- Lester Munson, Legal Analyst
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It's the offseason, so we wouldn't be throwing around a lot of football lingo anyway, right? You know, the opportunities to use cool phrases like "hitch and go" and "neutral zone" don't crop up every day this time of year. But never fear. The NFL and its union are nonetheless providing plenty of highfalutin words that just roll off the tongue here in our Courtside Seat. Today, we start with
For three years, "lockout" has been the word used most frequently in discussions among NFL owners. It was the focus of their strategy for negotiating a new and more favorable agreement with NFL players. It was the centerpiece of elaborate renegotiations with five television networks. And it was the reason for their bold but unsuccessful trip to the U.S. Supreme Court to try to change the law that governs their operations.
Now a new word has appeared in their discussions. The word is "injunction," and it's that last word the owners ever wanted juxtaposed with "lockout."
Why? Because an "injunction" could end the owners' "lockout," and end it in a hurry.
We aren't yet to the point where either of those words is being put into play for real, but we're getting mighty close. Again. The owners and the union have extended their negotiations twice already and now have only until 5 p.m. Friday to reach a new collective bargaining agreement. If they don't well, get ready for action. Or inaction, if you prefer.
That an injunction could stop an owners' lockout was always a possibility. But that's all it was -- a theoretical possibility. Until last week, when it moved from a possibility to a probability after U.S. District Judge David S. Doty issued a 28-page opinion about the way the league structured its renegotiated television contracts.
The legal opinion itself was a setback for the owners. Doty ruled that the owners' insistence on lockout clauses in television contracts -- in which the networks would pay for games not played during a lockout -- was a violation of their obligation to use "good faith" in obtaining maximum income from the networks to be shared with the players.
As Doty explained in his opinion, under the current agreement, "The players rely on the NFL to negotiate [television] contracts on behalf of both the NFL's own interests and the interests of the players." The italics in that quote are Doty's. He included them to emphasize that the league's bargaining with the networks was to be based on what was good for both the owners and the players.
The owners, Doty ruled, failed to meet their obligation to use "good faith" in bargaining with the networks. Instead of obtaining maximum income that would be shared with the players, Doty concluded that the "NFL undertook contract renegotiations to advance its own interests and harm the interests of the players."
To make sure that everyone understood what he thought of the owners' renegotiations of the network contracts, Doty described what he meant by "good faith." It is, he said, "motivated by proper motive" and "encompasses among other things, an honest belief, the absence of malice, and the absence of a design to defraud or to seek unconscionable advantage."
The league, he concluded, "did not act in good faith" when it used its "enormous market power" to "harm the players."
The loss of the lockout payments -- a hearing will be held to determine potential damages -- was bad enough for the owners. But the language in Doty's opinion is a powerful indication of what he might do if the current negotiations fail, ; the union decertifies, and the players file an antitrust case and seek an injunction that would stop a lockout.
When you add up words like "harm," "abuse," "unconscionable," "malice" and lack of "good faith," you begin to see how unhappy Doty is with what the owners did to the players when they renegotiated the television contracts.
Very unhappy. (And those italics are ours.)
I have watched Doty in action in his courtroom since 1989, when the players began the antitrust litigation that led to the agreements that have allowed the league to prosper. I have chatted with him in his chambers. He is a man of quiet understatement, and he is slow to criticize or to condemn. When he says in his opinion that the owners "did not act in good faith," it is a powerful signal, a signal that the owners cannot ignore.
To make sure no one missed his point, Doty devoted the final pages of his opinion to the possibility of an injunction that would stop the league from enjoying the benefits of the lockout clauses in the renegotiated network contracts. He listed the requirements for an injunction -- the threat of irreparable harm to the players, the balance of harm to the players against any conceivable harm to the owners, the public interest and the likelihood of the players' success in their attack on the renegotiated contracts.
In a subtle but unmistakable warning, Doty said he is interested in hearing evidence on only one of the listed requirements: whether the harm to the players was irreparable or could be satisfied with money damages. It is apparent that he already has reached some conclusions on the other issues.
The omens aren't good for the owners.
The same owner conduct that is leading Doty toward an injunction against the renegotiated TV contracts very likely will lead him toward an injunction that would stop the lockout, if it occurs.
