There are some great lawyers who’ve contributed their time and brainpower to teasing out the salient details – much of which they’ve said is reflected below. Thanks to Miki Turner, Professors Steven Banks and Stefan Szymanski, and Leo Glickman for their participation in, and contributions to, coverage of this trial.
In the United States Court of Appeals for the Second Circuit on Friday, December 12th, a three-judge panel heard the arguments of NASL and USSF counsel on why Judge Brodie’s ruling last month was an error. A ruling was not immediately made, but one is reasonably expected to happen before Christmas.
UPDATE: As of 1/12/2018, there has been no ruling on the appeal. Some have inferred from reading the calendar and rulings submissions that there is no reason to expect one imminently either. The clock to any subsequent appeal correspondingly gets pushed back along. NASL’s recent announcement that they will be switching the calendar to better align with the FIFA calendar may have been due to the projected changes to possible timelines partly based on the delay of this ruling.
To remind readers: there are many pieces to this lawsuit. The NASL sought preliminary relief from the USSF’s decision to not grant D2 sanction for 2018, so that they could continue to play while the lawsuit they filed was in motion. The October 31st hearing was to determine whether this petition would be granted. The October 31st hearing, and its appeal last Friday, is not directly the lawsuit itself. (NASL, in the lawsuit, seeks a permanent injunction against the USSF from unilaterally owning divisional sanctioning/standards.)
Judge Brodie determined that a high standard was required to force the USSF to give the NASL their temporary relief of permission to play in 2018, and that the NASL had not met that standard. The NASL appealed that decision, and the US 2nd Circuit Court of Appeals heard that appeal on December 12th.
The appeal hearing, in contrast to Judge Brodie’s 3.5-hour session, was brief. The entire event lasted twenty-five minutes. Many of the faces from Judge Brodie’s hearing were in attendance: Rocco Commisso, NASL interim Commissioner Reishi, Cosmos COO Erik Stover. Most of the journalists, bloggers and Five Points supporters who attended the District Court hearing were also in attendance for the appeal hearing as well. Cosmos colors were in the courtroom.
For some of the judges on the appellate panel, this was their seventeenth hearing in the past week. With hundreds of pages of briefings, replies, responses and ruling to go through, one can’t help but wonder to what extent these judges are prepared to make an informed decision about many things passing their bench.
But the judges’ job in Appeals Court is different from that of the District Court. Their role is not, at its fundamental base, to re-hear the arguments put forth in the District Court. What they are tasked to do, as an appellate body, is to determine whether the District Court judge made significant errors in applying judicial standards to process and evidence, or otherwise abused their discretion.
NASL counsel’s main argument is that Judge Brodie did not apply the correct standard that set what the NASL had to prove to secure their relief to play in 2018. They also claimed that even under the heightened standards the requirements – under a reading of ‘extreme or very serious harm’ – the standards were in fact met.
Judge Brodie in the 2nd District Court had to determine whether the relief required a status quo or mandatory injunction. NASL argued that when they filed the lawsuit, they had the D2 sanction; therefore, the petitioned relief was a return to the status quo. An injunction to retain the status quo is seen as causing less harm to the defendant, and thus easier to grant. Judge Brodie however decided that NASL was requesting a mandatory injunction, on the basis that divisional sanctions are specifically structured to automatically expire each year.
USSF counsel’s argument in the appeal is essentially the same as for dismissal, and agreed with Judge Brodie that extreme or serious harm was not demonstrated, and that due to the nature of sanctioning being annual, they were outside the scope of a status quo injunction. They also went one step further, to declare this a factual finding. If any subsequent appellate judges agreed with that assessment, it raises the standard by which it could be set aside to require it to be found factually in error – something difficult to do.
But USSF counsel also asserted that some of Judge Brodie’s findings of fact that supported the NASL’s pursuit of the larger lawsuit were in error. Judge Brodie found that the NASL had the benefit of the balance of hardships and that they had demonstrated irreparable harm from the USSF, that the Professional League Standards (PLS) had some anti-competitive effects, and that the NASL had, in general, a ‘plausible case’. The USSF refuted in their response that NASL had even proven ‘irreparable harm’ (something Judge Brodie had determined was found). ‘Irreparable harm’ would be the basis for granting preliminary relief if the standard to grant it were lowered.
What Judge Brodie indicated NASL had NOT shown was: a demonstration of extreme or very serious harm as defined by precedent; a clear showing that they would win a case; a demonstration of a conspiracy, and proof that the PSLs had no pro-competitive effects.
The first item is where NASL is driving most of their argument during the hearing. By indicating that the wrong standard was applied, it leads to the best path NASL has to a ruling in their favor. ‘Going out of business’ in their estimation reflects ‘extreme or very serious’ harm. The USSF contends this may be the case, but that it is also self-inflicted harm, referencing the one data point of another D3 league (the USL) as thriving as a result of going down to D3 only to rise again to D2 with nearly thirty teams. The USSF has been consistent in claiming there are no financial ties between USSF and SUM.
USSF and MLS will be forced to surrender emails and documentation, and answer to depositions under oath, that the NASL will be able to use to present as supporting evidence. MLS has been rumored to be pushing USSF to settle or get the case dismissed, in order to avoid this level of transparency.
An interesting moment during the hearing occurred when the NASL counsel referenced a statement made by MLS Commissioner and USSF board member and SUM Chief Executive Officer Don Garber a few days ago, referring to hundred of millions of dollars flowing between SUM and USSF. This contradicts USSF’s frequently-stated claim that no money transfers between the entities. As Professor Bank has stated however, it would not likely be factored into the ruling as it was not part of submitted evidence.
A strike against the NASL’s case is that they could not point out any specific case heard by the 2nd Circuit that supports their working definition of ‘extreme or very serious harm’. There is no case offering a contrasting precedent. There simply is no precedent, which puts the panel in a position to be creating case law from an appeal – something that appeals courts tend to prefer not to do.
And so, Cosmos Country waits for a second Christmas Miracle. It should be clear that this is a long-shot. The most likely ruling does not point to NASL being in operation in 2018 as a D2 league. Should the NASL wish to appeal the 2nd Circuit appeal court’s hearing, the case gets more difficult and the window of opportunity shrinks. Even under an expedited hearing, the dates being circulated point to late January or February, and the chances of success are smaller.
In the meantime, the USSF will almost assuredly parse the appeal court’s ruling for favorable statements to use in their soon-to-be-minted petition for a motion to dismiss the lawsuit. This will trigger another round of hearings and possible appeals. Assuming the petition is denied, this remains a separate branch off the trunk of the lawsuit.
None of this – at its base – reflects on the likelihood of success in court for the greater lawsuit. A number of lawyers following the case remain reasonably confident that the process of evidence discovery will only improve the chances of eventual success for the NASL’s suit.
The questions we have now before us, as club supporters, is what 2018 looks like without the NASL taking the field. The fate of Cosmos B remains in question. Erik Stover, New York Cosmos COO, when asked about them after the December 12th hearing, said no decision had been made as to Cosmos B. It was suggested no active deliberative process had yet been applied. (The Cosmos Development Academy however will be operating in 2018.)
In whatever form, Cosmos Country remains. If there is an NASL New York Cosmos in 2018, we will be at Cosmos matches. If there is an NPSL Cosmos B in 2018, we will be at Cosmos B matches. If there’s just Rocco, Erik, Joe and a handful of office staff, we’ll be there at the court galleries.
“But give us a place to stand and we shall move the whole world.” – Archimedes