By Jeff Birren, Senior Writer
DNA Sports Performance Lab, Inc. and its owner, Neiman Nix, (collectively “DNA Sports”) have been battling Major League Baseball (“MLB”) for its ban of products that contain IGH-1, a performance enhancing substance. These pages looked at the on-going litigation in “Sports Performance Lab Underperforms in Court Battle with MLB” (SLA, V. 17, #18 (9-25-2)). The U.S. District Court in San Francisco had just dismissed the claims brought against the MLB Players Association (“MLBPA”) and scheduled a similar motion brought by MLB. The Court ended with the statement that “[O]nce the pleadings are settled (or abandoned), a further order will address sanctions” (Id.).
Three days later, DNA Sports filed a notice of voluntary dismissal against the defendants. MLB then filed a motion for sanctions, seeking $33,407.17 to cover the cost of a single attorney performing 39.5 hours of work from April 2020 through July 2020. MLBPA moved to recover attorneys’ fees of $104,039.08 for 162.5 hours of work from January 2020 through August 2020. The Court held the hearing on those motions on September 24, 2020 “telephonically due to COVID-19.” The Court ruled on October 27, 2020 and it was not a happy occasion for DNA Sports (DNA Sports Performance Lab, Inc, and Neiman Nix v. Major League Baseball; MLB Advanced Media LP; Major League Baseball Players Association; and Major League Baseball Enterprises, Inc., N.D. Cal, Case No. 20-00546 WHA, Order Granting Motion For Attorney’s Fees (10-27-20)).
The Order stated that on “a Rule 11 motion, we consider all of the circumstances, not just the allegations of the complaint” (Id. at 2). What followed was “DNA Sports’ Harassment of the Baseball League.” The Court recounted the history of DNA Sports prior cases against MLB, filed in various federal and state courts. The Court then reviewed what it called “DNA Sports’ Pursuit of the Baseball Union.” Next came the Court’s review of the “Present Suit. Only on page nine did the “Analysis” begin.
The motions sought monetary sanctions against DNA Sports’ counsel, Lance Reich, under Rule 11 and against DNA Sports pursuant to the Court’s inherent authority, seeking to hold those two “jointly and severally liable for fees and expenses” (Id. at 9). The Court found “DNA Sports’ complaint baseless. That, along with finding Reich failed to conduct an adequate investigation, supports Rule 11 sanctions. And, such baselessness in addition to bad faith, supports inherent sanction of DBA Sports itself” (Id. at 10).
To allege a valid Lanham Act claim, a plaintiff must show that the defendants “made a false statement of fact in a commercial advertisement” whether of its product or that of a competitor; that the false statement “actually and materially deceived its audience” and that the plaintiff had been injured by the statement. The state law false advertising claim “requires a showing that the defendants participated in or had control over the untrue or misleading advertisements” (Id.). However, DNA Sports “admit that their product contain(s) naturally-occurring IGF-1. They concede that the league and the union have banned IGF-1” and that an independent company did the testing. Thus, they brought with claim “without ensuring that they sued the right defendants” (Id.). “Such baselessness supports an inference of improper motive” (Id. at 11).
The Court further stated that MLB’s prior motion for sanctions would also have been granted. The complaint had “recapitulated the misdeeds of the league’s” “prior investigations that inspired” two of DNA Sports’ earlier lawsuits which were previously dismissed “by prior rulings.” Although the plaintiffs claimed that the public statement “essentially banned” them from ever working again in a “league-related capacity” they had previously admitted that they had “‘never sold its supplements to league players on account of a non-competition agreement’” (Id., emphasis in the original). DNA Sports claimed a loss of good will compared to league-licensed products yet “failed to show how the targeted products” compete with the plaintiffs or if they “contain a banned substance.” They also failed to show how the use of these logos “the alleged commercial speech here—diverted sales from DNA Sports to these specific products and how this speech was false. Without these elements, their allegations against the league are baseless” (Id.).
The second point was that the Court “finds that Attorney Reich failed to reasonably investigate these claims” (Id.). Reich and DNA Sports alleged that they “consulted with several experts” as to whether the league-endorsed products contained natural IGF-1, but they “did not test these products for IGF-1 but instead relied on what it and its experts deemed ‘common sense’” (Id. at 12). Even “a cursory investigation into the Lanham Act, false advertising, and unfair competition claims” would have either revealed the missing elements, thus saving “DNA Sports’ complaint, or at least, save the league and the union the trouble of motion practice. Attorney Reich failed in this regard” (Id.).
Finally, the Court “finds DNA Sports filed its complaint to harass the league and the union. DNA Sports’ history of litigation demonstrates both that this suit is brought in bad faith to vex and that dismissal alone will not dissuade DNA Sports from trying again.” This was “the sixth suit arising out of the same original circumstances against the league” and “prior dismissals and sanctions have not tempered DNA Sports’ vendetta against the league” (Id., emphasis in the original). After each dismissal, “DNA Sports has simply developed a different theory in a different court based on the same facts and continued its pursuit of the league.” A prior court had imposed sanctions but as “DNA Sports’ litigation history demonstrates, however, these sanctions have not fazed DNA Sports.” Instead, it “has continued to sue the league, affiliated entities, and now the union, despite the outstanding monetary sanction for troublesome lawyering” and thus “dismissal alone with not deter DNA Sports from filing further baseless and harassing suits” (Id.).
Moreover, DNA Sports had turned down an offer from MLB that it would withdraw its motion for sanctions if DNA Sports would dismiss with prejudice “all outstanding litigation against MLB defendants and agree to bring no further litigation against them” (Id., at 13). DNA Sports and Reich refused to dismiss the “outstanding cases against the league, proving that DNA Sports does not intend to change its conduct.” In light of DNA Sports’ “persistence, it may be that no amount of sanctions will deter it from continuing its crusade. The requested amount of fees, however, will at least compensate the union for the harm done here.” As this was their sixth case against MLB, “a full award is appropriate” (Id.).
The Court thus granted the motions for attorneys’ fees in full, granting $104,039.08 to the MLBPA and $33,407.17 to MLB, and both are due by November 20, 2020. However, since this was “Reich’s first appearance before the undersigned, and given the importance of not dissuading representation of difficult clients” the Order “will be held in abeyance to see the extent to which he engages in ongoing harassment” (Id.). Mr. Reich has some thinking to do.
