Ramirez Suspension Raises Morals Clause Question

Jun 5, 2009

By Mathew Rosengart
A mere two months after the Los Angeles Dodgers inked a new, two–year, $45 million guaranteed deal with power hitter Manny Ramirez, the slugger got hit with a 50–game suspension for using a banned performance–enhancing substance.
The suspension puts the Dodgers in a tough spot. There’s no doubt that Ramirez, who at the time of his suspension had a .348 batting average, six home runs, and the highest on–base percentage in the National League, is a major asset to the team. Yet, there is also no doubt that the Dodgers are dreading the media frenzy and constant scrutiny the team will face once Ramirez returns.
Nonetheless there’s little chance the Dodgers will—or even can—cut ties with Ramirez. Although the Dodgers do not have to pay Ramirez his salary—about $8 million—during his suspension, MLB’s Joint Drug Agreement prevents them from terminating his contract altogether on the basis of the drug use. Section 8.L of the Joint Drug Agreement, a testing and penalty program that was entered into as a result of collective bargaining between players and owners, provides that: “All authority to discipline Players for violations of the Program shall repose with the Commissioner’s office. No Club may take any disciplinary or adverse action against a Player (including but not limited to a fine, suspension, or any adverse action pursuant to a Uniform Player’s Contract) because of a Player’s violation of the Program.” Under the agreement, the penalty for a first–time drug violation is a 50–game suspension.
Generally, baseball contracts, including the Dodgers’ contract with Ramirez, contain “morals clauses.” For example, under the Uniform Player’s Contract, a team has the right to terminate a contract with a player if that player “shall at any time fail, refuse, or neglect to conform his personal conduct to the standards of good citizenship and good sportsmanship.” Elsewhere, the contract provides that the player must “obey the Club’s training rules, and pledge himself to the American public and to the Club to conform to high standards of personal conduct, fair play, and good sportsmanship.”
However, the Dodgers almost certainly cannot use a morals clause to terminate their deal with Ramirez because the Joint Drug Agreement forbids any “adverse action against a Player” because of a drug violation, and individual player contracts cannot lessen this protection, which was negotiated collectively.
Why it matters: The Joint Drug Agreement is in place until December 2011. Until that time, owners have no choice but to deal with the risk of more steroids scandals. After the agreement expires, team owners and MLB may try to negotiate for more options in dealing with steroid–abusing players in the future.
Mathew Rosengart is a partner at Manatt, Phelps & Phillips, LLP. He can be reached at mrosengart@manatt.com. Rosengart has represented a number of well-known and high-profile celebrity clients in matters ranging from defamation to breach of contract, including several Academy-Award-nominated writers, directors, and actors. He has favorably resolved an invasion of privacy and right of publicity lawsuit against an internationally-renowned photographer, represented a commercial producer in an internal investigation, and obtained the dismissal of a breach of contract case brought against an Academy-Award nominated director/producer.
This article has been reprinted, with permission, from Manatt, Phelps & Phillips’ Advertising Law newsletter.


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