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Key Sports Law Developments to Watch in 2019

Key Sports Law Developments to Watch in 2019

By: Cameron Miller

2018 was monumental year for sports law on several fronts. By far the most significant development was the Supreme Court’s invalidation of the Professional and Amateur Sports Protection Act (PASPA), paving the way for the expansion of legal sports wagering across the country. In October, a federal jury convicted two former Adidas executives and an aspiring sports agent for their roles in funneling money to prospective college basketball players—essentially criminalizing NCAA rules in the process. The NCAA faced another reckoning in September, when it defended its amateurism rules in a case commonly referred to as Jenkins or Alston that threatens to upend the pay limits for college athletes (a ruling is expected sometime this spring).

The reverberations of these disputes will be felt in 2019 and beyond, as will a number of other sports law cases that figure to see substantial developments in the coming year.

Expansion of Sports Gambling and Possible Federal Regulation

In May 2018, the Supreme Court, by a 7-2 margin, struck PASPA down as unconstitutional, clearing the regulatory landscape for massive growth in the legal sports betting sector. PASPA, the Court reasoned, unduly restricted the ability of state legislatures to legalize and regulate sports betting, and therefore violated the Tenth Amendment’s anti-commandeering rule. In the ensuing months, New Mexico, Mississippi, West Virginia, Pennsylvania, Delaware, Rhode Island, and New Jersey—the state that brought the challenge to PASPA—all opened sports wagering operations (the District of Columbia and Arkansas legalized, but not have yet implemented, sports wagering). That group is likely to be joined by a number of others in the near future, with 13 states already introducing sports betting legalization and regulation bills in their 2019 legislative sessions. Although states are, for now, largely free to craft their own sports betting regulatory schemes, the legal wrangling in this sector is far from over. New proposed federal oversight of sports wagering may produce additional litigation if passed, and states may have internal battles over how to legalize sports betting—for instance, must it be done through constitutional amendment, a bill amending the state’s lottery system, or a compromise with local Native American tribes? Another possible frontier for litigation concerns the applicability of the Wire Act to interstate betting operations; the proposed federal bill would amend the Wire Act to avoid any conflict, but there is ample ambiguity in this corner of sports betting’s legal landscape. The Department of Justice muddied the waters even further when it issued a new interpretation of the Wire Act in early January that threatens the legality of daily fantasy sports, increasing the likelihood of litigation on this front.

A Ruling in the Alston/Jenkins Case

After a three week trial in September, a California federal court is poised to rule on perhaps the most important legal dispute in college sports history—and certainly the most impactful since the Supreme Court’s ruling in 1984 that invalidated the NCAA’s centralized television distribution plan and ushered in the era of billion-dollar media rights agreements. Known colloquially as a Alston/Jenkins, this case challenges the legality of the NCAA’s amateurism rules under the antitrust laws in an effort to break-up the NCAA’s cartel. Specifically, the player-plaintiffs seek an injunction that would prevent the NCAA (the collection of the 1000-plus member schools) from setting national compensation limits for athletes, and instead devolve the right to set compensation limits to the conferences. In that system, for example, the Southeastern Conference could allow its players to accept greater compensation (either from the school or third parties) than, say, the Pac-12 or Big Ten. Because the rule-making authority would rest with the conferences, which do not hold the market power the NCAA does, certain antitrust concerns are alleviated, though schools and conferences are, evidently, worried about collusion claims even in the proposed system. Alternatively, the players seek to lift the cap on the education-related expenses they can receive from their schools, which would conceivably allow players to receive additional money for school-related materials (e.g., laptops) and accept tuition assistance for graduate school. Whatever the outcome in the district court—though it is widely expected that the players will win—the case will be appealed to the Ninth Circuit, and then, potentially, to the Supreme Court. Meaning: The results of Alston/Jenkins are not likely to fully manifest in 2019, so long as the NCAA does not make a unilateral change as the result of a litigation loss. Nonetheless, the district court’s ruling, which is expected by spring’s end at the latest, will set in motion a process that could either completely overhaul college sports as currently constituted, or protect the status quo.

