By Robert J. Romano, Esq.
The NFL Players’ Association has petitioned the U.S. District Court of Minnesota to reopen the settlement agreement reached with the NFL last summer that ended the 132-day player lockout. The Players’ Association claims in its Rule 60 Motion that the NFL Owners engaged in collusive conduct in 2010 when they secretly set a cap on players’ salaries in an agreed upon uncapped season. After a brief history of NFL labor issues, this paper will examine the legal arguments both parties will be presenting in an upcoming court hearing.
Background & History
The National Football League has a long and storied history of labor disputes resulting in strikes, lockouts, and contentious litigation between the owners and players. In 1993, after years of costly and arduous lawsuits and court proceedings stemming from the players’ unsuccessful strike in 1987, the parties put aside their differences and entered into what is known as the White Stipulation and Settlement Agreement of 1993 (SSA).
Per the SSA, the Players’ Association recertified itself as a union and, together with the NFL and its Owners, agreed on terms for a new Collective Bargaining Agreement (CBA).[1] Over the course of time, with court oversight and approval, the parties have amended the SSA; an example being in 2006 when the parties agreed on a new CBA.[2] The 2006 CBA and SSA, as amended, provided for a six-year agreement with 2012 being the final year, but gave the Owners the right to opt out of the final two years. If the Owners exercised this opt-out provision, however, the final league year would be an uncapped year regarding players’ salaries.[3] In 2008, the Owners exercised their right to opt out, making 2010 the last season under the agreement.
In March 2011, the 2006 CBA expired and with the parties unable to agree on terms, the NFL instituted a player lockout. The Players’ Association countered by decertifying itself as a union and disclaiming any interest in continuing to serve as the players’ collective bargaining representative. The individual players were then free to, and did, sue the NFL for violating federal antitrust laws.
After a series of court hearings, creative legal maneuvers, and the threat of losing an NFL season drawing closer, the parties came to terms and entered into a new CBA. On August 4, 2011, in accordance with the new CBA, the parties filed a joint Stipulation of Dismissal with the district court, ending both the players’ antitrust suit against the NFL and any continued court oversight with regards to the SSA.
On May 23, 2012, the Players’ Association filed a Rule 60 Motion requesting that the district court reopen the settlement agreement reached with the NFL and enforce the terms of the SSA, thus bringing the matter back under the jurisdiction of the district court.[4] A Rule 60 Motion allows a party to seek relief from a final judgment and request the reopening of a case under a limited set of circumstances including, but not limited to, fraud, mistake, and newly discovered evidence.[5]
The Players’ Association’s Position
The Players’ Association filed its Rule 60 Motion claiming that in 2010, the Owners breached the terms of the White Stipulation and Settlement Agreement of 1993. Such breach concerned the Owners engaging in collusive conduct to suppress player salaries by imposing a secret, $123 million per-team salary cap during the agreed upon uncapped 2010 season. The Players’ Association alleges that this secret, collusive agreement violated SSA Article XIII §1 “Anti-Collusion”, SSA Article XV § 2 “Circumvention”, and SSA Article XIX § 6 “Breach of Implied Covenant of Good Faith and Fair Dealing”. Also, because evidence of the Owners’ conduct did not present itself to the Players’ Association until 2012, after the Stipulation of Dismissal was filed, its Rule 60 Motion is timely and properly before the court.
In analyzing the Rule 60 Motion, the Players’ Association argues that the Owners’ conduct violated SSA Article XIII § 1 “Anti-Collusion” because they, the Owners, restricted individual team decision making on whether or not to negotiate with any player concerning the terms or conditions of employment.[6] This secret salary cap violated the SSA because “the Owners explicitly agree that the 2010 season would not be subject to a salary cap”.[7] In addition, the salary cap caused economic injury to the players by reducing the amount individual teams spent on players’ salaries during the 2010 league year. Without this collusive activity, the Players’ Association argues, “teams would have spent substantially more on player salaries in 2010”.[8]
Second, the Players’ Association contends the Owners violated SSA Article XV § 2 “Anti-Circumvention” because they “entered into a collusive agreement for the purpose of circumventing the intention of the parties in that the final league year would be uncapped”.[9] It is the Players’ Association’s position that the reason for the agreed upon uncapped season during the final league year was to provide an incentive to the Owners to negotiate extensions of the SSA, rather than to let it expire.
