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Thursday, May 31, 2012

Suing the NFL: Where Labor Law meets Fed Courts

A couple of weeks ago I wrote about the federal defamation action brought against NFL Commissioner Roger Goodell by New Orleans Saints linebacker Jonathan Vilma over his one-year suspension for his alleged participation in the Saints "bounty" program. Two more interesting things in the case.

First, I have heard a few people suggest that the lawsuit is preempted by the NLRA and the new CBA, which gives Goodell broad power to investigate and punish player misconduct. The argument, I guess, is that in suing over Goodell's statements reporting his findings and punishment, Vilma is functionally challenging Goodell's exercise of that power. In other words, to determine the falsity of Goodell's statements requires a court to review the evidence that the league gathered about the bounty programa and to review the accuracy of Goodell's decision. Labor law people (are you out there, Matt?): Is that right? Can a legal claim arise from arbitrable conduct that violates some other right?

Second, I found it notable that Vilma sued Goodell, but did not sue the NFL on a respondeat superior theory. My suspicion has been that Vilma wanted to be in federal court and the NFL would have destroyed complete diversity. Vilma is a Florida citizen and so, it appears, is the NFL for these purposes, although it takes some digging. And it also provides a nice case for illustrating the puzzle of determining citizenship for diversity purposes when non-corporate entities are involved.

The NFL is an unincorporated association of its 32 teams, so it is a citizens of every state of which one of its teams is a citizen. One team, of course, is the Miami Dolphins, which are owned by Miami Dolphins Ltd., a Florida limited partnership. A partnership's domicile is that of every general and limited partner. The general partner is South Florida Football Associates LLC, which has its principal offices in New York; no other general or limited partners were listed on its 2012 Annual Report. An LLC's domicile is that of every member. The managing member is Stephen Ross, the man who is colloquially known as the "team owner." According to Wikipedia, Ross resides in New York' of course, residence is not domicile, so it is possible he also has a home in Florida and that is he true residence. Guess we need more discovery on this one. The key, though, is that Ross famously brought in a number of celebrities as minority owners, including Gloria and Emilio Estefan, the Williams sisters, Fergie, and Marc Anthony. I know for sure that the Estefans are Florida citizens. I am not sure if these "minority owners" are members of the LLC or limited partners in the partnership. Either way, Estefan alone means the partnership has become a Florida citizen (directly or through Estefan's effect on the LLC), which makes the NFL a Florida citizen. And thus a strategic reason for not suing the league.*

On the other hand, it may seem surprising that Vilma so wants to be in federal court. The theory underlying diversity jurisdiction is that it allows one party to avoid local bias that would exist in state court by getting to federal court. The converse is that the local would want to be in state court to take advantage of that bias. Yet Vilma, the "local," is looking for federal court. True, Vilma is not a Louisiana citizen. But he is a star player on the Saints and a leader of their championship team. He could expect to benefit from local favoritism even more than any Louisiana citizen would.

Finally, another explanation for Vilma's strategic choice may tie the two issues together. Perhaps Vilma was indeed worried about CBA preemption of his claim. Maybe the thought is that the defense argument that this issue is subject to arbitration appears stronger if the lawsuit is against the league, which is a party to the CBA, than if the lawsuit is against Goodell, who is not a party to the CBA. By not suing the NFL, Vilma could try to argue that this dispute is not subject to labor arbitration because this dispute involves people who are not parties to the CBA.

Thoughts?

    *Lawyers routinely gets this wrong. So I hope Vilma's attorney's reasoning did not go as follows: "The NFL is all 32 teams, the Dolphins are a partnership with their principal offices in Miami, so it is a Miami citizen, so the team destroys diversity." Full stop. That would be the right conclusion but the wrong analysis, and thus a not-so-good grade.

Posted by Howard Wasserman on May 31, 2012 at 09:31 AM in Civil Procedure, Current Affairs, Howard Wasserman, Sports | Permalink

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Comments

Howard - I think the suit is preempted under Section 301 of the LMRA (the NLRA as amended). The basic idea is that preemption turns on whether the conduct upon which the claim is grounded is governed by the CBA. If the agreement could not condone the activity, there is no preemption - think assault and battery or sexual harassment. But here the essence of the inquiry should consist in an evaluation of Goodell's authority under the CBA, and that brings the matter within the very broad preemptive sweep of Section 301. See e.g. Smith v. Houston Oilers, 87 F.3d 717 (5th Cir. 1996)

Posted by: Michael Duff | Jun 1, 2012 12:18:38 AM

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