NASL Hopes for Different Interpretation in Appeal of U.S. Soccer Lawsuit Ruling

(by Michael McCann si.com 11-7-17)

The survivability of the NASL hangs in the balance of a court familiar to many American sports fans: the U.S. Court of Appeals for the Second Circuit. This is the same federal appeals court that ruled against New England Patriots quarterback Tom Brady. It’s also the same court that will hear arguments brought by Dallas Cowboys running back Ezekiel Elliott in his case against the NFL.

For NASL and the U.S. Soccer Federation, the Second Circuit is critical for a different case. NASL has petitioned it to review whether U.S. District Court Judge Margo Brodie wrongly denied NASL’s petition for a preliminary injunction.

 

Brady, Elliott and the NASL share something else in common: they have placed their trust in the same attorney, Jeffrey Kessler. In advocating for NASL, Kessler insists that U.S. Soccer and its alleged co-conspirators (Major League Soccer, Soccer United Marketing and United Soccer League) have violated federal antitrust law. They have done so, Kessler charges, by blocking NASL from competing with MLS as a so-called “Division I” or top-level pro soccer league and by attempting to push NASL out of “Division II” so that Division II can be occupied alone by USL.

 

Put more bluntly, Kessler maintains that U.S. Soccer has unlawfully sought to destroy NASL. Absent judicial intervention, it is quite possible that NASL will go out of business.

To delay such an adverse consequence, NASL wants a federal court to enjoin (block) U.S. Soccer from reclassifying NASL during the duration of this litigation. The litigation could last years, meaning an injunction would be a game-changer for NASL.

Injunctions are very difficult to obtain and petitions for them are often denied. NASL had to convince Judge Brodie of four elements: (1) it would suffer irreparable harm without an injunction; (2) it has a likelihood of success on the merits of the legal arguments; (3) the balance of hardships tips in NASL’s favor; and (4) an injunction for NASL would be in the public’s interest.

As SI's Brian Straus explained, Judge Brodie found three of those elements to be in place. In fact, Judge Brodie expressly agreed with NASL’s assertion that the league faces a “likely total loss of its business” in the absence of an injunction. She also highlighted how NASL stands to lose interest from prospective investors who are exploring the possibility of bidding for as many as six potential new NASL teams in 2018.

Unfortunately for NASL, Judge Brodie found one element—likelihood of success on the merits—missing. Stated differently, while Judge Brodie was convinced that NASL is harmed by U.S. Soccer’s actions, she wasn’t convinced that U.S. Soccer is breaking the law in inflicting such harm.

 

To that end, Judge Brodie wrote that NASL “fails to demonstrate unreasonable restraint of trade.”

 

The judge took notice of how U.S. Soccer’s standards for classifying professional soccer leagues are arguably designed to promote quality of professional soccer in the U.S. and Canada. Further, Judge Brodie stressed that U.S. Soccer’s Board of Directors are required to act in the best interest of their accompanying non-profit, membership organization—U.S. Soccer—rather than any pro soccer league. “[M]embers of the Board,” Judge Brodie asserted, “may not blindly benefit MLS to the detriment of NASL or other professional leagues.”

 

Judge Brodie also appeared swayed by how certain business restrictions imposed by U.S. Soccer can advance the quality of soccer—even though, NASL charges, such restrictions might put NASL out of business and even though MLS and USL have periodically received exemptions from complying with those same restrictions.

For instance, U.S. Soccer stipulates that membership in Division I is contingent upon, among other things, featuring a minimum number of teams as well as a group of teams that play in three different time zones and in stadia with at least 15,000 seating capacity. These restrictions, U.S. Soccer contends, are critical for the success of pro soccer. If there are too few teams, for example, there will be “repetitive matchups” and fans will be inclined to tune out. National broadcasters also prefer that teams be dispersed across time zones and placed in larger markets.

NASL insists, correctly, that U.S. Soccer has it has not always held MLS to these restrictions. U.S. Soccer responds by noting that MLS requested different types of restriction waivers than those sought by NASL. As to USL’s compliance with other restrictions, U.S. Soccer emphasizes that the Division II league showed improvement in attempting to comply with restrictions whereas, from U.S. Soccer’s view, NASL did not.

Breaking Down the Appeal

Kessler hopes a yet-to-be-named panel of three judges on the Second Circuit construes the law differently than Judge Brodie. The judges will review the key legal issues “de novo,” meaning as new and without an obligation to defer to Judge Brodie. This non-deferential standard of review helps Kessler and NASL, although it by no means assures victory.

In fact, Judge Brodie is seldom reversed on appeal. According to Westlaw’s Judicial Reversal Report, 23 of Judge Brodie’s rulings have been appealed to the Second Circuit and only four of them were remanded or vacated; 19 (83%) were upheld. U.S. Soccer likely gains confidence from such data.

Kessler charges that Judge Brodie made fundamental legal errors. First, he contends that Judge Brodie applied a far too scrutinizing standard in assessing whether NASL has a likelihood of success on the merits. Judge Brodie treated the motion for a preliminary injunction as one for a mandatory injunction. The latter seeks to alter the status quo and requires a more conclusive showing than an ordinary preliminary injunction.

 

In her opinion, Judge Brodie noted that U.S. Soccer has rejected a request by NASL, which currently holds Division II sanctioning, to play under that distinction for the 2018 season. From that logic, the judge reasons, an injunction would alter the status quo, as NASL has already been rejected. Kessler ardently disagrees, stressing that NASL only wants to preserve the status quo and remain a Division II league. As a result, how the Second Circuit interprets “status quo” will play a pivotal role in NASL’s appeal.

Kessler also insists that Judge Brodie failed to properly infer wrongful behavior by U.S. Soccer’s Board of Directors, which Kessler portrays as inherently conflicted. He does so by stressing ties between the board’s members and MLS.

NASL’s petition is for expedited hearings to hear what it regards as an “emergency motion.” In the coming days, the Second Circuit will likely indicate a schedule for the appeal. In the meantime, the league's championship match, between the San Francisco Deltas and New York Cosmos, is set for Sunday. If NASL has its way, it won't be the last one.

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https://www.si.com/soccer/2017/11/07/nasl-appeal-us-soccer-lawsuit-ruling-injunction-kessler