NASL v. USSF/MLS: Dramatic Change in Tactics as Defendants File Answer to Amended Complaint

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We’ve had a pretty big change in legal strategy in the NASL v. USSF/MLS anti-trust case. As far back as October, USSF (then the only defendant) was angling to file a motion to dismiss the anti-trust case. That was put on hold while the parties argued over the preliminary injunction. When that was decided in February, the parties then set a schedule to get the case moving again. NASL filed an amended complaint as expected, and all that was left was for USSF/MLS to file their expected motion to dismiss…

…except they didn’t. In probably the most surprising move of these lawsuits so far, USSF has filed an answer to the amended complaint. What that means now is that after a scheduling conference is held between the parties, this matter can begin to proceed towards trial. Which means that the parties can pursue discovery. That is something that the NASL, it would be fair to say, have been looking forward to for quite some time. Whether they get everything they want is obviously another question, but what accounts for this massive change in strategy from the USSF/MLS?

I for one have been a bit skeptical about the chances of USSF/MLS prevailing on a motion to dismiss. There have been ample hints from the judges in both the district court motion for a preliminary injunction, and the appeal that NASL had enough of a case to survive a motion to dismiss. If that’s the case, the USSF may have decided a (failing) effort wasn’t worth the time and expense. That’s a plausible explanation at least. The reasoning set forth in their answer…I’m not so sure about.

MLS has filed their own answer to the amended complaint. It’s definitely less…wordy than the USSF answer and MLS spends most of the document denying allegations. That’s expected of course, but it is in contrast to the USSF pleading. I don’t know what accounts for the difference.

INTRO: THE REASON USSF ISN’T FILING A MOTION TO DISMISS IS BECAUSE THE COURT HAS TO CONSIDER PLAINTIFF’S ALLEGATIONS AS TRUE FOR PURPOSES OF ARGUING THE MOTION

Essentially, the defendants are arguing that because the NASL’s allegations are apparently so insane and over the top, the defendants have no choice but to take the case to trial, because if they file a motion to dismiss, the court is required to accept the plaintiffs’ allegations as true for purposes of deciding on the motion.

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Uh…WHAT? This is an absolutely ludicrous legal position, not least because both the USSF and MLS have recently filed motions to dismiss in the NASL Breach of Fiduciary Duty case and the SaveTheCrew case, respectively. Is the USSF trying to tell us that because the plaintiff’s claims are so looney-tunes, filing a motion to dismiss will make the court (or jury) rule that they are in fact true at all future proceedings? Again…WHAT? Why would a judge lend any additional credence to the sufficiency of the plaintiff’s complaint, due to the alleged outrageous nature of the allegations contained therein?

More likely, as Professor Bank surmises, this has more to do with public perception. USSF is probably thinking that NASL is going to go out making claims that, based on the fact that the defendants are admitting the allegations as true for purposes of a motion to dismiss, that they are actually guilty and are trying to escape liability on some technicality. This reasoning is silly, as the Court does not have to accept claims with no basis in fact and that aren’t sufficiently pled. And why would the judge (who is no-nonsense) listen to such claims from NASL anyway, if they’re so outrageous? This is RIDICULOUS reasoning, and I’m surprised the USSF is making the claim. MLS doesn’t join in this argument, merely settling on their belief that NASL is a failed league. They don’t offer a reason for not filing a motion to dismiss, and they weren’t required to. Again, I have no idea why the USSF included this. Anyway, lets move on.

Argument: NASL is a failed soccer league and its claims amount to nothing more than conspiracies.

This isn’t so much an argument as a summary of the position of USSF/MLS. Much of the first part of the Answer from both defendants seems more designed for public consumption than for the judge in this matter. It is however a useful summary of the position of the defendants. Mainly, the defendants haven’t done anything wrong and NASL has invented a conspiracy theory to cover for their own (in defendants’ view) failings. Here is the USSF:

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And MLS:

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Traffic is its own separate issue, but suffice it to say that you’ll see them mentioned frequently by the defendants going forward. As to multiple teams leaving, of course NASL argues that this is the result of improper conduct by MLS and U.S. Soccer. Finally, the thinly veiled reference from the USSF to New York Cosmos owner Rocco Commisso is, well, let’s call it pithy.

Turning to the conspiracy, defendants (USSF specifically) show that they can dig into the thesaurus, finding various adjectives to describe the plaintiff’s claim as…invalid.Screen Shot 2018-05-12 at 5.14.53 PM

Again, much of this opening seems more for PR purposes than to persuade a judge of anything.

Argument: NASL’s alleged conspiracy reprises an earlier (failed) argument:

Getting into more interesting territory, defendants raise the issue that this claim was previously litigated in Fraser v. Major League Soccer.

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First of all, why is that not quote not followed with a citation? Second, while counsel may be the same, the plaintiffs (and facts) are not. This is obviously setting up for an estoppel defense. I’ll go into this later, but the basic premise is that you only get one bite at the legal apple. Once you lose (and exhaust appeals), you can’t bring a case again on the same facts.

As for the Fraser reference, the gist of that argument is that the Court found that as a single entity, MLS could not conspire with itself in the context of labor issues. U.S. Soccer was involved in the suit as well for a number of (still unresolved) reasons as well. I will probably spin this off into a separate story; no need to confuse things here. Interestingly, MLS does not raise Fraser in its pleadings.

Argument: Professional league standards have not been frequently altered, nor have the substantive changes been onerous.

