The federal judge overseeing the NFL Concussion Litigation has denied relief to a litigation funder, which is trying to recover a $500,000 loan made to a former National Football League player and would like to arbitrate the dispute.
U.S. District Court Judge Anita Brody ruled specifically that Thrivest Specialty Funding cannot take former NFL player William E. White to arbitration to resolve the litigation over the loan, which was made 18 months ago so that White could pursue his claim in the multi-district litigation.
White, who played more than a decade of experience in the NFL, suffers from amyotrophic lateral sclerosis. At the time, he decided to sell Thrivest part of an estimated $3.5 million settlement from the NFL Concussion Litigation in exchange for a $500,000 advance payment. As part of the arrangement, White would pay the loan back, at a 19 percent interest rate, if his settlement claim was approved.
Judge Brody threw a wrench into that deal over the winter when she issued an order stating that class participants could no longer use third-party litigation funders to finance their claims. The latest decision was made pursuant to the All Writs Act.
“The court properly invalidated the funding agreements as required by the settlement agreement’s terms,” Judge Brody wrote. “Consequently, Thrivest cannot collaterally attack that determination through arbitration. Such an attack is an improper assault on the terms of the settlement agreement.”
Thrivest leaned on the Federal Arbitration Act in trying to get the litigation sent to arbitration. Further, it claimed that the deal it reached with White was not an assignment of his claims, which would make it subject to the December order.
Peter C. Buckley, a member of Thrivest’s counsel team, was not happy with Brody’s ruling, telling the Pennsylvania Record:
“Thrivest will appeal the injunction; but, beyond the important questions under the FAA which were recently addressed by the Supreme Court and will be a part of our appeal, I have other concerns both for the players and for the availability of post-settlement funding generally.
“The Claims Administrator is deciding whether a third-party funding agreement is valid, but neither of the parties to those agreements are participating in the Claims Administrator’s decision. The players are sharing their agreements, but, to my knowledge, they are not being asked whether they want to go down this road. And, the funding companies are not even being contacted until after a decision has been made and they are asked to accept rescission or elect to pursue remedies elsewhere. There is no notice or opportunity to be heard, fundamental protections in our system. This encourages the players to take on risks associated with litigation and appeals and opens them up to additional interest and expenses if the funding company is ultimately able to enforce the agreement. There seems to be no discussion of these risks with the players.
“What’s more, the possibility that this process might be a template for future cases will discourage funding companies from offering advances. My client shares the concerns about fairness and transparency. Thrivest provided the lowest rates of any non-recourse advance in the NFL Concussion Class Action and provided a summary of the financial terms on the first page of its agreement. Its advances helped players address critical financial challenges long before the settlement ever could. The concerns should be addressed, but not with a broad brush that paints using form not substance and punishes funders with honest intentions and fair and transparent terms.”
Besides Buckley, Thrivest is represented by John R. Gotaskie Jr., Eric E. Reed, and Mark J. Fanelli, also of Fox Rothschild.
