NFL Players Union Scores Reversal in Pay Cap Case

NFL Players Union Scores Reversal in Pay Cap Case Photo: Fotolia.

An appeals court on Friday gave the National Football League Players Association an opening to revive its $3 billion lawsuit accusing league owners of colluding to place a secret salary cap on the 2010 season. But the NFLPA and its lawyers at Winston & Strawn and Latham & Watkins still face a long road to recovering any damages.

Back in 2012, U.S. District Judge David Doty in Minneapolis ruled that the NFLPA was bound by a prior stipulation that it wouldn’t press collusion claims against league owners over the alleged pay cap. The U.S. Court of Appeals for the Eighth Circuit partially reversed that decision on Friday, ruling that the NFLPA should be given a chance to argue that the stipulation was procured through fraud and is therefore invalid.

In 1993, the NFL settled an antitrust class action lawsuit brought by former players. According to the judge that signed off on that settlement, it included “strict anticollusion provisions with an expedited and comprehensive enforcement mechanism to deter and punish any collusion” between team owners.

Flash forward to the 2010 season, which was the first in almost 20 years not to be governed by a collective bargaining agreement. That meant the traditional cap on how much teams can spend on players wasn’t in place.

In a January 2011 court filing, the NFLPA alleged that the owners had colluded to set an unofficial salary cap on the 2010 season, in violation of the provisions included in the 1993 class action settlement. Just a few months later, however, the players stipulated to dismissal of their collusion claims as part of a new collective bargaining agreement.

In the months that followed, NFL owners made public statements that the NFLPA interpreted as admissions that there was indeed a secret salary cap on the 2010 season. In a May 2012 complaint, the NFLPA sought to revive its collusion claims, which the union estimated could be worth more than $3 billion in damages. The union acknowledged that it stipulated to dismissal of those claims, but it argued that the stipulation is invalid because the league owners had duped them.

Doty disagreed and tossed the collusion claims in December 2012, ruling that the prior stipulation is valid. The Eighth Circuit reversed that holding on Friday, but it made a point of saying that the NFL’s lawyers at Covington & Burling and Faegre Baker Daniels could get the suit tossed yet again.

“The association bears a heavy burden in attempting to convince the district court that the dismissal was fraudulently procured,” the court wrote. “We hold only that the association should be given the opportunity to meet this burden.”

The NFLPA said in a statement that it’s pleased it can now take discovery in the case. “Through discovery and a hearing, we can understand how collusion took place,” the union stated.

In its own statement, the NFL noted that “the court specifically highlighted the heavy burden that the NFLPA faces in establishing this claim,” adding that it’s “highly confident that the claim will be dismissed yet again.”

The NFLPA’s longtime lead lawyer is Jeffrey Kessler of Winston & Strawn (formerly of Dewey & LeBoeuf). The union is also represented by Winston’s David Greenspan and David Feher, as well as Latham partners David Barrett, James Barrett, Thomas Heiden and Daniel Schecter.

The lineup for the NFL and its team owners includes Covington’s Gregg Levy and Benjamin Block and Faegre’s Daniel Connolly and Aaron Van Oort.

Correction: An earlier version of this story misidentified the law firms of Benjamin Block and Daniel Connolly. We regret the error.

LOAD MORE
Practice Area(s):
Industry: