The Work

March 2, 2009 6:49 AM

The Mickey Rourke Chronicles: A Pile-Driving Look at Sports and the Law

Posted by Ed Shanahan

By Zach Lowe

Is professional wrestling a sport? Debate it if you want, but we're starting this week's look at sports and the law with news that the WWE won a labor-related case that employment lawyers have been watching carefully because of its potential impact on contracts in other performance-related fields.

The win is another victory for K&L Gates partner Jerry McDevitt, the WWE's go-to counsel since he defended Jim "The Anvil" Neidhart after the pro wrestler's 1987 arrest at the Pittsburgh airport for allegedly kicking a flight attendant in a dispute over drinks. (Neidhart was eventually acquitted.)

Over the past two decades, McDeviitt has represented what was then known as World Wrestling Federation in a steroid investigation, quashed a subpoena targeting Hulk Hogan in the same probe, advised on the wrestling conglomerate's IPO and (unsuccessfully) fought the World Wildlife Fund over who "owns" the initials WWF.

McDevitt's latest WWE bout was connected to a case in federal district court in Connecticut. Three wrestlers claimed their WWE contracts mischaracterized them as "independent contractors" even though they acted, for all practical purposes, as full-time employees--including traveling where the WWE told them to travel and even styling their hair to WWE honcho Vince McMahon's specifications.

The wrestlers (Scott "Raven" Levy, Chris "Kanyon" Klucsarits and Am Law Daily fave "Above Average" Mike Sanders) sued, claiming the "independent contractor" status robbed them of benefits and denied the IRS proper tax payments. 

The WWE's argument was elegant in its simplicity: The contracts say you're independent contractors, so that's what you are. McDevitt tacked on a statute of limitations argument just in case.

The plaintiffs firm (the Stamford, Conn.-based boutique Silver, Golub & Teitell) urged District Court Judge Peter Dorsey to look beyond contract language and at the reality of the situation--an interesting argument, but a tough one to make in a world where the contract reigns supreme. 

On Tuesday, Dorsey dismissed the wrestlers' suit, saying they were indeed bound by the contracts.

"It vindicates our position that these are big guys who signed big guy contracts," McDevitt says. "And that the WWE paid them every dime they promised to pay them."

Now, if only McDevitt could sue to get Mickey Rourke his Oscar.

Another pro sports antitrust case?

As a baseball diehard, The Am Law Daily heard the phrase "antitrust exemption" long before we knew what it meant, but now the National Football League is testing the elasticity of the more limited antitrust exemption the government has granted to sports other than baseball.

The only major exemption to antitrust law the NFL enjoys is the one (codified in federal law in 1961) that allows league franchises to pool together and negotiate a single television contract--one that over time has become the most lucrative in U.S. pro sports. The exemption makes it impossible for television networks to bid for individual games, thus limiting the supply of games available and allowing the league as a whole to charge huge fees.

Now the NFL--backed, as usual, by Covington & Burling's Gregg Levy--is asking for another major antitrust exemption, this one involving the league's ability to sell the license to all apparel bearing NFL team logos to a single licensee (in this case Reebok).

The move is a response to a suit filed by American Needle, which claims that it and other apparel makers should have the right to negotiate independent marketing deals with individual teams. The NFL has argued that, at least for purposes of marketing clothes, it is a "single entity" that should not be subject to antitrust rules. (A single entity cannot be accused of anticompetitive behavior because there is, by definition, no other entity with which it competes). The league has won at every level so far, including at the U.S. Court of Appeals for the Seventh Circuit, which dismissed American Needle's suit last year.

But American Needle appealed to the U.S. Supreme Court, and the justices last week asked the U.S. Solicitor General's office for input on the matter--an indication that they just might be interested in taking the case. That apparently doesn't faze the NFL, which has joined American Needle in asking the court to hear the case.

The National Basketball Association and National Hockey League have filed amici backing the NFL; both are represented by Skadden, Arps, Slate, Meagher & Flom (partner Shepard Goldfein for the NHL and partner Jeffrey Mishkin for the NBA). 

The NFL claims that subjecting its apparel licensing deals to antitrust law would produce "a cascade of antitrust suits" that would waste the court's--and the league's--time and resources. 

What's interesting about this case is that the NFL in almost all other aspects of its business does not function as a single entity, says Marc Edelman, a sports law professor at Rutgers University. Each team is owned by an independent owner who can, within the restrictions of a salary cap, spend what he or she wants on individual players (thus the Washington Redskins signing of defensive end Albert Haynesworth to a jaw-dropping seven-year, $100 million deal this week). 

Allowing the league to claim single entity status when it wants would set a major precedent, Edelman says--precisely the precedent the NFL likely had in mind when it urged the court to take the case.

"This has the potential to be the most monumental sports antitrust case since 1972," when the high court in Flood v. Kuhn upheld baseball's antitrust exemption but laid the groundwork for baseball players to earn free agency.

Levy wasn't available for comment.

Your Weekly Barry Bonds Update

It appears the Barry Bonds criminal perjury trial, scheduled to start Monday, will be delayed again after prosecutors made a last-minute appeal of Judge Susan Illston's ruling earlier this month to suppress what the government considered damning physical evidence against Bonds--including the results of three positive drug tests and calendars reportedly showing Bonds' doping schedule, the New York Times reports.

We've written here about the San Francisco criminal defense titans repping Bonds and the Jones Day partner representing slugger Jason Giambi, an admitted steroid user who will testify in the case--if a trial actually happens. 

Now there's a new Am Law character in the case: Duffy Carolan, a partner in the San Francisco office of Davis, Wright & Tremaine. Carolan represents ten media companies (led by The Associated Press) who last week filed a motion asking the court to make public the jury questionnaires and responses. 

Carolan has been the AP's go-to Bay Area counsel for several years. She says the timetable for the court to rule on her motion is unclear now that the prosecutors have appealed and the trial's start date has been pushed back.

Other Bullets:

• We don't have the space here to plumb the entire sordid history of how an ownership group with ties to Oklahoma City purchased the NBA's Seattle SuperSonics in 2006, said all the right things about loving Seattle, and proceeded to use all sorts of back-room maneuvering to move the team to Oklahoma City for the 2008-09 season and beyond. But we can tell you this: A group of Seattle season ticket holders has sued the team. Among their demands: compensation for the money they could have earned selling their tickets on second-hand markets for the 2008-09 and 2009-2010 seasons--when the Sonics's Seattle lease was due to end. A federal judge in district court in Washington state has allowed that count to proceed (he dismissed several others); the plaintiffs, should they earn class status, could seek damages up to $7.5 million, according to their lawyers at the Seattle firm Keller Rohrback. The owners are repped by a team from Byrnes & Keller in Seattle.

• Finally, we leave you with the most interesting sports law argument we saw all week: Forget wrestling— is sheep-sheep-shearing a sport? Australian practitioners think so, and they're trying to get their pastime added to the country's official list of sports. One argument in their favor: A record-breaking sheep-shearer stripped 513 sheep in nine hours--and shed 16 liters of sweat in the process. That's about the amount Lance Armstrong sweats in one day of riding in the Tour de France, Bloomberg reports.

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