November 1, 2009 3:12 PM
The Sports Litigation Archives: USFL v. NFL
Posted by Brian Baxter
Before we busy ourselves with an evening of Brett Favre returning to Lambeau Field and Game 4 of the World Series, The Am Law Daily continues with our weekend coverage of important moments in sports litigation history.
Part one in our look at two major antitrust cases of the 1970s and 1980s, published on Friday, considered the events that resulted in the upstart American Basketball Association merging with the National Basketball Association. Our interest in the case was piqued by a new project from sports columnist Bill Simmons, better known as ESPN.com's The Sports Guy. In The Book of Basketball, Simmons chronicles the rise of the NBA.
Simmons also is the executive producer of ESPN's 30 for 30 series, which features 30 films about events that transformed the sports landscape between 1979 and 2009. The latest installment in the series, Mike Tollin's documentary Small Potatoes: Who Killed the USFL?, details the rise and fall of the spring football league. Tollin touches on another important antitrust case that played out between the USFL and the NFL.
We went searching for the lead lawyers on the case. Here's what we dug up.
USFL v. NFL
Few alternative sports leagues had the cachet of the USFL.
Started in 1983, the league lost an estimated $163 million in its three years of existence. Still, the USFL achieved plenty of notoriety in those years. It had high-profile owners, like Donald Trump; Heisman Trophy-winning college stars such as Herschel Walker and Doug Flutie; and innovative new rules like the two-point conversion and instant replay.
On October 17, 1984, the USFL sued the NFL seeking $1.7 billion in damages, accusing its older competitor of monopolizing TV contracts and stadium venues that made it virtually impossible for the USFL to play a fall schedule. Former NFL commissioner Pete Rozelle famously called the case "blackmail litigation" in this excellent story at the time by Sports Illustrated.
The case went to trial before U.S. district court judge Peter Leisure in May 1986 and lasted for 42 days. Representing the NFL was legendary Skadden, Arps, Slate, Meagher & Flom litigator Frank Rothman, who once ran MGM after his longtime client Kirk Kerkorian bought the studio.
Cocounsel to the NFL was former Manhattan U.S. attorney and Davis Polk & Wardwell partner Robert Fiske, Jr. (pictured left). Fiske later served as Whitewater special prosecutor and has had a string of high-profile clients over the years, including former USFL owner and Sotheby’s chairman A. Alfred Taubman.
The USFL turned to flamboyant trial lawyer Harvey Myerson, nicknamed “Heavy Hitter Harvey.” Myerson was a name partner at 700-lawyer Finley, Kumble, Wagner, Underberg, Manley, Myerson & Casey in New York. Much like its gridiron client, the firm would soon face its own financial problems.
The first stage of trial started well for the USFL, according to Sports Illustrated, and Rothman's and Myerson's contrasting courtroom styles were readily apparent. The good times wouldn’t last. On July 29, 1986, a six-person jury returned a symbolic verdict in favor of the USFL, but awarded damages of only $1, which under antitrust law was trebled with interest to $3.76. The check was never cashed. (One check that was cashed: the $6 million in legal fees the NFL was ordered to pay the USFL.)
The league quickly suspended operations, and USFL commissioner Harry Usher, himself a lawyer, and Myerson had a falling out. Weil, Gotshal & Manges's Ira Millstein--who also figured in our report on the ABA v. the NBA--was then brought in to try and seek an injunction.
“We were retained by the league over Donald Trump’s objection as additional counsel apart from Myerson, who was Trump’s guy,” says Dewey & LeBoeuf global litigation cochair Jeffrey Kessler (pictured right), a Weil alum. “We tried to [get an injunction on the grounds that] the NFL had contracts with all three TV networks and use that as leverage to pull a victory out of a loss. But the judge said the record wasn’t properly developed by Myerson at trial, so while we got an injunction, it wasn’t the one we wanted.”
The Second Circuit Court of Appeals in New York dismissed the USFL’s appeal in 1988 and the league folded for good shortly thereafter.
Looking back on the case 23 years later, Kessler says the USFL shouldn’t have filed its antitrust case in New York.
“It should have been brought in Memphis or some other place where the USFL was the only football team in town,” he says. “[The case] was about destroying football for those teams, not about Donald Trump’s desire to be an NFL owner, which is what the New York jury thought. But Trump wanted all the attention and publicity that comes from being in New York.”
Tollin’s USFL documentary makes a similar assertion--that Trump wanted to force a merger with the NFL so he could own an NFL team. Trump has vigorously denied the claim.
Whatever the underlying cause of the USFL's demise, Harvey Myerson’s fall was as precipitous as that of the league he represented. Finley Kumble, once the fourth-largest firm in the U.S., went bankrupt in 1987. (Click here for a blow-by-blow on the firm's collapse from The American Lawyer.)
Myerson partnered up with former Major League Baseball commissioner Bowie Kuhn to found Myerson & Kuhn the next year, but that firm would also soon implode amidst allegations that Myerson was padding bills to his biggest client, Lehman Brothers predecessor Shearson Lehman Hutton.
Kuhn would flee to Florida to escape the firm’s creditors and Myerson would face federal charges of defrauding clients. After defending himself at trial, he was convicted in 1992 of filing false expenses, overbilling clients, and tax evasion. Myerson served five years in prison and last year it emerged that he owed New York state nearly $1.5 million in back taxes.
Click here for part one of The Sports Litigation Archives: ABA v. NBA.Make a comment