Third, the Player’s Association alleges that the Owners’ actions violated SSA Article XIX § 6 “Implied Covenant of Good Faith and Fair Dealing”. They claim the Owners’ act of concealing the capped season from the players was malicious and designed to “defraud or to seek an unconscionable advantage over the players”.[10] That’s because this secret pact was malicious in its intent, injuring the rights of the players to receive the agreed upon benefits afforded them in the SSA, the Owners breached their obligation to deal fairly and in good faith with the players.
The Players’ Association asserts that because the Owners’ collusive conduct is newly discovered evidence, unbeknownst to them when they filed the Stipulation of Dismissal, its Rule 60 Motion is properly before the court. Being properly before the court, they are entitled to relief from a final judgment, that its request to reopen the settlement should be granted, and they are entitled to compensatory damages.
The NFL And The Owners’ Position
The NFL and the Owners contend that on August 4, 2011, when the Stipulation of Dismissal was filed with the court, all claims regarding the players’ antitrust suit and the White Stipulation and Settlement Agreement of 1993 ended. They support their position with three main defenses.
First, that per the terms of the 2011 CBA, the Players’ Association released and covenanted not to bring claims of collusion arising under the now expired SSA. The 2011 CBA specifically addressed this issue:
“The NFLPA on behalf of itself, its members and their respective heirs . . . releases and covenants not to sue, or to support financially or administratively, or voluntarily provide testimony of any kind, including by declaration or affidavit in, any suit or proceeding (including any Special Master proceeding brought pursuant to the White SSA and/or the Prior CBA) against the NFL or any Club or any NFL Affiliate with respect to any antitrust or other claim asserted in White v. NFL or Brady v. NFL, including, without limitation . . . collusion with respect to any League Year prior to 2011, or any claim that could have been asserted in White or Brady related to any term or condition of employment with respect to conduct occurring prior to the execution of this Agreement.”[11]
This release and covenant not to sue the Owners “indicates an intent to make an ending of every matter arising under or by virtue of the contract”.[12] Their position is well grounded because under controlling New York law, “a general release bars an action on any cause of action arising prior to its execution”.[13]
Second, the NFL and the Owners argue that an agreement was entered into between themselves and the Players’ Association to resolve all outstanding claims regarding the SSA. Such agreement was expressed in the jointly filed Stipulation of Dismissal that reads:
“The parties stipulate to the dismissal with prejudice of all claims, known and unknown, whether pending or not, regarding the Stipulation and Settlement Agreement (“SSA”) including but not limited to the claims asserting breach of the SSA related to (i) television contacts and broadcast revenue; and (ii) asserted collusion with respect to the 2010 League Year, excepting only the pending claim filed March 11, 2011 relating to an alleged rookie shortfall on the part of the Philadelphia Eagles.”[14]
It is the NFL’s position that the Players’ Association agreed to dismiss any and all claims, known or unknown, regarding asserted collusion with respect to the 2010 season when they signed and jointly filed the Stipulation. It is apparent from the document’s language that such is true. In addition, the Stipulation of Dismissal is a separate and independent reason, apart from the release and covenants within the 2011 CBA, as to why the Rule 60 Motion is not properly before the court.
Third, the NFL and the Owners claim the Players’ Association’s Rule 60 Motion is time barred per SSA Article XIII. Article XIII provides that “a claim for collusion has to be brought within 90 days of the later of two dates: (1) the date when the NFLPA first knows or reasonably should have known with the exercise of due diligence that it had a claim; and (2) the date of the first regular season game in the season which the violation is claimed”.
The NFL asserts that if the Players’ Association exercised any due diligence, they knew or reasonably should have known of any collusive conduct on behalf of the owners. They argue that the alleged collusive conduct, the suppression of 2010 player salaries, would have been apparent from the face of the players’ contracts signed in advance of the 2010 season. The NFL and Owners’ state, somewhat sarcastically, in their Opposition that “calculation of total player compensation, on a League-wide or Club-specific basis, would have been a simple arithmetic exercise”.[15] The Players’ Association has knowledge of the terms of every executed player contract since the SSA and the CBA require the NFL to forward them a copy of such.
