreements could incorporate the SRA’s arbitration clause by reference if the parties so choose. But unless they do expressly, the SRA’s arbitration clause should be limited to the services that the SRA covers. Revis has a strong argument under the plain terms of the SRA, which, as the Appellate Division dissent notes, limited arbitration to when disputes arise in the meaning, interpretation, or enforcement of “this Agreement.” Indeed, New York’s general rule is that the question of arbitrability is first decided in the courts (see Matter of Smith Barney Shearson Inc. v Sacharow, 91 NY2d 39, 45 [1997] [“the question of arbitrability is an issue generally for judicial determination in the first instance”]). Only a narrow exception exists when the parties clearly and unmistakably agree “to arbitrate even [arbitrability]” (id.). Although the AAA Rules incorporated in the SRA is an unmistakeable agreement to arbitrate the arbitrability of claims arising under the SRA, Revis’s claims don’t appear to arise under the SRA. Rather, Revis’s fraud claims relate only to the separate legal services agreement for the off the field endorsements. Because that agreement was an oral one, there is no unmistakeable agreement to arbitrate even the arbitrability of disputes arising under it. What’s remarkable is that this case could have a significant impact on how broadly or narrowly the arbitration clause of the NFLPA’s standard representation agreement is construed, and yet, so far, there are no amicus filings supporting either side. But there’s still time. The Court of Appeals’ rules for amicus motions provide that amicus briefs can be filed up until about one month before the case is scheduled for oral argument. And this case hasn’t been scheduled for oral argument yet. The Court of Appeals would benefit from hearing the perspectives of the players or agents who could be impacted by the Court’s interpretation. For more on Revis’s upcoming trip to the Court of Appeals, you can find the briefs here: Revis’s Opening Brief Schwartz’s Brief Revis’s Reply Brief Rob Rosborough is an appellate litigator and partner at Whiteman Osterman & Hanna LLP in Albany, New York. He runs the New York Appeals blog (https://nysappeals.com), covering the New York Court of Appeals and issues of appellate law in New York, where this post was first published. He can be reached at [email protected] or on Twitter at @NYSAppeals.

(Photo Credit: Miami Herald) The table is set and the stakes are high. The players are the Seminole Tribe of Florida, Governor Ron DeSantis, FanDuel, DraftKings, Las Vegas Sands, and Magic City Casinos with West Flagler & Associates. The game is Texas Hold’Em and the prize is the right to provide sports betting services in the Sunshine State. The days of anonymous message board bookies and crypto-winnings payouts are waning as more and more states legalize sports wagering. As of July 2021, 14 states allow some sort of mobile sports betting, while numerous others have sports betting bills on the books (according to actionnetwork.com), non-less controversial than the great and sometimes wacky state of Florida. Poised as possibly the largest sports wagering market in the country, it is no surprise that there are a lot of big players at Florida’s sports betting table. In April of 2021, Florida Governor Ron DeSantis and the Seminole Tribe of Florida signed a massive, 30-year gaming compact. The compact, projected to bring $6 billion to the state of Florida, granted expanded gaming rights to the Seminole Tribe, including a controversial and exclusive expansion into mobile sports betting. It seemed as if the duo had flopped a straight, but did they pull a card out of their sleeve? The Indian Gaming Regulatory Act (IGRA) became federal law in 1988. The IGRA was intended to establish a gaming framework that would help all Native American tribes generate revenue while also protecting their gaming ventures from outside influence. A key provision in the IGRA requires gaming to occur “on Indian lands.” The compact, not so subtly, states “wagers made by players physically located within the state using a mobile or other electronic device, shall be deemed to be exclusively conducted by the Tribe where the servers or other devices used to conduct such wagering activity on the Tribe’s Indian lands are located.” This clever work-around to the “on Indian lands” requirement would allow bettors to use a mobile app to place bets anywhere within the state. In a series of tweets, Conduct Detrimental’s own Dan Wallach was quick to point out the compact’s work-around will not likely pass federal muster. In the first of many challenges to the compact, a complaint by Magic City Casinos shows that the state of Florida has already decided the issue in previous rulings; stating, “the phrase “on Indian lands” (as used in IGRA) is unambiguous and literally requires that the person placing the wager be physically present on tribal land.” The compact was submitted for review to the Bureau of Indian Affairs at the Interior Department. The Bureau is allotted 45 days to approve, decline, or give no response to such agreements. The effect of a “no response” is that the compact would be approved, but only to the extent that it is consistent with the IGRA. The compact would lack the support and legal bolster of a full Bureau approval and comment. August 5th marked day 45 and there has been no response. Both state and federal challenges to the compact are sure to follow. So, if the compact fails, how are Florida sports bettors going to get their fix?? No worries, the door is about to be kicked wide open. According to an article by the Tampa Bay Times, over $62 million has been poured into political action committees (PACs) and lobbying efforts surrounding sports betting in Florida. In some of the cleverest PAC titling ever, Magic City Casinos donated $15 million to the creation of the People Against Regulatory Legislation Addressing You committee… or the PARLAY PAC for short. Further, Las Vegas Sands, FanDuel, and DraftKings teamed up with a whopping $37 million donation towards their own PAC. In response to the mounting opposition, the Seminole Tribe also put forth $10 million to defend the compact. This sudden influx of money was most certainly due to a new bill, signed by DeSantis, which went into effect on July 1, to curb ballot-gathering contributions. Regardless, the pot is now right and we are just waiting on the river. Will the compact hold up against state and federal challenges? Will the numerous PACs be able to gain statewide voter support for a new sports betting law? Will Florida sports bettors finally be able to legally wager? The Florida 2022 Regular Legislative Session is set to begin on January 11, 2022 and it will be one for the (sports) books! Van Santos is a recent graduate of Nashville School of Law. He is a resident of Nashville, Tennessee. You can reach Van on Twitter at @Van_Santos_13 or through email at [email protected].

