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Sports Law
University of Missouri School of Law
Lee, Ilhyung

Sports Law – Lee – Spring 2016
       I.            The Role and Authority of the Sport’s CEO (the Commissioner) and “Best Interests” of the Game
a.       The Role and Authority of the Sport’s CEO
                                                              i.      “Black Sox” Scandal
1919 World Series Res v. White Sox heavily favored and ‘lost’ 5-3
All were eventually acquitted
Landis becomes the commissioner and bans 8 players for life
Made owners realize they needed to clean up baseball
                                                            ii.      Changes to Commissioner in baseball
Had 3 team, switched to individual commissioner
Landis is the first who insisted his authority be essentially unlimited and be in writing
§ 2 of MLB constitution provided that the Commissioner shall:
serve as CEO of MLB; executive responsibility for labor relations and serve as Chairman
Investigate anything not in the best interests of baseball
To determine after investigation what action to take
To make decisions regarding on-field discipline, playing rule interpretations, game protests and any other matter within the responsibility of the League Presidents prior to 2000
                                                          iii.      Commissioner in Sports
Commissioner becomes basically CEO
“In the best interest of x sport” = very broad scope of authority
Serves as negotiator between owners and players
Federal Jurisdiction
Federal Question
Subject matter
Amount in controversy is greater than $75k
Diverse citizenship
Rule 21(d): Betting on Games
Anyone who bets on game in connection with the bettor has no duty to perform shall be declared ineligible for one year
When in connection, shall be declared permanently in ineligible
                                                          vi.      Cases
1.      Rose v. Giamatti
Was betting on the reds, in violation of Rule 21(d)(2) – don’t bet on games (resulted from Black Sox scandal)
Rose tries to defeat federal jurisdiction with diverse citizenship
Rose from OH, MLB Ohio and elsewhere, Reds OH, Commissioner NY
Court says no beef with Reds or MLB so they aren’t parties – fraudulent joinder of parties
Case was never decided on the merits
“Commissioner has unlimited authority to investigate” though
District court basically told Rose no chance to win, so Rose settled
Agrees to withdraw all legal claims, lifetime ban à but can apply to reinstate
b.      Legal Scope
Questions to Ask
What is the scope of judicial review?
What is the source of the Commissioners authority?
What is the scope of the Commissioners power?
What procedures should the Commissioner follow?
What standard of proof should be applied?
Counsel, in court, admitted that commissioner has to follow due process in investigations. Political disaster otherwise
What remedy or penalty may Commissioner employ?
Landis was a District Judge in Chicago and ruled his court room with an iron fist
Told MLB he would only take Commissioner job if he had absolute authority
Reserve System
Whatever team you are drafted to – on the team for life or until they no longer wanted you
Modifications later free agent declaration after 6 years
                                                          iv.      Cases
1.      American League Baseball Club of NY (Yankees) v. Johnson
Johnson was part of 3 person committee before Black Sox scandal
Mays walked off during a game to go fishing; then sold from Red Sox to Yankees. Johnson then punished
Court said Commissioner has authority to punish if detrimental to game, BUT Mays action was off-the-field so punishment so should be left to team
BUT – this was before absolute authority
2.      Milwaukee American Association v. Landis
Facts: Landis upset owner moving player b/t minor and major by ruling player was free agent
Court – Commissioner’s authority not limited to on field – virtually unlimited, wide, exclusive
Exclusions to power
Can’t be fraudulent, arbitrary, without legal basis for the same or without any evidence to justify action
3.      Finley v. Kuhn
Discusses reserve system and free agency
Finley sold players to Red Sox and Yankees for a lot of cash; Kuhn says you can’t do this. Finley argues no difference than Babe Ruth being sold from Red Sox to the Yankees
Kuhn says not best interest and:
Debilitation of Oakland Clob
Loss of balance
Unsettled reserve system
Court confirms Commissioner has this power
Finley tries to legality standard
Court says baseball is unique, but Commissioner has authority to do this
Also say Commissioner acted in good faith
Not up to the court to decide if Commissioner was right or wrong
Continued exceptions to power
Motivated by malice, ill will, or anything other than the Commissioners good faith judgment
c.       Sources of Commissioner’s Authority
MLB Constitution
Art II, Sec 3(g) – added after Turner case à “such other actions Commissioner may deem appropriate”
Art V, Sec 2; majority votes is 3/4
Art V, Sec 7 – 3/4 vote to amend Constitution
Art V, Sec 9 – Election of Commissioner
Art VI, Sec 1 – Limitation of Commissioners Authority
Not ‘baseball style’ arbitration
Arbitration unless Constitution, ML Rules, Basic Agreement between the teams, and MLBPA or CBA provide otherwise
Went from 3 commissioners to one, who has unlimited power except for carve outs
Arbitrary, capricious, ill will – judge made
MLB Constitution Provisions
Art 2, Sec 5 – CBA
Prevents the commissioner from having authority over designated hitter rule, probably
Art 2, Sec 3 – no action by Commissioner if actions are covered by the contract
Art 5
Art 6
US consti

                 iii.      On the contract – collective bargaining agreement
League contract with league players association
Arbitration award is valid if “draws its essence” from cba/labor law
Interpretation of contract,
Arbitrators not courts
“even arguably construing or applying the contract and acting within the scope of his/her authority”
Labor arbitration award is valid so long as it “draws its essence” from the labor contract
                                                          iv.      Damages
Courts/arbitrators don’t really give – opera singer v. plumber
Special, unique, particular, exceptional à Lajoie
No damages in Lajoie because not generalized skills, hard to measure
                                                            v.      Injunctive relief
Positive Injunction – specific performance
Courts don’t like these because it isn’t practical
Negative injunction – can’t do something
3.      Unclean Hands
Collective football “Jan. 2” cases
Unclean hands – no injunction for first team (Flowers, 5th Cir.), BUT
Despite unclean hands – injunctive relief in favor of first team (Neely, 10th Cir)
Both parties had unclean hands, so not going to allow to avoid K
                                                          vi.      Future Contracts
Affective AFTER end of 1st contract (Bergey – contract not unlawful)
Rule: as long as performance and consideration for 2nd contract begins after 1st and there’s no encouragement to terminate the first, then lawful
                                                        vii.      Cases
1.      Philadelphia Ball v. Lajoie (1902)
Philadelphia NL has a k with Athlete, but then Philadelphia AL offers more money
NL sues in PA court and asks for injunction after Lajoie sighs with AL à trial court denied and SC of PA reverses
K says NL can release within 10 days of notice and renew K if want him to come back
Lajoie argued K is not fair;
Trial court focused on lack of mutuality for remedy
Court says Lajoie agreed to it – so can’t complain now
Remedy here – conceptual linchpin – he’s good, so we can’t measure damages
Give a negative injunction
After, Philadelphia AL traded Lajoie to a team in Cleveland and Plaintiff tried to enforce the PA injunction but Ohio refused