Wednesday, November 24, 2010

Eleventh Circuit Holds Claims Against NFL & NFLPA By Former Player Preempted

In Atwater v. National Football League (09-12556), the Eleventh Circuit released a published decision finding the plaintiff/appellant's claims to be preempted by the Labor-Management Relations Act (“LMRA”), 29 U.S.C. § 185.  Tenth Circuit Judge David M. Ebel, sitting by designation, wrote the opinion for the Court.  The court described the background facts as follows:
Plaintiffs include several former NFL players, the spouse of one of the players, and several investment entities controlled by them. During 2004 and 2005, Plaintiffs invested approximately $20 million with Kirk Wright and Nelson “Keith” Bond, who along with others operated an investment company, International Management Associates (“IMA”). Unbeknownst to Plaintiffs, Wright was actually conducting a Ponzi scheme through which he stole most of the money Plaintiffs invested with IMA. IMA eventually sought bankruptcy relief. Wright was convicted on a number of federal felony charges and thereafter killed himself.
In this litigation, Plaintiffs sued the NFL and the NFLPA, alleging Plaintiffs would not have invested money with IMA had Defendants given them accurate information about Wright, Bond and IMA. More specifically, Plaintiffs complained that the NFLPA listed Wright and Bond with the NFLPA’s Financial Advisors Program without first conducting a proper investigation. As for the NFL, Plaintiffs asserted that several Plaintiffs requested, and the NFL provided, background checks on Wright, Bond and IMA that were inadequate. Based upon these allegations, Plaintiffs invoked the federal courts’ diversity jurisdiction, see 28 U.S.C. § 1332, asserting claims against the NFL and NFLPA under Georgia law for negligence, negligent misrepresentation, and breach of fiduciary duty.
The NFL and the NFLPA argued that § 301 of the LMRA preempted Plaintiffs’ state-law claims because these claims arose from, or were substantially dependent upon an interpretation of, the CBA between the NFL’s Management Council (“NFLMC”) and the NFLPA.

With regard to the law, the court stated that "in order to insure the uniform interpretation of collective bargaining agreements throughout the nation, § 301(a) completely preempts state-law claims, including state tort claims, that require the interpretation or application of a CBA."  The court continued:
If the state-law claim either arises out of a CBA or is dependent upon the meaning of a CBA, “the application of state law (which might lead to inconsistent results since there could be as many state-law principles as there are States) is pre-empted and federal laborlaw principles—necessarily uniform throughout the Nation—must be employed to resolve the dispute.”
In determining whether § 301 preempts Plaintiffs’ state-law claims, we consider the elements of each of those claims in turn.....
For these reasons, we uphold the district court’s determination that § 301 preempts Plaintiffs’ state-law claims. We, therefore, affirm the district court’s decision granting the NFL and NFLPA summary judgment on those claims. In light of that determination, we need not consider Plaintiffs’ challenge on appeal to the alternate basis on which the district court granted the NFLPA summary judgment—that the disclaimer contained in the NFLPA’s Financial Advisors Program regulations precluded Plaintiffs’ claims against it.


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