When the Law Doesn’t Matter

As lawyers, part of our job is to think about potential consequences and incentives of creating different rules. Take a small example: if you make your employees responsible for damage they cause to company-owned cars, you incentivize them to drive more safely.  Most of the time

The same is true on a much more fundamental level: What could happen if you give too much authority to the Manager of your LLC? Or the President of your Board? These questions must be handled carefully when drafting the bylaws or operating agreements of your business or you could be in trouble down the road . . .

. . . similar to the troubles faced by the NFL recently.[1]

Over the course of the last year, the sports public has begun to understand what many of us sports law geeks have known for a long time: the governing documents of professional sports leagues provide sports commissioners with an enormous amount of power, almost unprecedented in corporate America. In short, we have learned that not much can stop NFL Commissioner Roger Goodell.

Imagine a CEO with the authority to fine two members of the company’s Board of Directors for conduct he has decided in his own opinion is not good for business. Roger Goodell can do that. Imagine an employee, after being suspended without pay by his boss, seeks legal recourse and discovers that the judge in the courtroom is . . . his boss. That’s Roger Goodell. He is not only the prosecutor and the judge but he governs with an incredibly vague standard – conduct detrimental to the best interests of the League – and his opinion of what that vague standard means is the only one that matters.[2]

Even better for Roger Goodell, he has a famous and well-known court decision backing him up. In 1978, the 7th Circuit Court of Appeals agreed with then baseball Commissioner Bowie Kuhn that he had authority, except in very limited circumstances, to decide what was in the “best interests of baseball” and act accordingly.[3]

And so when various sports columns recently have referred to Roger Goodell as a tyrant, a dictator, a czar, and (my favorite) a Stalinist hypocrite, they are not too far off. Within his domain, Roger Goodell can do as he pleases and, legally speaking, the only thing that can stop him is termination by a super majority of the NFL owners.

There are plenty of good reasons for a sports commissioner to have such extensive authority – reasons that I will not bore you with here. But for me, the more interesting question is this: once that authority has been granted, how on Earth do you stop it when it gets out of control?

The last few months have presented a real-life case study on how a professional sports commissioner can be stopped. And, as the title to this post alludes, it has little to do with the law. The noise has quieted down significantly in the last couple of weeks, but over the course of the fall one of the dominant story lines in the sports world was NFL fans’ feeling of extreme antipathy towards NFL Commissioner Roger Goodell.

The disgust primarily surrounds Mr. Goodell’s treatment of safety in the NFL. Mr. Goodell has used his power as Commissioner to ratchet up player fines and suspensions for illegal hits to unprecedented plateaus. These fines culminated in the spring of 2012 with the Saints Bounty Scandal in which Mr. Goodell suspended coaches and players for lengths of time never seen before in the history of North American professional sports. 

Three months later, the antipathy intensified. In August 2012, the NFL locked out the officials prior to the beginning of the 2012 season. And thus, poorly trained replacement officials worked the games. Most of you know the result: calls were missed, players were injured, fans were angered (caution: language), and there was nothing anyone outside the NFL Executive Office could do to stop it, as artfully articulated by Hall of Fame quarterback Steve Young.

But then, a funny thing happened. 

A week after Steve Young’s comments, the NFL and the referees ended the strike. And less than a month later, Mr. Goodell recused himself from hearing the newest appeal in the Saints Bounty scandal. Legally speaking, Mr. Goodell need not have taken either of those steps. But he did.

He did so in response to public pressure. Not because of a court, or a law, or because his job was threatened – but because he heard all of the noise. We know this because no court or law made him do it, or frankly, could make him do it.[4]  And we also know it because the NFL owners have expressed nothing but confidence in Mr. Goodell.

I suppose this may seem like an obvious point, but from the perspective of a fan of sports law (that would be me), it is an incredibly fascinating one. The position of a professional sports commissioner has been purposefully endowed, by lawyers who drafted the corporate bylaws of the leagues, with an extreme amount of power. And as you create such a position – just as you create the rules that govern your LLC or your corporation – you are asking yourself: shouldn’t we be worried about all this unchecked power? The lesson from the last few months is: perhaps not.  It seems Commissioners can be contained by public pressure even when they cannot be contained by the law.

Now, if only Gary Bettman would begin abiding by my theory . . .

[1] See what I did there?  Now that is a transition.

[2] The NFL Constitution carefully outlines the NFL Commissioner’s powers, but for our purposes, two of them stand out. The NFL Commissioner has full authority to punish anyone in the NFL whom he believes is guilty of and resolve any disputes that in his opinion constitute conduct that is “detrimental to the best interests of the League.” And these powers extend to cover every owner, player, coach, and employee of the NFL. See NFL Constitution and Bylaws § 8.3(A) and § 8.13(A)

[3] Finley v. Kuhn, 569 F.2d 527 (7th Cir. 1978)

[4] This is a bit of an exaggeration.  Finley v. Kuhn makes clear that there are some small exceptions, and interestingly, we may see District Court Judge Ginger Berrigan test the limits of those exceptions over the next year in the case filed by the Saints players.

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