Image from CNN There are some “special” places in this world. And then…there’s Cleveland. Sitting all alone up there, in a class by itself. Occupying the rarified air that is usually only reserved for a Hollywood comedy, with its guaranteed laughs and fumbles that occur with almost predictable regularity. So, it was no surprise that when the Baseball Club Formerly Known As the Cleveland Indians announced last week that it was changing its mascot name to the Cleveland Guardians, New York attorney Dan Lust, co-founder of Conduct Detrimental, discovered that there already WAS a “Cleveland Guardians” sports team: the men’s roller derby one, to be exact. The team even already owned the domain name ClevelandGuardians.com. What would have been a surprisingly bad move by any other MLB team looked to be sadly on-brand for the hapless “216”-ers. A team’s mascot name is synonymous with a team’s brand. The Yankees. The Dodgers. Instantly recognizable to even casual sports fans, these brands conjure up the entirety of the experience that any one fan has had with a team. Say “Cleveland”, and folks MY age (40+) almost universally think at least quickly of the movie “Major League” from the 1980’s. This branding is the keystone to a team’s – and their fans! – identity. Look no further than the Cleveland Browns’ NFL team’s own “Dog Pound” of fans for an illustration of this. As a trademark lawyer myself, I hear any team’s mascot name, and I say “Have you trademarked it yet? You need to protect your intellectual property!” (I’m a rather unapologetic nerd like that.) Intellectual property – copyrights, trademarks, patents, and business secrets – is an often-overlooked set of assets to almost any organization. As with any professional sports team, it is reasonable to expect that they have had dozens of lawyers on this intellectual property, protecting it from the outset. So when Cleveland announced last week that it would be changing its mascot name, it was a little strange that no trademark application immediately appeared in the United States Patent & Trademark Office’s online database for trademark searching, called TESS. Jump to today, Wednesday, July 28, 2021, and what did I stumble across on TESS while I was waiting for a client to email me some pictures of a product that she’s trademarking? “Cleveland Guardians”! In fact, there WAS an application from July 13, 2020 in the search results! What?! How did they manage to keep their new name secret for over a YEAR?! Well…it turns out that last July (2020), an application was filed with the USPTO that is related to the “Cleveland Guardians” name, by someone purporting to represent the organization (or at least TRYING to do so). TESS has the following record on that 2020 application here: Now, the applicant filed this trademark application as an “intent-to-use” application, or a “1b” application, meaning that he did not yet actually use the name “Cleveland Guardians” in commerce yet, but that he was indeed planning to do so. So, for the filing of a 1b application, there is no need to submit a “specimen”, or a picture or website or some such other article that “proves” that one is using the applied-for mark in commerce, yet. But our little eager beaver DID submit a specimen! However…he submitted it for “ENTERTAINMENT IN THE NATURE OF BASEBALL GAMES”. So that is what the application reflected. Oh no! What a mistake! What now? Not to be hindered in the slightest, our intrepid applicant has provided us all with a TRANSLATION of “entertainment in the nature of baseball games”. For my over four decades of sports fandom, I never knew that “entertainment in the nature of baseball games” translated to “Cleveland Guardians”! Whew, am I ever glad this fellow helped me discover my gap in sports knowledge. The USPTO, stuffy old government arm that it is, was not amused, finding that “ENTERTAINMENT IN THE NATURE OF BASEBALL GAMES” was merely descriptive, and our would-be hero of 2020 sadly was denied the right to trademark this phrase. Or to trademark “Cleveland Guardians”, his purported “translation”. Which leads us to today’s revelation: On July 23, 2021, just last week, the Cleveland Indians Baseball Company, LLC, FINALLY filed an application for the trademark of “Cleveland Guardians” with the USPTO: While there is no English translation of “Cleveland Guardians” into any other tongue included on this application, we do wish the applicants the best of luck, both with the USPTO and on the diamond. They’re going to need it, to compete with that roller derby team! Let’s just hope they get around to changing the name of the LLC, too. Mikal-Ellen Suzuki Bennett is intellectual property counsel at the multi-state firm of Kincaid & Associates, PLLC, and works in the firm’s Wilmington office. She practices mostly intellectual property law these days and spends as much time as she can outdoors and/or with her friends and family. She retains her lifelong love of her family, sports, chemistry, and all things WVU. Let’s Go Mountaineers!