In addition, the Players’ Association’s Executive Director, DeMaurice Smith, was on notice of any alleged collusive conduct when he openly stated prior to the 2010 season that there was “almost a uniform decrease in club payments that you wouldn’t expect in a completely free market”.[16]
Therefore, it is the NFL and the Owners position that the Players’ Association motion is time barred because they knew, or in the exercise of due diligence should have known of any collusive conduct regarding the 2010 season. SSA Article XIII requires a collusion claim to be brought no later than 90 days after the first regular season game, that being September 9, 2011. Because the Stipulation of Dismissal was not filed until May 2012, it is outside of the mandatory 90-day time requirement and therefore must be denied.
Conclusion
The Players’ Association is going to have a difficult time convincing the district court to grant its Rule 60 Motion and open the White Stipulation and Settlement Agreement. There is evidence that they were aware in the summer of 2010 of collusive conduct on behalf of the Owners regarding a secret salary cap. If such is true, SSA Article XIII requires them to assert an action within 90 days from the start of the season. They failed to do such. In addition, both the 2011 CBA and the Stipulation of Dismissal provides language that clearly relieves the NFL and the Owners of any collusive conduct that the Owners may have engaged in regarding a secret salary cap for the 2010 season. A court hearing regarding the Players’ Association’s Rule 60 Motion is scheduled for September 6, 2012.
Romano is the founding partner of The Romano Sports & Entertainment Agency. He can be reached at (203) 777-9797
[1] White v. NFL, 836 F.Supp. 1458, (D.Minn.1993).
[2] Amendments to the SSA were also approved in 1996, 1999, and 2002.
[3] SSA Art. I (be)-bf).
[4] Pls’ Pet. to Reopen and Enforce Stipulation and Settlement Agreement, May 23, 2012.
[5] Rule 60. Relief from a Judgment or Order
(a) Corrections Based on Clerical Mistakes; Oversights and Omissions. The court may correct a clerical mistake or a mistake arising from oversight or omission whenever one is found in a judgment, order, or other part of the record. The court may do so on motion or on its own, with or without notice. But after an appeal has been docketed in the appellate court and while it is pending, such a mistake may be corrected only with the appellate court’s leave.
(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
[6] SSA Art. XIII “No Club, its employees or agents shall enter into any agreement, express or implied, with the NFL or any other Club, its employees or agents, to restrict or limit individual clubs decision making as follows:
(a) whether to negotiate or not to negotiate with any player;
(b) whether to submit or not to submit an Offer Sheet to any Restricted Free Agent:
(c) whether to offer or not to offer a Player Contract to any Unrestricted Free Agent or Undrafted Rookie;
(d) whether to exercise or not exercise a Right of First Refusal; or
(e) concerning the terms or conditions or employment offered to any player for inclusion, or included, in a Player Contract.
[7] Pls’ Pet. to Reopen and Enforce Stipulation and Settlement Agreement, at 1.
[8] Pls’ Pet. to Reopen and Enforce Stipulation and Settlement Agreement, at 14.
[9] Pls’ Pet. to Reopen and Enforce Stipulation and Settlement Agreement, at 17.
[10] Pls’ Pet. to Reopen and Enforce Stipulation and Settlement Agreement, at 18.
[11] 2011 NFL-NFLPA Collective Bargaining Agreement Art. 3, § 2.
[12] Defs’ Opp. to the Pet. to Reopen the Stipulation and Settlement Agreement at 3, August 16, 2012.
[13] Clark v. Buffalo Wire Works Co, Inc. 3 F.Supp. 2d 366, 372-373, (W.D.N.Y.)
[14] Stip. of Dismissal, August 4, 2011.
[15]Defs’ Opp. to the Pet. to Reopen the Stipulation and Settlement Agreement at 6.
[16] Defs’ Opp. to the Pet. to Reopen the Stipulation and Settlement Agreement at 1.