This is probably going to make heads of NASL partisans explode. Essentially, the argument here is that the changes to the PLS have been modest to keep of with the evolving landscape of U.S. Soccer, and infrequent.

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Sooooo, a couple of things. 1) This is not an exhaustive list of the PLS; you can review them here. The main things missing revolve around the financial issues, which HAVE changed since 1995. 2) Notice something missing? How about the attempt by the USSF in 2015 to again alter the PLS? The defendants COMPLETELY IGNORE anything regarding the 2015 attempt to change the PLS. This was a HUGE point of contention from NASL. They threatened to sue over the matter, and the USSF ended up backing down. The judge in the motion for a preliminary injunction found the 2015 attempt to change the standards very suspect.

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Do…the defendants think that Judge Brodie is not going to remember this? I’m a little stunned they didn’t address this here. MLS is no better here, essentially deciding to ignore the issue. We’ll discuss this a bit more below.

Argument: NASL did nothing to comply with the standards, or even present a plan to comply, after being granted provisional sanctioning in 2017.

Much firmer ground here from USSF/MLS. Once NASL were granted provisional sanctioning in 2017, there are a number of things they were required to do to continue to be in the good sanctioning graces of USSF. You can read the requirements here. Sunil Gulati said in his declaration that at the sanctioning hearing in August 2017, NASL essentially were no closer to compliance, and in fact had regressed. One question: While it’s pretty clear that NASL was having issues even having the minimum number of teams (though NASL will say that’s due to the conspiracy), there appears to be a conflict in the submissions from the defendants. In Sunil’s declaration, he says that NASL at the sanctioning meeting needed three years to come into compliance. So why in USSF’s answer, do they say that NASL had no plans for compliance on *any* time frame?

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Hyperbole perhaps? That being said, it’s pretty clear that at least according to Sunil’s declaration, NASL at best only had a plan for a plan. I’ve tried to get out of Rocco some information regarding the steps he took to comply from the date they got provisional D2 sanctioning until the day it was taken away. All he told me was that NASL did take the steps necessary, but that is belied by Sunil’s declaration, self-serving though it may be (and keep in mind, Rocco didn’t really refute it in his responses). This is a place where you can expect USSF to depose a number of NASL officials to see what exactly was going on for those eight months in 2017.

Argument: NASL cannot challenge USSF’s authority to impose standards, because the court in Fraser has already ruled on this issue.

This is an interesting one. We’ll get into this later, but it looks like USSF is using Fraser to argue for an anti-trust exemption and establish themselves as the regulatory body for professional soccer. That is a position that have not previously taken, and one that was specifically denied in the ChampionsWorld case.

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We’re about to have some precedent set.

ANSWERS:

We now get to the portion of the answer where USSF/MLS answer each of the (numerous) allegations set forth in the amended complaint. If you don’t know how an Answer works: The defendant(s) must go though each numbered paragraph, and either admit the allegation, deny the allegation or state that there is insufficient information to answer the allegation (and thus deny it). Things like the name/address of the defendant are usually admitted; just about everything else is denied or pled as lacking sufficient information. You can admit part of an allegation and deny part. There are some other intricacies that we won’t get into here. Here is an example from the complaint.

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I’m not going to go through each allegation. One, because I’d be here for days, and two, as is customary, the defendants admit as little as possible. The answer is mostly a series of this kind of thing:

 

So you can see that a lot of this isn’t worth much at this time. I would like to move to a certain section I referenced earlier:

The attempt in 2015 to modify the Professional League Standards.

As mentioned above, even though the PLS were modified in 2014, USSF attempted in 2015 to raise the standards again. The short time period between modifications was odd enough, but making it even more suspicious was that it was in the context of NASL applying for Division I sanctioning. USSF hasn’t had a particularly convincing answer as to why there was a need to change the standards in such a short period of time, and their answers in this section don’t inspire any confidence they have a satisfactory answer.

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Given Judge Brodie’s previous skepticism about the 2015 changes to the PLS, defendants should probably focus on coming up with something better than this. I’ll bet she allows liberal discovery here. MLS’ response on this issue sheds absolutely no light.

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They basically just deny knowing anything. Again, seems ripe for discovery.

USL:

The other interesting part of the answer deals with the treatment of USL, versus the treatment of NASL in the sanctioning process. It’s absolutely accurate that while NASL’s Division II application was rejected with no chance to cure any defects (USSF would say that was because NASL had no plan), USL was given at first a month, and then until January 2018 to fix its application. Then it was given two years to fully come into compliance with Division II standards. NASL not surprisingly alleges this disparate treatment was part of the conspiracy, stating the fact USL needed 20+ waivers showed it wasn’t particularly better off than NASL was. USSF’s answer in this section is interesting.

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First, notice how defendants skirt over the issue as to how many waivers were requested and given; they simply acknowledge that “certain” waivers were sought. Second, how can USSF deny that the initial month they granted to USL stretched from October until January 2018? It’s simply demonstrably true. A weird thing to deny, but maybe they know something we don’t.

So that’s Part I of the story. Next we’ll discuss the defenses raised by USSF and MLS.

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Categories: Lawsuits

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3 replies

  1. Regarding the 2015 PLS — my understanding is that the fact USSF *withdrew* that proposal without even a vote at Board level is a rather compelling argument that the Fed wasn’t just running roughshod over the NASL. No?

    (Maybe it was a really clever move anticipating a lawsuit! I’m kidding. I think.)

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