By Ellen Rugeley
Almost four years after winning an antitrust lawsuit in a Delaware federal court, the Association of Tennis Professionals (ATP), which operates a men’s professional tennis circuit, is now set to return to that same court in order to defend a policy requiring the defendants to pay $20 million in legal fees.
The original lawsuit, filed in 2007 by the German Tennis Federation and Qatar Tennis Federation, stemmed from the ATP’s decision to lower the Hamburg event’s tier status and move it away from May, where it served as a French Open tune-up.
These changes were part of the ATP’s so-called “Brave New World” plan, which sought to channel top players to top tournaments, and increase the tour’s popularity, including ticket sales and sponsorships.
In its ruling, the 3rd U.S. Circuit Court of Appeals sided with the ATP, noting that “professional sports teams or tournaments always have an interest in obtaining the best players possible.”
The court also wrote that the ATP board of directors did not breach any duty of loyalty because it was not “materially self-interested” when it voted for the Brave New World plan.
However, earlier this month, the appeals court ruled in favor of the defendants by not ordering them to pay the legal fees. The court also called into question the bylaw that the ATP contends requires the payment.
“We have doubts that Delaware courts would conclude that (the bylaw) imposes a legally enforceable burden on Deutscher and Qatar,” wrote the panel.
“Determining whether (the bylaw) provides a basis for fee-shifting might require analysis of the possibility that it was adopted specifically to deter members from suing the organization.”
The bylaw in question, which was adopted in 2006 when the circuit implemented a new tour structure that disadvantaged certain tournaments, including the Hamburg, Germany stop co-owned by the Qatari and German federations, requires ATP members to pay legal fees if they lose a lawsuit against the tour.
The appeals court sent the fee issue back to a lower Delaware federal court to determine whether the bylaw was legal, despite the fact that the lower court had already ruled that the federal antitrust law prevented the ATP from obtaining the fees because the appeals court wanted a ruling first on whether the underlying policy should even stand.
The ATP also sued its insurance carrier, National Union Fire Insurance Company of Pittsburgh, a division of AIG, for $1.5 million, alleging that the company did not reimbursed the tour for some of the fees. According to the claim, which was filed on May 2 in Florida federal court, the insurer only paid $8.3 million of the total $9.8 million the tour claims it was owed under its policy.