The Federal Government’s Continued Prosecution of NCAA Rules Violations and the Fallout

In September 2017, the U.S. Attorney’s Office in the Southern District of New York announced charges against assistant college basketball coaches, agents, financial advisors, and apparel company executives (“defendants”) after a years-long investigation into recruiting practices in men’s college basketball. The charges were, essentially, that the defendants defrauded universities by making payments to prospective college basketball players and their families in exchange for those players’ agreement to attend a certain school affiliated with a certain apparel company (either Nike or Adidas). Those players were therefore ineligible, the government’s reasoning went, exposing the schools to NCAA penalties and depriving them of their control over the scholarships and of the coaches’ “honest services.” The cases, decried as spurious and an overstepping of the government’s rightful prosecutorial bounds, nonetheless went forward; in October, a New York federal jury found two Adidas executives and an aspiring sports agent guilty of fraud. Several defendants have taken plea bargains, and two more trials are set for early 2019. Chuck Person, a former NBA assistant, is set to be tried in February along with clothier and referee Rashan Michel, and former Oklahoma State assistant Lamont Evans is to be tried in April. Two former assistants who were supposed to be tried alongside Evans, Tony Bland and Emanuel “Book” Richardson, recently reached plea deals. With or without the testimony of Bland and Richardson, the prosecution must show that the defendants intended to defraud the schools—either of control of their scholarship assets or the coaches’ “honest services”—and that the intent was to obtain money or property from the schools.

Although the prospect of appeals mean these criminal cases will likely not be completely resolved in 2019, the fallout may begin to be felt this calendar year now that the NCAA has been given clearance to investigate some of the conduct under its rules and adjudicatory system. Key questions that remain include: How much of the government’s evidence will the NCAA have access to; how might the NCAA’s proposed move to neutral arbitrations impact the outcome of its investigations; what might the relationship between the FBI/federal prosecutors the NCAA be moving forward now that the government has shown an interest in prosecuting NCAA violations (and will that relationship impact the NCAA’s status as a non-state actor); and the interplay between the NCAA’s crackdown on amateurism violations with the shifting legal winds created by the outcome in Alston/Jenkins

Colin Kaepernick’s Collusion Claims

Somewhat lost in the drawback in on-field NFL player activism this past season is the fact that Colin Kaepernick’s collusion case against the league continues. Though the matter is shrouded in the secrecy of arbitration, news of NFL owner depositions, a denial of the NFL’s motion to dismiss, and settlement talks leaked out over the course of the year. Reporting in late November 2018 indicated that settlement negotiations between Kaepernick and the league had fizzled and that the two sides were determining the contours of a hearing that would occur early this year in Philadelphia. At the hearing, which may last two weeks, Kaepernick must show “by a clear preponderance of the evidence” that at least two NFL teams, or the league and at least one team, agreed not to negotiate with and/or offer a contract to him. If he prevails, Kaepernick is entitled to compensatory damages; such damages could include the value of the contracts he would have received but-for the collusion (if it existed). Non-compensatory damages are also awarded according to how many collusion violations a team has accrued. Importantly, if 14 or more teams are found to have colluded against Kaepernick, the NFL Players Association has the right to terminate the CBA. The Kaepernick issue—and the social, political, and cultural debates it spawned—is likely to see a resolution in the first half of 2019 (though a federal court appeal is possible and could prolong the process, existing precedents set an exceedingly high bar for overturning arbitration awards).

The NFL Concussion Settlement – A Settlement in Name Only

Like the Kaepernick dispute, much of the action in the NFL’s Concussion Settlement has occurred out of the public eye. Behind-the-scenes, players’ attorneys, NFL lawyers, the entity administering the settlement, and the judge overseeing it all have been warring over the Settlement’s language, application, and the future of an agreement that has been projected to be worth over $1 billion. Recently, these disputes have bubbled to the surface, revealing just how deep the divide between players and the league is. The core of the disagreement is this: The Settlement program has established two systems whereby former NFL players, provided they played for a certain number of games, can be diagnosed with a “qualifying diagnosis” that entitles them to payment. The Baseline Assessment Program (BAP) provides one free neuropsychological and one free neurological evaluation to players who were on an active roster for at least three games in a single season. Players’ scores on the neuropsychological examination and clinical symptoms presented to the neurologist determine whether the player receives a qualifying diagnosis, which can range from an “early dementia” diagnosis to more serious diseases like Parkinson’s and Alzheimer’s. In order to qualify for one of the two “early dementia” diagnoses—which are by far the most common qualifying diagnoses—players must meet certain cut-offs on the neuropsychological testing and present the right combination of symptoms to the neurologist.