With the implementation of “Name, Image, and Likeness,” (NIL) legislation around the country, student athletes are now able to profit off of their likeness and enter into endorsement contracts. While this is an exciting time for student athletes, there are still many obstacles and barriers involved in the early state laws that may prevent student athletes from getting paid. One of the biggest barriers to student athlete’s compensation will be conflicting contract interests with their university and their university’s athletic department. Under Florida law, student-athletes are prohibited from entering into a contract for NIL compensation that conflicts with a term in a university team contract. Similarly, California’s NIL law “prohibits a student athlete from entering into a contract providing compensation to the athlete for use of the athlete’s name, image, or likeness if a provision of the contract is in conflict with a provision of the athlete’s team contract.” Since student athletes are prohibited from entering into agreements that conflict with the university's contract interests, student athletes are expected to enter into agreements that either coincide or do not affect the university’s contract interests while also disclosing their potential contracts with their university’s athletic department to prevent conflicting contract interests. Instructing every eligible college athlete to disclose their potential NIL endorsement deals to their university seems like a tall task for athletes, coaches and everyone else involved; however, most of the potential conflicting contract interests will involve the university’s major athletic sponsors. For example, a student athlete at The University of Alabama will likely know that their main apparel sponsor is Nike since the Nike logo appears on their jerseys and other athletic apparel. Thus, it would be very unlikely for a student athlete at Alabama to enter into an agreement with a competing athletic company like Adidas or Under Armor, especially when they could possibly enter into a NIL agreement with the same company that sponsors their university. Although it is unlikely for a student athlete to enter into a contract that conflicts with their current university or athletic department, it is bound to happen at some point in this NIL era. Will the student athlete be forced to resign from their university’s athletic team if they refuse to terminate the conflicting contract? Until a student athlete enters into a contract that conflicts with their university's contract interests, we do not have the precedent to answer these types of questions. However, the majority of issues involving conflicting contract interests are likely to emerge before a student athlete agrees to attend an NCAA institution. With the emergence of NIL, student athletes will seek to get paid before choosing where they start their college career. Signing a significant deal with a major sports brand will definitely affect the student athlete’s ability to earn revenue, especially if the university the student athlete wishes to attend has a different major sports brand as their main sponsor. For instance, 17-year-old, Mikey Williams, became the first high school athlete to sign a NIL contract when he agreed to a deal with Excel Sports Management. Since Williams is considered to be one of the top national basketball prospects, he is projected to generate millions of dollars of his name, image and likeness rights. Although Williams could enter into blockbuster deals with major basketball brands, his endorsement choices will affect where he decides to enroll two years from now. If Williams were to enter into a contract with Nike, he would likely choose an institution that is sponsored by Nike and would allow him to gain revenue from the contract he signed while in high school. Williams, and other athletes in his position, would be unlikely to choose an institution that would not allow him to capitalize on the contract that he already had signed, which would result in the schools without a Nike sponsorship losing their chance to have an athlete like Williams play for their school. Conflicting contract interests pose a variety of major issues and headaches for institutions going forward, especially for smaller institutions without major sport brand sponsors. While on the other hand, it also creates a multitude of issues for student athletes. Based on potential contract interests, are student athletes better off signing NIL contracts after they enroll at an institution? How will all student athletes disclose their contracts to their universities? Conflicting contract interests will be an important issue to keep in mind as other states continue to pass NIL legislation and NIL rules are fully implemented into college athletics.