A federal judge in the Northern District of Illinois has granted a motion brought by the United States Soccer Federation and Major League Soccer to stay the antitrust and civil RICO claims brought against them by a promoter, pending arbitration.
ChampionsWorld LLC, former promoter of international professional men’s soccer matches, sued the defendants on May 2, 2006. It claimed that after reaching “a series of ‘match agreements’” with the USSF in which the governing body agreed to sanction soccer matches in exchange for a “sanctioning fee,” the USSF wrongly arrogated the authority to extract such sanctioning fees by falsely holding itself out to be the exclusive governing body of men’s professional soccer in the United States and by threatening to report ChampionsWorld to FIFA as a ‘promoter in bad standing.’
“Such a designation, according to ChampionsWorld, would have effectively destroyed its business because FIFA would not permit international soccer teams to play matches arranged by such promoters.
“ChampionsWorld further claims that MLS conspired with USSF to give MLS favored treatment with regard to its match promotions. ChampionsWorld alleges that, through such anticompetitive, fraudulent, and extortionate acts, Defendants caused ChampionsWorld severe financial harm ultimately leading to bankruptcy.”
The court noted that the plaintiff’s claims are potentially subject to two different dispute resolution agreements.
The first arises from FIFA regulations agreed to by ChampionsWorld’s CEO, Charles Stillitano. “In brief, FIFA requires any person arranging international professional men’s soccer matches to be a licensed ‘match agent,’” wrote the court. “Pursuant to this directive, in 2004, Stillitano submitted to FIFA a written ‘match agent license application.’ As part of the application, Stillitano declared that he was familiar with, and unconditionally accepted, FIFA’s ‘Match Agent Regulations.’ Article 22 of the MARs addresses dispute resolution, providing: ‘[i]n the event of a dispute between a match agent and a national association, . . . the complaint shall be submitted to the FIFA Players’ Status Committee for consideration and resolution.’ The MARs also provide for appeal of FIFA’s arbitration decisions to the independent Court of Arbitration for Sport.”
The second is the dispute resolution agreement in the ChampionsWorld-USSF match agreements, which contain the following forum selection clause:
“The parties hereby consent to the exclusive jurisdiction of the courts of the State of Illinois in connection with any action or proceeding arising out of or relating to the Agreement. In addition, it is expressly agreed that any judicial action or proceeding relating to this Agreement shall be brought in the Federal or State courts which cover Chicago, Illinois.”
The court went on to note that the defendants’ motions turn on the interplay between each of the two above-quoted dispute resolution agreements and the federal statute governing commercial arbitration. That statute, the Federal Arbitration Act, establishes the validity, irrevocability, and enforceability of commercial arbitration agreements. See 9 U.S.C. § 2., according to the district judge. The FAA requires a District Court to stay litigation upon the application of one of the parties if any issue involved in the suit is referable to arbitration. See 9 U.S.C. § 3..
”Generally, a commercial dispute is referable to arbitration whenever the underlying contract contains an arbitration clause,” wrote the judge, citing 9 U.S.C. § 2. “Where the relevant contract contains a broad arbitration provision, the Act precludes litigation ‘unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.’ Welborn Clinic v. MedQuist, Inc., 301 F.3d 634, 639 (7th Cir. 2002). The FAA thus embodies a strong federal policy in favor of arbitration. See Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 22, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983).”
The court went on to note that ChampionsWorld made three arguments “that it did not agree to arbitrate its dispute with defendants. First, ChampionsWorld argues that Stillitano’s license application did not bind it. Second, ChampionsWorld argues that, USSF, as a nonsignatory to the license agreement, cannot enforce that agreement’s arbitration provision. And third, ChampionsWorld contends that the forum selection clause in the ChampionsWorld-USSF sanctioning agreements trumps any rights the license application might give USSF.”
Regarding Stillitano’s license application, the court wrote that ChampionsWorld used Stillitano’s license “to act as a ‘match agent’ and financially benefit from so doing. ChampionsWorld thus cannot now disclaim the match agent license application in order to avoid its arbitration provision.”
Turning to its argument that the USSF was not a signatory to the Stillitano license and thus cannot enforce that agreement’s arbitration provision, the court wrote that “federal arbitration law disagrees. There are circumstances in which one may enforce an arbitration agreement to which one was not a signatory.”
On the plaintiff’s final argument against arbitration, the court found that the language in the forum selection clause in the ChampionsWorld-USSF sanctioning agreements was vague about arbitration, which flies in the face of established case law that such language must be “explicit.”
Next, the court turned to ChampionsWorld’s arguments that its claims exceed the scope of the agreement. The arguments “must be rejected for several reasons,” wrote the court. “To begin with, as previously noted, ‘any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.’ Moses, 460 U.S. at 24-25.
The court concluded that “where claims against a signatory to an arbitration agreement are “obviously intertwined” with those against nonsignatory parties, courts should stay the entire case under FAA § 3. See Hoffman v. Deloitte & Touche, LLP, 143 F.Supp.2d 995, 1005 (N.D. Ill. 2001).”
Championsworld, LLC v. U.S. Soccer Federation, Inc. et al.; N.D. Ill.; Case No. 06 C 5724 ; 2007 U.S. Dist. LEXIS 33089; 5/4/07
Attorneys of Record: (for plaintiff) Ronald Hanley Balson, LEAD ATTORNEY, Carrie A. Hall, Jolanda B Krawczyk, Michael Best & Friedrich, Chicago, IL; Jamie M. Brickell, Jessica Ann Whiting, William Laurence Charron, Pryor Cashman LLP, New York, NY. (for defendant United States Soccer Federation, Inc.) Livia McCammon Kiser, Timothy Bunker Hardwicke, Latham & Watkins LLP (IL), Chicago, IL; Russell F. Sauer, Jr., Latham & Watkins, L.L.P., Los Angeles, CA; Terrence Joseph Connolly, Latham & Watkins, LLP, New York, NY. (for defendant Major League Soccer, L.L.C.) Allison Anne Parker, Michael J. Gaertner, Lord Bissell & Brook, Chicago, IL; Bradley I. Ruskin, Jennifer R. Scullion, Scott Arthur Eggers, Proskauer Rose LLP (New York), New York, NY; David L. Shaul, Proskauer Rose LLP, New York, NY; Jordan B. Leader, Proskauer Rose, New York, NY.
