Legal Principles
Applied to
Sport
Management
_____1. a person who brings suit in a
court (opposed to defendant).
_____2. a court order requiring a person
to do or cease doing a specific action.
_____3. prohibits employment
discrimination based on race, color,
religion, sex and national origin.
_____4. amending the Fair Labor
Standards Act, aimed at abolishing wage
disparity based on sex.
_____5. is a collection of federal and
state government laws, which regulates
the conduct and organization of business,
no monopoly.
_____6. a wrongful act or an
infringement of a right (other than under
contract) leading to civil legal liability.
_____7. failure to use reasonable care,
PRE-TEST
•
•
•
•
•
•
A. Injunction
B. Antitrust
C. Tort
D. Plaintiff
E. Negligence
F. Title VII of Civil
Rights Act
• G. Equal Pay Act
• H. Title IX
ANSWER
•
•
•
•
•
•
•
•
1. D
2. A
3. F
4. G
5. B
6. C
7. E
8. H
And the Law
• Sports law is the body of legal issues at work in the world of both
amateur and professional sports.
• Sports law overlaps substantially with labor law, contract law,
competition or antitrust law, and tort law. Issues like defamation
and privacy rights are also an integral aspect of sports law. The area of
law was established as a separate and important entity only a few
decades ago, coinciding with the rise of player-agents and increased
media scrutiny of sports law topics.
• Sport law
– Application of existing laws to the sport setting
– A few laws specific to sport industry (regulation of boxing,
antitrust and MLB, sport agent industries, NCAA, and Title IX,
etc.)
• When a dispute arises over interpretation of a rule or regulation, sport
lawyers represent both the governing body/association and the
participant(s).
History of Sport
Law
Tort law cases involving
participation in sport and
games date from the early
evolution of tort law.
Many of the earliest U.S.
lawsuits in the sport
industry involve
professional baseball.
Players challenged
owners on reserve
system that prevented
players from free
agency.
Sports Law History: Judge Landis and the Federal League Antitrust
Suit of 1915
•
The Federal League filed its suit on January
5, 1915. The complaint alleged that the
American and National Leagues had illegally
monopolized the professional baseball
industry in violation of both federal and state
antitrust law, and had also illegally conspired
to destroy the Federal League in violation of
state law.
•
The league asked the court to issue an
injunction preventing the major leagues
from continuing to coordinate their activities
under the so-called National Agreement (the
document governing professional baseball at
the time) and from continuing to interfere
with the Federal League's operations (such as
by filing any new lawsuits against Federal
League players).
Key Concepts: Antitrust
• Sherman Antitrust Act (1890)
goal:
– Promote competition in the
free market; break up
business trusts and
monopolies and prohibit
anticompetitive activity by
businesses
• Application of antitrust laws to
leagues left indelible mark on
the structure and nature of
labor–management relations
Key Concepts: Antitrust
Antitrust Exemptions
• MLB is exempt from antitrust laws as a result of a
1922 Supreme Court Federal Baseball decision
– All professional sport leagues and tours are subject to
antitrust rules.
– Curt Flood Act (1998): Legislative response to Federal
Baseball and dozens of unsuccessful congressional
acts; allows MLB players to sue their employers under
the Sherman Act, but exempts the business of baseball.
Curt Flood
Flood v. Kuhn (407 U.S. 258) was argued before
the Supreme Court on March 20, 1972. Flood's
attorney, former Supreme Court Justice Arthur
Goldberg, asserted that the reserve clause
depressed wages and limited players to one team
for life. Major League Baseball's counsel
countered that Commissioner Kuhn had acted
"for the good of the game.“
He was a heavy drinker but he became an
alcoholic.
He went bankrupt over the lawsuits and business
adventures.
He died at the age of 59.
