Thursday, December 19, 2013

NFL, Retired Players Reach $42M Deal Over Publicity Rights

Former professional football players reached a $42 million agreement with the National Football League over use of their publicity rights, with a Minnesota judge signing off on the deal.

The settlement faced vociferous objections from a handful of class members, who argued that not a single athlete would see a guaranteed dime from the millions. U.S. District Court Judge Paul A. Magnuson had harsh words for the objectors in his order, calling them out for their "baser instincts, namely the lure of what their attorneys promise is lucrative financial payouts from the NFL."

The roughly 25,000 class members alleged that the NFL illegally used the likenesses of former players, particularly in NFL Films productions. Pursuant to the settlement, the NFL will create a $42 million Common Good Fund for the benefit of all retired professional players, with some money set aside to establish a licensing agency for the former players. When the licensing agency strikes a deal with an entity, 75 percent of the fees generated will be paid directly to the players whose rights were licensed, with the remaining 25 percent being paid to the Common Good Fund for the benefit of the class as a whole.

"The vast majority of class members see the settlement at issue here for what it is: a boon to those thousands upon thousands of former NFL players who can now reap the collective benefit of a large financial payout to a fund organized solely for their benefit, overseen by their comrades-in-arms," the court said. "That former players will also finally have an avenue to pursue commercial interests in their own images and in their images as part of their former teams, for the first time in conjunction with the NFL's copyrights and trademarks, is icing on the cake for those players and indeed for all former players."

Judge Magnuson found the settlement "fair, reasonable, and adequate" in large part because the chances that the lawsuit "will succeed are slim at best." Further litigation would be both complex and extraordinarily expensive, the court said, and the plaintiffs" case faced serious obstacles from the statute of limitations (at best, six years, which would eliminate a majority of the class) to the choice of law analysis.

With the "law" of more than 20 states referenced in the class's amended complaint – some of which contains law on the right of publicity, while others do not – a serious conflict between applicable state laws weighs heavily against the ultimate certification of the class, the judge explained. Damages for the tens of thousands of class members pose a similar problem, with just a handful of players entitled to substantial amounts and a review of each player's contract required. Football is a team sport, Judge Magnuson added, making valuation of publicity rights damages "a Herculean task."

"Each individual appearing in a game clip has publicity rights in his or her image. But the value of those rights must be divided among all those appearing in some way. Would a court apportion more value to a team's quarterback, because he stands above the line of scrimmage and is more visible in any game clip? Or perhaps a player with a distinctive hairdo, such as current Pittsburgh Steeler Troy Polamalu, deserves more compensation because his image is readily identifiable?" he wrote. 

"Magnify these individual issues times 53 players on each of 32 teams' active rosters each year, and it is easy to see that determining damages on either an individual or a class-wide basis would be nearly impossible."

Alternatively, the benefits of settlement are "numerous and far-reaching," Judge Magnuson concluded.

"The settlement provides benefits to the class far beyond direct economic benefits arising out of the alleged infringement of players' publicity rights, which for the vast majority of class members could be meager, at best," the court said. The court also noted that The Common Good Fund and the licensing agency are independent of the NFL and the players' union, which will protect the rights and interests of all class members.

To read the final approval order in Dryer v. National Football League, click here

Why it matters: The court's decision demonstrates how the complexity of a class action suit ultimately impacts the value of the settlement accepted by the court in lieu of litigation.  Judge Magnuson did not mince words when evaluating the plaintiffs' suit, explaining the potentially insurmountable obstacles of the choice of law analysis and determination of damages. (In a detailed footnote, he broke down what a hypothetical retired Minnesota Vikings player might be entitled to from an NFL film about the history of the franchise, estimating that even if 200,000 DVDs of the film were sold, the potential damages for a single player were roughly $200.) Facing an expensive, protracted, complex battle against a defendant with deep pockets, the court found the $42 million to be "the best solution.”

 

Linda A. Goldstein
Partner
Manatt, Phelps & Phillips LLP
LGoldstein@manatt.com

 

This article was originally published on the Manatt internet site. You can view the original by clicking here.


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