California Appeals Court Affirms for NFL in Raiders Case

Sep 23, 2005

A California appeals court has affirmed a lower court’s ruling that dismissed a claim brought by the Oakland Raiders, which alleged, among other things, that the National Football League breached its fiduciary duty to the team.
The impetus for the litigation was the team’s claim that “it was discriminated against and treated unfavorably as compared with the other member clubs, thereby placing it at a competitive disadvantage.”
It claimed specifically that the alleged breaches of fiduciary duty included: “singling the Raiders out” from other clubs and “treating the Raiders disparately and adversely”; permitting other member clubs to violate NFL rules, thereby giving them a competitive advantage over the Raiders; requiring that the Raiders (over its objection) participate with other member clubs in the European football league known as the “World League of American Football”; concealing information from the Raiders and excluding its participation in a lawsuit involving the former owner of the New England Patriots, William H. Sullivan, Jr.; and denying Al Davis (former Raiders’ managing general partner) and his family permission to buy the Oakland Athletics baseball team, notwithstanding [*4] that defendants permitted violations of the League’s “Cross-ownership Rule” by other club owners. n3 In addition, the Raiders alleged that Tagliabue committed further breaches of fiduciary duty: by removing Davis from the Management Council Executive Committee in September 1995; by removing Raiders’ representatives from NFL committees, and by excluding the Raiders from participating in significant NFL committees, thereby placing the Raiders at a competitive disadvantage; and by concealing from the Raiders certain rules violations by other member clubs.
The defendants — the NFL and its commissioner, Paul Tagliabue — countered that the claim was without merit for a variety of reasons, including the absence of legal duty, and the requirement that courts abstain from involving themselves in disputes involving private voluntary associations.
The trial court granted summary adjudication for the defendants, spawning the Raiders’ appeal.
The centerpiece of the appeal was whether the defendants owed a fiduciary duty to the Raiders. The appeals court viewed the plaintiff’s supporting case law as lacking “a reasoned basis for finding such a fiduciary relationship.” Then it turned to whether, “irrespective of the absence of fiduciary duty imposed by law, the NFL and Tagliabue undertook fiduciary responsibilities to the Raiders by agreement.”
“It is clear from a comprehensive review of the NFL constitution that neither the NFL nor Tagliabue undertook the role of a fiduciary towards any particular member club, including the Raiders,” wrote the court. “To the contrary, the expansive powers of the commissioner delineated in the NFL constitution strongly demonstrate the absence of such a fiduciary relationship.”
What’s more, “the breadth of the commissioner’s powers plainly shows that there are numerous and varied potential circumstances in which the commissioner may be required to act against the best interests of the Raiders as a member club.
“We conclude that there was no fiduciary relationship between defendants and the Raiders arising either as a result of agreement or by operation of law.”
Oakland Raiders v. National Football League et al.; Ct. App. 6th App. Dist.; H026688; 7/28/05
Attorneys of Record: (for plaintiff) Kenneth G. Hausman, Simon J. Frankel and Matthew R. Schultz of Howard Rice Nemerovski Canady Falk & Rabkin. (for defendants) James L. Hunt, Dale E. Barnes and Michael T. Pyle of Bingham McCutchen, and Allen J. Ruby of Ruby & Schofield.


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