The Curt Flood Clause
RISK MANAGEMENT
Key Concepts: Risk Management
• Developing management strategy to maintain
greater control over legal uncertainty
– Prevention: Keeping problems from arising
– Intervention: Having an action plan to follow when
problems do occur
• D.I.M. Process:
– Develop, Implement, and Manage risk
• Include all employees in the three-stage process
Key Concepts: Judicial Review
• Occurs when plaintiff challenges a rule in a sport organization and
court determines whether it should review the sport organization’s
decision
– Historically, courts have declined to overturn the rules of voluntary
athletic organizations unless certain conditions exist.
– Plaintiff’s interest is to keep rule from applying or to force the
athletic association to apply it differently (not in monetary
damages).
– Plaintiffs seek injunction: an order from the court to do or not do a
particular action.
Key Concepts: Tort Liability
• Tort: An injury or wrong suffered as the result of another’s
improper conduct.
• Tort law provides monetary damages to compensate an
injured person (plaintiff).
• Intentional torts occur when a person purposely causes
harm to another or engages in activity that is substantially
certain to cause harm.
• Negligence is an unintentional tort and is the most
common tort that sport managers encounter.
Key Concepts: Tort Liability
Negligence
• Sport managers are negligent when:
– They commit an act/omission causing injury to a person to whom
they owe a duty to act with care.
– Negligence imposes a duty to refrain from careless acts.
• Plaintiff must show that sport manager (defendant) owed the plaintiff a
duty of care and breached it.
– A duty of care arises from a relationship between plaintiff and
defendant (e.g., arena operator & fan).
– When a duty is breached and that breach is the cause of an injury
for which there are monetary damages, negligence has occurred.
Key Concepts: Vicarious Liability
• Allows plaintiff to sue a superior for the negligent acts of a
subordinate.
• Employer need not be negligent to be liable.
• Three defenses are available:
– The employee was not negligent.
– The employee was not acting within the scope of employment.
– The employee was an independent contractor.
Key Concepts: Agency Law
• Agency describes a relationship in which one party, the
agent, agrees to act for and under the direction of another,
the principal.
• Purpose of agency law is to establish duties that principals
and agents owe each other.
• Agency law is an important component of the player
representation industry.
History
• Considerable growth over last 30 years due to:
– Legal profession is more specialized.
– Amount of litigation and diversity of cases in the sport industry
have increased as more people rely on the courts to resolve
disputes.
– Many athletic associations have adopted their own governance
systems with rules, regulations, and procedures that are based on
the U.S. legal system.
• Skills in legal education are beneficial to many positions in sport
industry.
Key Concepts: Agency Law (cont.)
•
Fiduciary duties inherent in the principal–agent relationship
– Principal’s fiduciary duties:
1. To comply with a contract if one exists
2. To compensate the agent for his or her service.
3. To reimburse the agent for any expenses incurred while acting on the
principal’s behalf
– Agent’s fiduciary duties:
1. To obey
2. To remain loyal
3. To exercise reasonable care
4. To notify
5. To account (for information and finances on a reasonable basis)
Key Concepts: Contract Law
• Contract: Written or oral agreement between two or more parties;
creates legal obligation to fulfill the promises.
•
– Sport managers negotiate and enter into contracts regularly with or
without legal advice.
• A valid contract must have the following elements:
– Offer and acceptance (mutual assent)
– Consideration (value)
– Capacity
– Legality (subject matter is legal and not against public policy)
Key Concepts: Constitutional Law
• Developed from precedents established by courts applying the
language of the U.S. Constitution and state constitutions to the actions
and policies of governmental entities
• Four constitutional challenges arise in sport:
– Due process
– Equal protection
– The right to be free from unreasonable searches and seizures
– Invasion of privacy
Key Concepts: Constitutional Law
State Action
• U.S. Constitution and state constitutions do not apply to
private entities.
• Exception: In some cases the private entity is so enmeshed
with the public that courts apply the constitution to the
private entity.
• When a private entity meets this standard, it is called a
state actor.
Key Concepts: Constitutional Law
Due Process: 5th and 14th Amendments
• The right to notice and a hearing before life, liberty, or
property may be taken away.
• Athletic associations may have an impact on liberty and
property interests protected by the due process clauses in
the Fifth and Fourteenth Amendments.
