NASL seeks Summary Judgment against US Soccer, MLS in Antitrust lawsuit

With the discovery phase seemingly complete (although you never know in a case like this), the North American Soccer League is looking to effectively end their lawsuit against the US Soccer Federation and Major League Soccer before it ever goes to trial, seeking a Summary Judgement ruling against the two defendants in the Antitrust case.

It should be noted that NASL is suing the defendants on a number of counts, and this summary judgment motion only deals with on aspect of the lawsuit: the antitrust conspiracy allegations. Of course, the antitrust conspiracy allegations were always the most serious part of the case, as NASL has argued that MLS and the Federation conspired to institute rules and procedures via the Professional League Standards designed to hinder competition generally, and cripple NASL specifically.

For those of you who haven’t been following along (or may have simply forgotten in these coronavirus times), NASL filed an antitrust lawsuit against the US Soccer Federation in September 2017 after the Fed rejected their application for Division 2 sanctions. New York Cosmos owner (and defacto head of the NASL) Rocco Commisso led a lawsuit against the Federation, which was later amended to add MLS as a defendant (go back and read this for a real primer on the fight).

There have been so many twists and turns in this case, that I hesitate to cover it here (maybe I’ll do an FAQ another day), but after preliminary injunctions and amended pleadings and discovery/deposition fights, we’ve finally moved towards the endgame. If the NASL is successful in its summary judgment motion, it means the court has determined that there are no genuine issues of fact in the case, and that they should be entitled to a judgment as a matter of law. Thus, the court will look at the facts in the light most favorable to the non-moving party (USSF/MLS) to make that determination. Essentially if NASL wins, the court after hearing the motion will say: Even if you look at things from MLS/USSF’s perspective (and most favorable one), they have no defense/case.

I covered a couple of procedural notes on Twitter, but the most curious note from the letter is that if successful, NASL would agree to forgo its pursuit of the Sherman Section 2 claims and move to a trial for damages. That’s interesting, as it seems to imply they will not pursue relief under those claims, nor relief for things like a permanent injunction of the Professional League Standards. I’ll look for some clarification on this, but that would be significant, as the PLS have been the bane of NASL’s existence–at least in their current form–since 2015. Recall that NASL threatened to sue the USSF back then before the Federation backed off.

So with that background out of the way, let’s take a look at the summary judgment letter.

The facts:

The letter opens with an argument that with discovery concluded, the evidence proves that the PLS were “adopted and applied not for any competitively neutral goal, but with the purpose of shielding MLS from competition (and later its affiliate, the United Soccer League).” Normally, the letter would follow up with some showing of the evidence alleged, and the letter does. Unfortunately, the evidence is redacted. Much of this case has been filed under seal since the initial preliminary injunction fight, which did reveal a lot of juicy (and not particularly pleasant) details. It’s not surprising, but disappointing nonetheless.

Once central figure in this fight is surely form USSF president Sunil Gulati, who declined to seek re-election following the failure of the US Men’s National Team in their 2018 World Cup Qualifying. Gulati has been associated with USSF and MLS since the latter’s inception in 1996. Indeed, he was employed by the league up through 2010. NASL uses that relationship as evidence of the cosy relationship between the federation and MLS. If there is on person besides MLS commissioner Don Garber who knows where the bodies are buried, its Gulati.

It must be said that Gulati declaration while the fight for a preliminary injunction was going on was detailed, interesting and persuasive (and voluminous). Given that, its not surprising that NASL spends time going after Gulati here. NASL argues that much of what Gulati (and other individuals) said regarding the adoption/implementaiton/executuion of the PLS was false, in that those procedures were infused with a desire to shield MLS from competition. You can “read” it for yourself below:

Allegations against Gulati.

Again, the redactions make it incredibly difficult to analyze NASL’s argument, so we’ll likely have to wait for the responses from USSF/MLS to get more of the puzzle.

The law:

NASL has a couple of hurdles they need to overcome: They need to show from the facts that there was a concerted action by USSF and MLS which unreasonably restrains trade. The “action” here is the adoption/implementation of the PLS, which the NASL argues was done by MLS/USSF in a way to restrain trade (the ability of NASL to compete against MLS). What we’re talking about here specifically are the requirements that leagues/teams have to meet in order to be sanctioned by USSF.

The PLS covers things like stadium requirements, financial wealth of ownership groups, location of teams (time zones) and the like. They, according the the USSF and MLS, were designed to protect soccer from failing, given the dubious history of professional soccer in this country on both the men’s and women’s side. In the preliminary injunction phase, the court essentially agreed that such standards in theory are reasonable, though certainly did leave open the possibility that they could be illegal (the 2015 attempt by the USSF to modify them raised some eyebrows in the court’s eyes).

As far as concerted action goes, NASL argues that the “admissions and documents of the defendants demonstrate “a concerted action to adopt and apply the Standards in a discriminatory manner for the unlawful purpose of protecting MLS from any competition in D1, and MLS’ reserve league USL* from any competition in D2.”

*USL is of course an independent league, though I appreciate the shade thrown here.

When it comes to the second half of the question, “unreasonable restraint of trade,” NASL argues that the alleged action by USSF/MLS unreasonably restrained trade in a couple of ways: First by establishing that the PLS were implemented and applied with “the necessary safeguards to prevent a biased process favoring some competitors over others.” This likely has a lot to do with the 2017 sanctioning process, where the Fed denied NASL’s sanctioning application for the 2018 season and kicked off the lawsuit. There were lots of allegations flying around about pressure from federation board members as well as certain members not taking their duties seriously. Again, much of this is redacted so it’s tough to fully assess the argument.

Alternatively, NASL says that the court can reach the same conclusion under a “quick look” tests, which essentially dispatches with an analysis of the relevant market and simply looks at the there is a good reason for the rules to be in place (“procompetitve justification”).

What’s next:

MLS and USSF will obviously respond to this pleading and will likely offer summary judgment motions of their own. This will all be set for oral arguments (or may just relying on the record, given coronavirus) within the next month or six weeks likely. Again, I’m not sure if the NASL is forgoing its requests for relief beyond monetary damages. The problem is that NASL as an entity is essentially dead, and whether it can be resurrected is in doubt, at best. So money damages are really the only way to compensate them.

But the other question is: What does NASL want done about the PLS themselves. They admit “D1 and D2 sanctions have competitive value—as they must, since, by USSF and FIFA rules, such sanctions indisputably are necessary to grant access to major international tournaments, players and other competitive benefits.” So we’re mostly talking about matters of degree as opposed to kind. The court is unlikely to find the PLS to be “illegal” in and of themselves, but does NASL want the court to, say, drop the time-zone requirement? Lower the net worth requirements? Again, something to clarify.

For the defendants’ part, they’ll likely rely on the court’s ruling from the preliminary injunction to fuel their defense, though it was hardly a total victory, and the court will have the full record to look at here. That said, summary judgment is still a high hurdle to clear. More to come soon for sure.

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