Doty's ruling -- which might have come as a surprise to some owners, although the league responded to it at the time by saying its teams were "prepared for any contingency" -- has changed the topography of the negotiation and added the word "injunction" to the vocabulary of the lockout. It was a shot heard throughout the league, and it might have been the most critical factor in the NFL's decision Friday to extend negotiations until the end of this week.
If those negotiations fail, the next important words we'll be hearing are "decertification" and "litigation" along with "injunction."
(Insider) trading deadlines
Mark Cuban is everywhere. He made headlines with his interest in buying the Chicago Cubs. He competed on "Dancing with the Stars." He's making noise about purchasing the Dodgers. Or the Mets. Or both. He's thinking about signing Charlie Sheen for a show on his cable network.
He makes the Rev. Jesse Jackson look publicity-shy and reclusive.
Now Cuban is offering support to Raj Rajaratnam, the 53-year-old hedge fund billionaire who is fighting insider trading charges in a trial that began in downtown New York this week. Rajaratnam is accused of making $45 million by trading on illegal stock tips in 35 companies. It's the biggest insider trading prosecution in nearly 30 years.
Although it may be difficult to understand how Cuban finds time for all the things he tries to do, it's easy to speculate about why he's supporting Rajaratnam. Like Rajaratnam, Cuban faces allegations of insider trading. The difference is that the charges against Rajaratnam are criminal, and the assertions against Cuban are civil.
Rajaratnam, if convicted, faces the possibility of 20 years in prison. Cuban, if he's found to have violated trading rules, faces only a fine.
But, according to a report in The Wall Street Journal, shortly after federal agents arrested Rajaratnam in a raid that rocked the world of finance, Cuban called him to commiserate, reassuring Rajaratnam that "just because the government says something doesn't make it true."
Both billionaires are battling furiously, Rajaratnam against federal prosecutors in a jury trial and Cuban against Securities and Exchange Commission lawyers in pretrial maneuvering in Dallas.
Attorney John Dowd, one of the nation's finest advocates, is leading Rajaratnam's defense. Does the name sound familiar? It should. He's the former federal prosecutor who led Major League Baseball's 1989 investigation to determine whether Pete Rose was betting on baseball.
Working swiftly and effectively, Dowd determined that Rose had made 388 bets on baseball during the first three months of the 1987 season, including 51 bets on Reds games while he was their manager. In only two-and-a-half months, Dowd managed to document each bet meticulously with telephone records, bookie logs, taped conversations and Rose's own handwritten notes.
Now, working around the clock since Rajaratnam's arrest 17 months ago, Dowd and a team of eight other lawyers are working to shred the same kinds of evidence he used so effectively against Rose. It's an effort that is expected to cost Rajaratnam $40 million.
Cuban, although he is not charged with crimes, has a similar all-star team of expensive lawyers on his side whose efforts will cost him vastly more than he would have paid in a settlement. It has turned ugly. Cuban's legal team has accused career SEC lawyers of "egregious acts of misconduct" and has insisted in numerous court filings that the complaint against Cuban is based "only on significant personal bias against Cuban."
Cuban already has demanded that the SEC pay his legal fees, a highly unusual request in SEC litigation. The effort, which includes more than 400 pages of legal briefs, was unsuccessful, but it set the tone for what has become scorched-earth, take-no-prisoners litigation.
The latest battle involves a montage of photos of Cuban that an SEC lawyer sent to his colleagues in an e-mail. In one of the photos, Cuban's arms are wrapped around bundles of currency as he grins into the camera. In an e-mail responding to the photos, an SEC supervisor said, "The picture with the money is particularly helpful and certainly speaks a 1,000 [sic] words (if not more.)"
Cuban's lawyers say the e-mail exchange of the pictures shows that the SEC lawyers are biased against Cuban. The SEC attorneys deny it, asserting that Cuban himself created the problem with "his own publicity photos" and his "self-created celebrity persona."
The SEC's case against Cuban is a long way from any conclusion, and the outcome is uncertain. But it would not be a big surprise to see the peripatetic Cuban show up at the Rajaratnam trial in the U.S. Courthouse on Foley Square in New York. And that would be a photo that would make it to every bulletin board in SEC offices around the country: Cuban and Rajaratnam, two notorious traders, beaming into the camera.
If they could add Charlie Sheen, it would be on every front page in America.
Lester Munson, a Chicago lawyer and journalist who reports on investigative and legal issues in the sports industry, is a senior writer for ESPN.com.