•
– Liberty and property (right to play, right to be free from
stigma, right to work and earn salary, etc.)
NCAA/NAIA
Key Concepts: Constitutional Law
Equal Protection: 14th Amendment
• No person shall be discriminated against unless a constitutionally
permissible reason for the discrimination exists.
• Standards of review for discrimination:
– Strict scrutiny: On the basis of race, religion, or national origin.
– Legitimate interest: On the basis of gender; discrimination can
occur only if legitimate interest for doing so exists.
– Reasonable basis: Discrimination on any other status or
classification.
Key Concepts: Title IX
• Comprehensive statute aimed at eliminating sex discrimination in
educational institutions that receive federal funding
• In athletics, cases focus on three areas:
– Proportionate scholarship distribution
– Equal treatment, benefits, and opportunities given in specific
program areas
– Degree to which educational institution has equally and effectively
accommodated the interests and abilities of male and female
students
PENN STATE WOMEN’S
VOLLEYBALL
Key Concepts: Constitutional Law
Search and Seizure: 4th Amendment
• People have the right “to be secure in their persons,
houses, papers and effects against unreasonable searches
and seizures.”
– Sport example: the act of taking the athlete’s urine or
blood for drug testing
• Several courts determined that private athletic association
(such as NCAA) or public high school drug testing
programs do not violate state constitutional rights.
HILLSBORO HIGH SCHOOL
Key Concepts: Constitutional Law
Invasion of Privacy
• No specific amendment for invasion of privacy; court has
implied one from the Constitution.
• Plaintiff must establish that invasion is substantial and in
area for which there is an expectation of privacy.
• Sport cases most often arise as challenges to drug testing
programs.
• U.S. Supreme Court has held that drug testing of high
school athletes is not an invasion of privacy (1995).
STEROID USE/PERFORMANCE
ENHANCMENT
BROADCASTING RIGHTS
Key Concepts: Antitrust
Antitrust Exemptions (cont.)
• Sport Broadcasting Act of 1961 exempts leagues from antitrust laws
when pooling rights to enter into national broadcasting rights.
• Labor exemption: Restrictive practices are exempted from antitrust law
when those practices have been negotiated in a collective bargaining
agreement by labor and management.
Key Concepts: Labor and Employment Laws
National Labor Relations Act (1935)
• Establishes procedures for union certification and
decertification and the rights and obligations of union and
management once a union is in place.
• Areas of the sport industry where unions occur are facility
management and professional sports.
• Unions can be found in interscholastic athletics, but state
labor laws would apply.
Key Concepts: Labor and
Employment Laws
National Labor Relations
Act (1935)
• Players associations differ from
unions in other industries:
– Turnover rate for sport union members is
high due to short athlete careers.
– Forces players associations to constantly
spread their message to new members
throughout North America.
– Unions struggle to keep the superstars and
the players on the bench equally satisfied.
– Management in professional sport favors
unions to achieve the labor exemption for
restrictive practices.
Key Concepts: Labor and Employment Laws
Equal Pay Act (1963)
• Prohibits employer from paying one employee less than another on
basis of sex when performing jobs of equal skill, effort, and
responsibility
– Only applies to sex-based discrimination on the basis of
compensation.
• Four defenses available when disparity is due to:
– Seniority system
– Merit system being followed in good faith
– System measuring pay on the basis of quality/quantity of
production
– Factor other than sex
Key Concepts: Labor and Employment Laws
Title VII of the Civil Rights Act of 1964
•
Federal law prohibiting discrimination in many settings, including housing, education,
and public accommodations
– Covers employers with 15 or more employees, but exempts Native American tribes
and private clubs
•
Protects all classes of people from dissimilar treatment on the basis of race, color,
national origin, sex, or religion
•
•
Defense where being a member of a certain class is a bona fide occupational
qualification (BFOQ)
– Race and color can never be BFOQs
– Examples
• Hiring male resident directors to monitor dorms at all-male school
• Hiring a Catholic to teach religion at a Catholic school
Key Concepts: Labor and Employment Laws
Age Discrimination in Employment Act (1967)
• Prohibits employment discrimination on the basis of age.