There is another, semi-parallel program through which former players can also be tested and diagnosed—the Monetary Award Fund (MAF) program. The MAF program features the same (or virtually similar) neuropsychological testing or neurological evaluations as are administered in the MAF. One key difference is that, instead of having to wait in line for months for BAP testing, players contact MAF physicians directly to schedule appointments, which cuts waiting times significantly. Unlike BAP assessments, MAF evaluations are not free—players’ attorneys usually front the costs, which can approximate $10,000—but players are evaluated quickly and know whether or not they have a compensable diagnosis far sooner than they would have had they proceeded through the BAP. But the difference driving the dispute between the NFL and the players is the standard by which MAF evaluations are judged. When evaluated through the MAF program, the Settlement provides that the testing methodology need only be “generally consistent” with that of the BAP, giving MAF physicians far more leeway in using their clinical judgment when rendering diagnoses (according to the Settlement’s website, “generally consistent” means that “two things have more elements or characteristics in common with each other than they have elements or characteristics that differ from each other. The common elements or characteristics must predominate over the uncommon ones”). As a result, far more qualifying diagnoses were being rendered in the MAF program.

Seeking to reduce the league’s financial exposure in what is now an uncapped settlement, the NFL attorneys employed a variety of tactics to forestall claims, including appealing hundreds of cases and bringing the “generally consistent” issue to the judge after adverse rulings from the Settlement’s Special Master, who agreed with the players’ interpretation of the “generally consistent” language. A hearing on the “generally consistent” was supposed to be held in early January, but then the NFL curiously withdrew its appeal a day prior to the hearing, and the judge later authorized the Settlement administrator (a third party law firm) to make changes to the diagnosing process to require MAF physicians to outline why their methodologies are generally consistent with those of the BAP—a development that players attorneys predict will make it more difficult for players to receive qualifying diagnoses. Other disputes over the implementation of the Settlement, including whether the Special Masters are required to consult a panel of neurologists that are perceived to be anti-player in deciding whether to approve or deny claims on appeal, are likely to spill further into 2019.

A Possible NHL Concussion Settlement?

Former NHL players pursued similar concussion claims against their league, but were denied their bid for class certification in July 2018, effectively killing their chances of the lucrative, global settlement achieved by the former NFL players. The failed class certification effort was reflected in the agreement reached between the parties in November 2018, which will pay a reported $19 million to 300-plus former players (by contrast, the initial agreement between the NFL and its former players exceeded $700 million, though there were thousands of players involved in that litigation). Because the settlement is capped, the NHL may not share the NFL’s incentivize to fight claims tooth-and-nail, but both sides should look to what has occurred in the NFL case to avoid becoming bogged down in disputes over diagnosing protocols and claim delays. At some point this year, we should have a better understanding of how the league will disburse the settlement funds, which will shape any future disputes in who receives what from the $19 million pot.

College Football Concussion Cases

College football players, too, are seeking reparations for the concussion-related injuries they suffered during their collegiate careers. Those cases, of which there are hundreds, were consolidated in federal district court in Illinois in early 2018 and are awaiting the results of four “bellweather” cases currently in the pre-trial process. As a result of these bellweather, or test, cases, the parties and court will decide whether it is wise to continue the aggregation of the cases or to litigate them separately. At present, three of the four bellweather cases are currently awaiting a judge’s ruling on a motion to dismiss; in the fourth, the judge partially granted and partially denied the Big Ten Conference and NCAA’s dismissal motions, leaving the plaintiff’s negligent, fraudulent concealment, and breach of contract claims intact. Although it appears likely that the dismissal issues will be resolved for the other three cases this year, 2019 will be largely consumed by discovery—with an ultimate resolution still years away.

NCAA Show-Cause Penalty Litigation

The legal battles between former USC assistant football coach Todd McNair and the NCAA have taken too many twists and turns to count, but the developments in late 2018 were perhaps the most significant. McNair was defeated at trial in May 2018 on his defamation charges against the NCAA, which stemmed from an NCAA finding in 200x that McNair knew of payments in violation of NCAA rules made to then-USC player Reggie Bush. But McNair’s bid to undo the show-cause penalty levied against him (which required any school that hired McNair to “show-cause” why the NCAA’s penalties should not follow McNair to his next job) succeeded when a Los Angeles County Superior Court judge found the NCAA’s show-cause penalty to violate California’s competition laws. The NCAA is appealing the ruling, and a resolution in 2019 is likely. Should McNair prevail, the NCAA and its California members may be unable to enforce show-cause penalties against coaches, thus removing arguably the harshest punishment for rules violations. The battle over the future of the show-cause penalty in California has the potential to alter the NCAA’s adjudicatory process and its relationship with its California-based members, and could provide a roadmap for similar challenges in other states.

