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March 1, 2011 11:43 PM

With NFL Pact Set to Lapse, Judge Gives Players Big Win in Dispute Over TV Cash

Posted by Brian Baxter

U.S. district court judge David Doty in Minneapolis ruled Tuesday that a special master erred in saying the National Football League could pocket $4 billion in television revenue should team owners shut down America's most popular sport once the league's collective bargaining agreement expires on Thursday, according to the Minneapolis Star Tribune and The Associated Press.

As with the rest of the simmering NFL labor war, Am Law 200 firms are representing both the NFL and the NFL Players Association in the "lockout funds" dispute, which The Am Law Daily first reported on last June and once again in January.

Special master Stephen Burbank, a University of Pennsylvania Law School professor, ruled last month that the league could cash $4 billion in TV checks from its contracts with ABC, CBS, ESPN, Fox, NBC, and DirecTV. (Burbank did award the players $7 million in damages after holding that the NFL violated "lockout insurance" provisions of its contracts with ABC and ESPN.)

The revenue would act as a de facto insurance policy for the NFL in the event that management chooses to lock out players as a negotiating tactic. Both sides have been trying to improve their bargaining position during ongoing labor talks that jeopardize the 2011 season, with players threatening to decertify the union in an effort to thwart a lockout and, ultimately, bring antitrust actions against the league. For their part, owners have vowed to follow through on their lockout threat come Thursday, and hope to use the TV revenue to offset the costs of not playing games later this year. (Click here for a quick primer on what a lockout and union decertification mean.)

Doty, who has been overseeing NFL labor disputes for nearly 20 years under a federal consent decree, ordered in his 28-page ruling that another hearing be held to determine whether NFL players should receive financial damages or an injunction that would block the league from stockpiling TV funds in the event of a lockout. Doty did not set a date for that hearing.

Latham & Watkins partner Thomas Heiden, who served as cocounsel to the NFLPA in the case along with Dewey & LeBoeuf global litigation chair Jeffrey Kessler, called Doty's ruling a "big deal not only for the players, but for the fans as well."

Doty, Heiden says, found that when NFL owners set out to reopen the league's five broadcast contracts, they did so to disadvantage and harm the players, and in the process breached a series of obligations to players that are spelled out in the so-called Reggie White settlement agreement that provides the template for the league's collective bargaining agreement.

Heiden says he received a congratulatory phone call from NFLPA executive director DeMaurice Smith--a former Latham partner and colleague who was also once a partner at Patton Boggs--after news of Doty's decision broke. (The Am Law Daily spoke with Smith after he was elected to replace predecessor Gene Upshaw in 2009.)

Other attorneys appearing on a copy of Doty's ruling as representing the union include Weil, Gotshal & Manges litigation cochair James Quinn, longtime outside counsel to the NFLPA, and local counsel Mark Jacobson and Anthony Kirwin from Lindquist & Vennum in Minneapolis. Heiden says that Timothy Thornton, a former general counsel of Northwest Airlines and current partner with Minneapolis firm Briggs and Morgan, served as lead local counsel to the NFLPA before Doty.

Heather McPhee, a former Latham and Patton Boggs associate now serving as assistant general counsel for the NFLPA, served as lead in-house counsel for the union overseeing the matter. The NFLPA's general counsel is Richard Berthelsen (sibling publication Corporate Counsel profiled Berthelsen two years ago). 

Covington & Burling litigation chair Gregg Levy, longtime outside counsel to the league, argued the case for the NFL before Doty, along with fellow litigation partner Benjamin Block. Levy did not immediately respond to a request for comment, but NFL spokesman Greg Aiello told the AP that Doty's decision would have "no effect on our efforts to negotiate a new, balanced labor agreement" and that league owners were "prepared for any contingency." (NFL owners have long wanted out from under Doty's jurisdiction.)

Skadden, Arps, Slate, Meagher & Flom antitrust leader Shepard Goldfein and Faegre & Benson antitrust partner Daniel Connolly also appeared as counsel to the NFL, although it was Covington that took the lead for the league. The NFL's general counsel is Jeffrey Pash, a former partner at the firm. Former league commissioner Paul Tagliabue currently serves as senior of counsel at Covington.

Meanwhile, with the league's collective bargaining agreement set to expire Thursday, the main issues dividing the sides continue to be how to divide the league's $9 billion in annual revenues, whether to add two games to the regular season, what to do about benefits for retired players, and the imposition of a rookie wage scale. While the two sides have agreed to mediation before George Cohen, a former partner at Washington, D.C., boutique Bredhoff & Kaiser and current director of the Federal Mediation and Conciliation Service, all indications are that they remain far apart.

Dewey's Kessler and sports litigation cochair David Feher are serving as lead labor counsel to the union, along with Weil's Quinn. Proskauer Rose labor partner L. Robert Batterman and Covington's Levy are advising the league. ESPN.com reported on Tuesday that the league and players union had resumed talks, with New York Giants owner John Mara becoming the first team owner to participate in negotiations since Cohen began overseeing the process. Mara is a former labor associate at now-defunct New York firm Shea & Gould.

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