– Applies to employers engaged in commerce and who hire over 20
workers for 20 or more calendar weeks, as well as labor unions and
state and federal governments.
• Employer can defend a claim by proving the decision was made due to
reasonable factors other than age.
Coach Joe Gilliam of TSU
Key Concepts: Intellectual Property
• Trademark
– Word, name, or symbol used by a manufacturer or merchant to
identify and distinguish its goods from those manufactured and sold
by others.
• Service mark
– Used to identify the source of an intangible service (e.g.,
professional sports franchises’ marks)
• Lanham Act
– Governs trademarks and service marks, gives protection to the
owner of a name or logo, keeps others from selling goods as the
goods of the original source.
Key Skills For Sport Managers
• By practicing problem solving, sport
managers can improve their logical and
analytical reasoning skills.
• Analysis of case and statutory law will lead
to more persuasive and clear written and
oral communication skills.
CURRENT AND
FUTURE ISSUES
Managers can effectively manage legal
problems by knowing and understanding law
and sport law.
By knowing legal pitfalls, managers can
avoid, prevent, or reduce many kinds of
problems.
A well-written and well-administered risk
management plan can help a sport manager
avoid legal liability.
Analysis should include a list of issues to
consider.
Future Issues:
Olympics
Growing number of challenges over
rules and regulations imposed on
participants.
Drug testing is a growing legal
battlefield.
Ambush marketing occurs when an
organization misappropriates
trademarks, logos, and goodwill of
events or organization (e.g., Nike in
1996).
Other issues:
The right of individual athletes to
market themselves
Imposition of codes of conduct for
athletes
Future Issues: Collegiate Sport
• Challenges may arise regarding NCAA amateurism rules. Key legal
issues:
– Restrictions on athletes’ involvement with sport agents
– Restrictions on athletes’ abilities to market themselves
– Protection and licensing of collegiate trademarks and logos
– Gender equity
– Use of dietary supplements and other stimulants
• Possible that issue of NCAA drug testing might be heard and decided
by the U.S. Supreme Court.
Future Issues: Professional Sport
• League structure and collective bargaining negotiations
• Major League Soccer awarded single-entity status, thus exempt from
antitrust challenges (2002)
• Viability of the 2002 MLB CBA; success centers on whether the
disproportionate spending on player salaries decreases
• Viability of women’s leagues (WNBA, WUSA)
Future Issues: Governmental Scrutiny
• State regulation of player agents has increased from 2
statutes in 1986 to 28 statutes in 1997.
• New federal regulation of sports agents (2004).
• Many disputes are being resolved through the commercial
and labor arbitration processes.
• More widespread use of buyout provisions to release
parties from their agreements.
PRE-TEST 2
_____1. Written laws created by legislatures,
which are law-making bodies composed of elected
representative.
_____2. Submission of a dispute to a neutral
decision marker for final and binding resolution.
_____3. An erroneous interpretation of the law.
_____4. Compensation in excess of actual
damages that is awarded under certain
circumstances, to punish the offender.
_____5. The decisions of higher court that
establish the rule of law to be followed in similar
cases in lower courts.
_____6. A summary of allegations in a case
_____7. Submission of a dispute to an impartial
decision maker for negotiating a settlement.
_____8. a person who acts primarily for the
benefit of another.
_____9. a foundational document that sets forth
the basic operating principles of a government.
_____10. Damages that an injured party can
collect to compensate for the loss suffered.
•
•
•
•
•
•
•
•
•
•
A. Arbitration
B. Binding precedent
C. Compensatory damages
D. Complaint
E. Constitution
F. Fiduciary
G. Legal error
H. Mediation
I. Statues
J. Punitive damages
ANSWERS
1. I
2. H
3. G
4. J
5. B
6. D
7. A
8. F
9. E
10. C