Antitrust Law Daily Wrap Up, ADVERTISING—DMinn: Settlement of Ex-Players’ Class Action Against NFL Preliminarily Approved, (Apr 11, 2013)

By John W. Arden, J.D., LL.M.

The federal district court in Minneapolis has preliminarily approved the settlement of a class action brought by former professional football players, claiming that the National Football League violated their rights of publicity by using their identities to advertise, promote the league, sell merchandise, and otherwise generate revenue for the league and its teams (Dryer v. National Football League, filed April 8, 2013, Magnuson, P.).

In August 2009, a group of retired NFL players brought an action alleging that the NFL had earned substantial revenue by making promotional films and selling products featuring the names, images, and likenesses of retired players without the players’ authorization. The complaint alleged that the NFL Films website used the names of more than 450 retired players to advertise and sell videos promoting the NFL and that the NFL Network broadcasts hundreds of hours of these films each year. This conduct violated the former players’ rights of publicity and other state laws.

Specifically, the players claimed that the NFL’s conduct constituted: (1) false endorsement under Section 43(a) of the Lanham Act, (2) violation of players’ statutory and common law publicity rights of 26 states, and (3) unjust enrichment. The lawsuit requested the certification of a class of retired NFL players whose names, voices, images, likenesses or other identities have been used to promote the NFL and its teams; an award of damages; equitable and injunctive relief; and an award of attorney fees and costs.

The litigation that followed has been "contentious from the outset," according to the court. After months of negotiations, the parties reached a settlement, providing for a fund overseen by a panel of former players that will distribute payments to assist former players and their families and creating a licensing agency to market former players’ publicity rights, "with the blessing (and the use of some trademarks and copyrights) of the NFL."

A group of former players opposed the settlement, contending that it (1) did not directly benefit them (2) required an impermissible cy pres distribution of settlement proceeds, and (3) failed to determine the monetary value of the rights assigned to the licensing agency.

Approval of Class Action Settlement

To approve a class action settlement, a court must enter a preliminary order, notify the class, and conduct a final fairness hearing. A court must analyze four factors in determining whether a settlement is fair, reasonable, and adequate: (1) the merits of the plaintiffs’ case; (2) the defendant’s financial condition; (3) the complexity and expense of further litigation; and (4) the amount of opposition to the settlement.

Factors. Despite the opposing plaintiffs’ belief in the merits of the case, a realistic view of the matter "reveals serious difficulties both with Plaintiffs’ claims and with their chosen vehicle for redressing their claims," the court observed. The statute of limitations for the claims was determined to be six years, severely limiting the time period for which damages might apply. Certification of the proposed class was highly doubtful, at best, the court found. Absent class treatment, it was unlikely that any single plaintiffs’ claim was so valuable as to warrant engaging in protracted litigation. Thus, the merits of the case weighed "very heavily" in favor of the settlement.

The financial condition of the NFL was not at issue, the court said. The league was able to pay any judgment against it. Thus, the factor did not weigh for or against the settlement.

The most vociferous contention opposing the settlement was that it constituted an impermissible cy pres distribution of settlement funds, with the subtext that cy pres distributions are against public policy and that the settlement was likely to be overturned on appeal. However, this settlement did not provide for cy pres distribution of funds, the court found. It merely created an administrative vehicle, overseen by members of the class, to fairly and directly distribute settlement proceeds to the class, specifically to those members who need it most.

Settlement class. To effectuate the settlement, the court conditionally certified the settlement class as all individuals who were on a roster of any NFL club, who had retired, and—for deceased members—whose heirs, successors, and assigns own or control their publicity rights.

The court held that the settlement class was so numerous that joinder of all members would be impracticable; there were common questions of law and fact; the claims of the representatives of the class were typical; the representatives will fairly and adequately protect the interest of the settlement class; the questions of law or fact common to the settlement class predominated over any questions affecting only individual members; and a class action is superior to other methods for fairly and efficiently adjudicating the controversy.

Notice. The court approved the proposed notice to class members and directed that the plaintiffs’ lead settlement counsel provide mailed notice to all class members by May 31, 2013 and publish the summary notice plan by August 1, 2013.

Exclusions. Any class member wanting to be excluded from the settlement class must submit a written request for exclusion by August 30, 2013.

Objections and intervention. Class members wishing to object to the fairness, reasonableness, or adequacy of the proposed settlement must file the objection with the court on or before August 30, 2013.

Preliminary Injunction. All class members were preliminarily enjoined from filing, commencing, intervening, or participating as plaintiff, claimant, or class member of any other lawsuit, arbitration, or other proceeding arising out of the facts or circumstances at issue in this case.

Membership of panel, licensing agency. The members of the panel distributing payments to class members and the licensing agency are James Nathaniel Brown, Irvin Acie Cross, Billy Joe Dupree, Ronald Mix, Darrell Thompson, Jack Youngblood, and David Robinson.

Final approval hearing was set for Thursday, September 19, 2013.

The case is Civil No. 09-2182 (PAM/AJB).

Attorneys: Aaron R. Fahrenkrog (Robins Kaplan Miller & Ciresi LLP) for John Frederick Dryer. Michael Schaper (Debevoise & Plimpton LLP) for the National Football League.

Companies: National Football League

Cases: Advertising MinnesotaNews