Atwater v. National Football League

Summarized by Paul Avron , Berger Singerman LLP
15 years 4 months ago

Citation:

(11th Circuit, Dec 31,1969)

Tag(s):

11th Circuit

Ruling:

The principal ruling in Atwater, et al. v. The National Football League, et al., Case No. 09-12556 (11th Cir. Nov. 23, 2010), by the Eleventh Circuit was that section 301(a) of the Labor-Management Relations Act (LMRA), 29 U.S.C. § 185, pre-empted plaintiffs' state law claims for negligence, negligent misrepresentation and breach of fiduciary duty asserted against The National Football League (NFL) and the National Football League Players' Association (NFLPA) arising from the loss of funds placed with an investment firm that was, in fact, operated as a Ponzi scheme.

Procedural context:

Procedurally, plaintiffs/appellants appealed the district court's grant of summary judgment in favor of the defendants/cross-appellants on their defense that the state law claims being asserted were preempted by Section 301(a) of the Labor Management Relations Act, 29 U.S.C. § 185. The defendants-cross appellants appealed the grant of summary judgment on three of four of the counterclaims asserted by the Plaintiffs/appellants.

Facts:

The plaintiffs, including several former NFL players, and the wife of one of them, alleged that they would not have invested monies with International Management Associates (IMA) had the NFL and the NFLPA given plaintiffs accurate information about IMA and its principals, one of which was principally involved in operating IMA as a Ponzi scheme, and conducted adequate background checks, the failure to do so which resulted in plaintiffs losing the monies they invested. The Eleventh Circuit held that because plaintiffs' state law claims arose from or were substantially dependent upon an interpretation of a collective bargaining agreement (CBA), those claims were preempted by section 301(a) of the LMRA. Citing to Supreme Court precedent, the Eleventh Circuit explained that "[i]n order to insure the uniform interpretation of collective bargaining agreements throughout the nation, § 301(a) [of the LMRA] completely preempts state-law claims, including state law tort claims, that require the interpretation or application of a CBA." The Eleventh Circuit first rejected the plaintiffs' arguments that section 301(a) of the LMRA could not preempt their state law claims because the NFL was not a signatory to the CBA, explaining that the issue had been waived but, in any event, that fact was not dispositive and, in any event, the NFL through its agent the NFLPA was bound by the CBA. The court then considered each of the state law claims and concluded that the duties allegedly owed to the plaintiffs which formed the basis of those claims arose from the CBA which, in relevant part, provided that "'[t]he parties will use best efforts to establish an in-depth, comprehensive Career Planning Program,' which would include 'provid[ing] information to players on handling their personal finances." As to the negligent misrepresentation claim, the Eleventh Circuit made note of language in the CBA to the effect that, even though data would be provided to players, "it being understood that players shall be solely responsible for their personal finances, and explained that this language would have to be considered and that was an additional basis to find preemption. Next, the court rejected the plaintiffs' argument that because some of them were retirees at the time they made their investments with IMA and they were therefore not members of the NFLPA's bargaining unit, section 301 of the LMRA could not preempt their state law claims, nor the claims of the other investment-entity plaintiffs which were derived from duties owed to the plaintiff-players, explaining that even as retirees these plaintiffs could enforce under that statute a provision in the CBA requiring the provision of retirement benefits. In any event, the argument missed the main point that the core issue is whether the court would be required to interpret or apply the CBA to adjudicate the state law claims and the answer to that question was "yes." The Eleventh Circuit affirmed the district court's grant of summary judgment to the NFL and NFLPA on the plaintiffs' state law claims. The Eleventh Circuit affirmed the district court's grant of summary judgment to the plaintiffs on the indemnification and contribution counterclaims on the basis that, because there was no underlying liability to the plaintiffs, such indemnification and contribution claims did not lie. Lastly, the court rejected the argument that the player-plaintiffs breached that part of the NFLPA Constitution which provides that "[n]o member of the NFLPA shall resort to any court or agency outside the NFLPA unless and until he has exhausted all forms of relief provided in this Constitution" by filing suit. The court explained that even though it was bound to follow the "plain language" of the Constitution, this language did not create "a form of relief" that the players were obligated to exhaust, and that the NFLPA Board of Player Representatives (Board) failed to demonstrate that it could have granted the plaintiff-players the relief sought on the claims asserted in the litigation. The court further explained that even if the Board could make that showing, it failed to demonstrate that the referenced language informed the plaintiff-players that such a mechanism for relief was available to them and had to be exhausted.

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