The Continuing Fallout From the Nassar Scandal

One of the defining stories of 2018—sports law and otherwise—were the revelations on the scope of former Michigan State and USA Gymnastics physician Larry Nassar’s sexual abuse. Now, Nassar is in prison; the school’s athletic director resigned; former president Lou Anna K. Simon is gone and facing criminal charges for lying to police concerning her knowledge of Nassar’s conduct; the school is clear of NCAA liability; and the lawsuits facing the school from hundreds of Nassar victims settled for $500 million. But Michigan State is not out its legal quagmire yet. A recently-concluded investigation by the Michigan Attorney General found no new criminal conduct, though the school was heavily criticized for lacking transparency during the investigative process and, according to interim university president John Engler, is still withholding some documents as privileged (who also said the school will resist further investigations). If or when those documents are released, the university may face further liability. At least one of the university’s trustees, along with a chorus of others, are calling for an independent investigation to answer the “who, what, where, when” of the Nassar saga and the culture that allowed the abuse to drag on for more than two decades; that inquiry could beget additional legal action. And then there is the matter of how to distribute the $425 million that has been earmarked for at least 332 Nassar victims. How the fund will be overseen and how a payout formula is developed are the next steps in attempting to right Nassar’s horrible wrongs. 2019 may bring additional closure and healing, but the Nassar scandal and its consequences are from over for Michigan State.

Other Issues to Watch:

The continued use of wearable fitness trackers in professional sports (e.g., WHOOP, Zebra, Catapult) and the legal questions surrounding data ownership and use. The MLB and NBA collective bargaining agreements address and regulate the use of wearables; watch for the issue to become more prominent as the biometric data gathered from athletes grows more valuable in free agency and draft decisions.

Continued efforts by several states to ban youth tackle football. Illinois, New York, California, New Jersey and Maryland have all, at one point, introduced legislation that would prohibit children younger than 12 or 14 from playing tackle football, but thus far none of the legislation has been enacted. If such legislation is passed, it is sure to elicit a strong legal response from youth football leagues like Pop Warner.

Legal issues in eSports. As they continue to develop, eSports leagues have and will continue to face a variety of legal issues, including labor issues if and when players begin to unionize and antitrust concerns depending on how leagues organize themselves (either in single-entity or franchise models or something else entirely).

Congressional reform of USOC and national governing body governance remains a possibility. In light of the sexual abuse scandals that have plagued NGBs during the past several years, Congress may assume greater oversight over Olympic sports. Establishing the U.S. Center for SafeSport as an investigatory entity was a first step, and Congress may yet go further—but how, and what will the legal implications be? We may gain greater clarity on these issues in 2019.

The future of the Oakland Raiders. The transient franchise currently does not have a home for the 2019 NFL season, and the city of Oakland’s antitrust suit against the team (filed in December) and the remainder of the league does not improve the prospects of return to the Coliseum. The city is accusing the Raiders and the rest of the league of violating antitrust laws and the NFL’s own relocation policies in moving the team to Las Vegas. The city’s core claim is that league’s teams have engaged in a group boycott against the city by ending negotiations that would have kept the team in Oakland after the city refused to assent to the Raiders’ financial demands for a new stadium—demands the city characterizes as a “cartel fee.” Irrespective of where the Raiders play next season, Oakland’s lawsuit will remain a painful reminder of the (black) hole left behind.

Jacobus Rentmeester, the photographer whose shot of Michael Jordan inspired the famous Jumpman logo, is seeking to take his IP misappropriation case against Nike to the Supreme Court after dismissals in the Ninth Circuit. If SCOTUS grants certiorari, it could re-open the possibility of Rentmeester receiving millions in royalties fees he claims he’s owed.

A suit pressed by former NFL players over the painkillers and opioids they were given as players was reinstated by the Ninth Circuit in September after being dismissed in December 2014. The case was remanded to the Northern District of California.

Cameron Miller is a 2016 graduate of Stanford University and earned a Master's in Sports Law & Business from Arizona State University in 2017. He is the Sports Lawyers Association's Research Assistant and is a first-year law student at Georgetown University.


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