PGA Ban of LIV Golfers Tries to Evade Litigation Hazards

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In law, a court typically won’t hear a legal question until there is an actual dispute. Hypotheticals and maybes don’t cut it.

For golf fans wondering if the PGA Tour can legally discipline its members for playing for LIV Golf’s first event at the Centurion Club outside London, that question now has an actual dispute and could be litigated.

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On Thursday, PGA Tour commissioner Jay Monahan announced in a letter to members that golfers who compete without releases, “are suspended or otherwise no longer eligible” to play on the Tour, including the Presidents Cup.

Monahan’s reasoning is straightforward. As a contractual condition of Tour membership, golfers agree to play Tour events and agree to not play in other events without the Tour’s permission. Along those lines, players contractually assent to the player handbook, which explicitly allows the Tour to fine, suspend or ban members for violating regulations.

Monahan’s letter acknowledged that members rationally make decisions “for their own financial-based reasons.” But he also noted that when a person joins a member organization, there are duties and responsibilities that must be followed.

Players who join LIV, Monahan underscored, do so without the Tour’s authorization. As Monahan sees it, these players “can’t demand the same PGA Tour membership benefits, considerations, opportunities and platform” as Tour members who follow the rules.

“That expectation,” Monahan contextualized for the Tour’s members, “disrespects you, our fans and our partners.”

LIV Golf sees the situation quite differently. In a statement, the new league blasts Monahan’s statement as “vindictive” and one that “deepens the divide between the Tour and its members.” LIV also finds it hypocritical for the Tour, “an organization dedicated to creating opportunities for golfers to play the game,” to “block golfers from playing.” LIV concluded its statement with a warning, saying the Tour won’t have “the last word on this topic” and stressing that “the era of free agency is beginning.”

There’s a good chance that a court will have the last word. As detailed more fully in other Sportico legal stories, there are at least four types of litigation that could follow.

  1.   Suspended golfers could sue the Tour on antitrust and contract claims.

A golfer who has lost his Tour membership by playing in LIV events without authorization could petition a court for a restraining order. If granted, the order would prohibit the Tour from carrying out a suspension. The Tour could appeal such an order to the applicable U.S. Court of Appeals. Correspondingly, the denial of restraining order could be appealed by a player.

In this type of litigation, the golfer would maintain the Tour is operating as a monopsony in violation of federal antitrust law. The Tour, under this theory, prevents other buyers (i.e., LIV) of services offered by elite golfers. Mindful that antitrust law is most concerned with protecting consumers, the golfer would insist the exclusion of rival organizations is harmful to golf fans. These fans, it would be argued, are better off if they can watch their favorite players compete in as many tournaments as possible. In statements to media, LIV has also maintained that fans would enjoy its format as a point of differentiation from the Tour’s format. The golfer could thus argue the Tour is denying golf consumers a chance to see a new and exciting format.

In addition to an antitrust claim, the golfer would contend that the Tour has acted arbitrarily and capriciously—the applicable legal standard for judging how a member organization applies its own rules— in denying releases to play for LIV. If the Tour has a history of readily granting releases, a player could say the decision to deny LIV is designed as a punitive measure that betrays past practices.

The Tour would be armed with several defenses.

First, the Tour would stress that members contractually agree to follow Tour rules. These rules are in writing and, as a condition of membership, golfers accept them. If members don’t want to follow these rules, they can—as Dustin Johnson and several other golfers have done—quit the Tour. Tour golfers, in other words, can’t have their cake and eat it too.

Second, the Tour would repudiate the notion that its rules harm golf fans and by extension consumers. The Tour would assert it has constructed a model of well-organized system of competition that has made the sport extremely popular–and lucrative, including for its member players. To prevent the Tour from enforcing its rules, the Tour would argue, would harm, not benefit, golf fans. There would be chaos in the industry and the Tour would suffer diminished capacity to negotiate valuable sponsorship and other contracts that are popular with fans. This defense would rely on precedent, too. Nearly 50 years ago, the U.S. Tennis Association relied on it in defeating an antitrust lawsuit brought by member players whom it denied a chance to play in a rival league. Additionally, the Tour could point to statements by several players who’ve signed up with LIV that part of the appeal was that they’d have to play fewer events, which undermines the argument that consumers benefit from the new outfit.

Third, the Tour would emphasize that, like other sports leagues, it enjoys wide latitude in applying its rules. Courts have consistently deferred to decision-making by private membership organizations so long as they follow their own rules. Here, the Tour would maintain, it gave the golfers advanced notice of what might happen and now it has happened.

  1.   LIV Golf could sue the Tour under antitrust and tortious interference claims.

LIV Golf is also a potential plaintiff. The league could raise similar antitrust arguments as those discussed above and those claims would focus on (alleged) consumer harm. Separately, LIV could assert that by punishing member golfers for doing business with LIV, the Tour has tortiously interfered with LIV’s prospective business relationships.

The Tour, meanwhile, would emphasize that its members agreed to follow rules, that the sport has become very popular with fans (consumers) through its system and as a member organization, it has every right to enforce its own rules.

  1.   Suspended Tour golfers and LIV could sue Tour business partners as co-defendants.

Antitrust lawsuits are among the most feared in law. Successful ones can lead to treble damages, meaning if a jury finds that the defendant caused $10 million in damages to economic competition, those damages are automatically multiplied by three. Plaintiff’s attorneys can make not-so-small fortunes out of antitrust cases. Antitrust lawsuits also tend to be very expensive, requiring expert witnesses and other parties and often lasting several years (quick illustration: NCAA v. Alston was in court for about eight years).

Any entity, including sponsors, courses and media companies, that does business with the Tour could be joined in an antitrust lawsuit on the theory that they’re part of an illegal conspiracy to interfere with economic competition and harm consumers.

This may be one reason why, for example, the U.S. Golf Association announced it would permit golfers who play in LIV’s London event to also play in next week’s U.S. Open at The Country Club in Brookline, Mass. The USGA, which oversees the 14 national championships including the U.S. Open and the U.S. Women’s Open, is under no obligation to follow Tour rules and, for antitrust defense reasons, to not enforce Tour bans. On the other hand, USGA has consistently maintained that it can deny entry to anyone at any time for any reason. It also emphasized its decision was only for this year’s event, which suggests USGA’s move might be buying time to let things play out. The Professional Golfers’ Association of America, meanwhile, would take on a similar legal risk by enforcing a Tour ban.

  1.   The Tour could sue LIV for tortious interference.

Tour golfers are independent contractors rather than employees. That distinction has important antitrust significance. If golfers were employees and unionized, they would enter into a collective bargaining agreement that would negate their right to sue the Tour under antitrust law. But even as independent contractors, they are members who contractually owe duties to the Tour.

The Tour could argue that LIV has wrongfully interfered with its membership contracts by inducing golfers to either quit the Tour (like Johnson) or attempt to play in violation of their Tour membership (like Mickelson). LIV, in response, would maintain that golfers are adults who can make their own decisions about their careers, and that offering them a chance to play in other events is not illegal.

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