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C.A. Won’t Reinstate Oakland’s Suit Against NFL, Clubs
Segal Says City, Suing Over Raiders’s Move, Is Not Third-Party Beneficiary of Relocation Policy
By a MetNews Staff Writer
The City of Oakland struck out yesterday in its effort to gain reinstatement of its Los Angeles Superior Court action against the National Football League and its 32 member clubs over the move by the Raiders in 2017 to Las Vegas, with Div. Seven of this district’s Court of Appeal holding that the city failed to state a cause of action based on the league’s constitution or its various agreements.
Chiefly in focus was its “Relocation Policy.”
“We conclude that, because the City did not and cannot allege it is a third party beneficiary of the alleged contracts, its causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing fail,” Justice John L. Segal wrote. “We also conclude the City has not and cannot allege facts sufficient to state a cause of action based on a theory of unjust enrichment.”
Nevada Entices Move
The State of Nevada lured the Raiders to make the move by dangling an offer of $750 million toward the construction of a $1.9 billion stadium in Las Vegas. By contrast, Oakland said it would put up $350 million toward the building of $1.3 billion stadium to replace the aging facility in which the team had been playing since 1995.
A vote of three-fourths of the teams in favor of a move is required. The teams in 2017 voted 31-1 in favor of the Raiders’s move, and the league received a $378 million relocation fee from the club.
Suit was brought by Oakland in 2020, claiming, among other things, that the NFL and its members breached the Relocation Policy’s proviso that teams seeking to move “work diligently and in good faith to obtain and to maintain suitable stadium facilities in their home territories.”
Karlan’s Ruling
Los Angeles Superior Court Judge Craig D. Karlan on April 20, 2021, sustained demurrers without leave to amend to all causes of action and the lawsuit was dismissed.
In his opinion affirming the judgment, Segal pointed out that under the California Supreme Court’s 2019 decision in Goonewardene v. ADP, LLC, one requisite for qualifying as a third-party beneficiary is “that permitting the third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties.”
Segal said that while Oakland satisfies two other elements, it does not satisfy that one, and “is not a third party beneficiary of the Relocation Policy and cannot maintain a cause of action for breach of contract.”
Prerogative Not Waived
The jurist explained:
“Simply put, the defendants did not agree to constrain their ability to approve a proposed relocation for any reason. Moreover, the Policy states that, ‘[i]n considering a proposed relocation, the Member Clubs are making a business judgment concerning how best to advance their collective interests.’ Giving a third party the right to enforce provisions of the Relocation Policy in an attempt to restrict the defendants’ unfettered discretion under the Policy and prioritize a third party’s interests over the collective interests of the League and its member clubs would be contrary to the Policy’s plain language.”
The “Relocation Policy” was formulated in the aftermath of the Ninth U.S. Circuit Court of Appeals’s 1984 decision in Los Angeles Memorial Coliseum Commission v. National Football League affirming an injunction against the NFL enforcing a rule under which the Raiders would have been barred from moving to Los Angeles, finding the rule to be an unlawful restraint of trade in violation of the Sherman Act. The policy was established, also, in light of pending federal legislation.
No Expectation
Segal wrote:
“[T]he circumstances surrounding the adoption of the Relocation Policy and its amendments confirm the defendants did not reasonably expect host cities like Oakland to be able to enforce the Policy. As the City alleged, the League first issued the Relocation Policy on the heels of proposed federal legislation that would have removed the League’s autonomy in making relocation decisions. The League made amendments to the Relocation Policy under similar circumstances and after fallout from several relocations prompted discussions with the United States Conference of Mayors. While these circumstances indicate the defendants intended the Relocation Policy to benefit host cities, it does not follow that the defendants reasonably expected host cities to be able to enforce the Policy.”
Oakland has no claim to recompense for unjust enrichment,” he said, because it “cannot show that, as between it and the defendants, the City has a better legal or equitable right to the increased value in the Raiders” after the move “or to the relocation fee.”
The case is City of Oakland v. The Oakland Raiders, 2022 S.O.S. 4423.
Federal Courts
Oakland has also challenged the Raiders’s move in federal courts, alleging antitrust violations. Among its theories was that it might still have a club were it not for the NFL limiting the number of teams to 32.
U.S. Magistrate Judge Joseph Spero on April 20, 2020 dismissed the action without leave to amend, saying:
“Reading Oakland’s complaint and arguments as a whole—in particular, the lack of any suggestion as to how the NFL should be structured, and the request for equitable relief only as to the decision to permit a relocation rather than the limitation on the number of teams—it does not appear that Oakland actually objects to the limited number of teams in the NFL. Instead, it would seem that Oakland simply wishes it could have kept one of those teams for itself, and benefited from the prestige and economic windfall that derive from that scarcity, without paying the supracompetitive price that also arises from it. This Court declines to be the first to endorse that unorthodox theory of antitrust injury….”
The Ninth Circuit on Dec. 2, 2021, affirmed in an opinion by Senior Judge A. Wallace Tashima. Among the holdings was that “the City’s contention that, in the absence of Defendants’ challenged practices, it would have retained the Raiders (or acquired another team) is too speculative to establish antitrust standing.”
Oakland on March 14 petitioned for certiorari in the U.S. Supreme Court.
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