Parrish et al v. National Football League Players Incorporated

Filing 581

Declaration of David Greenspan in Support of 580 MOTION for Judgment as a Matter of Law Defendants' Renewed Motion for Judgment as a Matter of Law filed byNational Football League Players Incorporated, National Football League Players Association. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5)(Related document(s) 580 ) (Padnos, Todd) (Filed on 11/26/2008)

Volume 3 Pages 454 - 629 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA BEFORE THE HONORABLE WILLIAM H. ALSUP ) ) ) ) Plaintiffs, ) ) VS. ) ) NATIONAL FOOTBALL LEAGUE PLAYERS ) ASSOCIATION and NATIONAL FOOTBALL ) LEAGUE PLAYERS INCORPORATED d/b/a ) PLAYERS INC, ) ) Defendants. ) ___________________________________) BERNARD PAUL PARRISH, HERBERT ANTHONY ADDERLEY, WALTER ROBERTS III,

No. C 07-0943 WHA

San Francisco, California Wednesday October 22, 2008

TRANSCRIPT OF PROCEEDINGS APPEARANCES: For Plaintiffs: MANATT, PHELPS & PHILLIPS 1001 Page Mill Road Building 2 Palo Alto, California 94304 RONALD S. KATZ, ESQ. RYAN S. HILBERT, ESQ. MANATT, PHELPS & PHILLIPS 7 Times Square New York City, New York 10036 L. PETER PARCHER, ESQ. MANATT, PHELPS & PHILLIPS 11355 West Olympic Boulevard Los Angeles, California 90064 CHAD HUMMEL, ESQ.

BY:

BY:

BY:

(Appearances continued on next page) Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U .S. D istrict Court [phone]

APPEARANCES CONTINUED: Also for Plaintiffs: MCKOOL SMITH 300 Crescent Court Suite 1500 Dallas, Texas 75201 LEWIS T. LECLAIR, ESQ. JILL ADLER NAYLOR, ESQ. ANTHONY GARZA, ESQ. BRETT CHARHON, ESQ. DEWEY & LEBOEUF 1301 Avenue of the Americas New York City, New York 10019-6092 JEFFREY L. KESSLER, ESQ. DAVID GREENSPAN, ESQ. DAVID G. FEHER, ESQ. ROY TAUB, ESQ. MOLLY DONOVAN, ESQ. JASON CLARK, ESQ. WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153-0119 BRUCE S. MEYER, ESQ.

BY:

For Defendants: BY:

BY:

Also Present: BY: Reported By:

KEKER & VAN NEST LLP 710 Sansome Street San Francisco, California 94111-1704 R. JAMES SLAUGHTER, ESQ.

Katherine Powell Sullivan, CSR # 5812 Official Reporter - U .S. D istrict C ourt

Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U .S. D istrict Court [phone]

ALLEN - DIRECT / PARCHER

487

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 jury. to that?

THE COURT:

But the -Your Honor -Excuse me, please. I would like to

MR. KESSLER: MR. PARCHER: respond to that. THE COURT:

Go ahead, Mr. Parcher.

What do you say

MR. PARCHER:

Well, I'm respectfully disagreeing.

Perhaps it's my fault because I'm making it look left when it's center right. There are two prongs to this case. One is breach of

contract, and the other is breach of fiduciary obligation. THE COURT: Only as it relates to the GLA. Right. I'm saying there is a duty. It

MR. PARCHER:

began -- it began with the constitution in the union.

It goes

through several other documents that I'm about to introduce that clearly demonstrate that these men who spoke for this union had a duty to do the right thing by these guys. THE COURT: All right. I'm going to instruct the

I'm going to let you pursue this line of questioning, but before this case ever started we had a lot of motions. And

the Court has already ruled that this case you've got to decide is two issues, and they both are related to the GLA. This case is not about a broad-ranging duty of fairness by the union to its members. That would be a

Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U .S. D istrict Court [phone]

ALLEN - DIRECT / PARCHER

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different kind of a lawsuit. This case is about the GLA that the class members signed. And that's what hooks them all together, is this GLA. The Court has previously said there are two issues for you to decide: The meaning of the GLA and whether it was

violated by the defendants, and secondly, whether or not the defendants violated any fiduciary duty as it relates to the GLA. MR. PARCHER: THE COURT: constitution. MR. PARCHER: THE COURT: I accept that entirely. Well, then, I'm going to let Okay.

Not as it might have related to the union

All right.

you pursue this line of questions based on the union constitution. MR. PARCHER: THE COURT: it to the GLA. MR. PARCHER: THE COURT: Right. Well, I'm just -Right, right.

But at some point you've got to connect

Fine. I've just begun. You're talking about duties

MR. PARCHER: THE COURT: and so forth. MR. PARCHER: MR. KESSLER:

All right.

I am talking about duties. Your Honor, again, just to add an Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U .S. D istrict Court [phone]

ALLEN - RECROSS / KESSLER

955

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 quickly.

MR. KESSLER:

Sorry.

I apologize.

Trying to go too

BY MR. KESSLER: Q. The EA license agreements, there is a minimum royalty

payment in 2006-2007, that period of time, of $25 million per year, correct? A. Q. Yes. Was that agreed to for active player rights, retired

player rights or both? A. Q. Just active player rights. Did you discuss with EA whether they would be willing to

pay any additional money for all the retired player rights? A. Q. A. Q. Yes. Were they willing to do that? Absolutely not. Mr. Parcher suggested you could give away the rights of

the retired players for free to EA just by saying: "Don't pay me anymore. Include them in the 25."

Mr. Allen, if you gave away retired player rights for free to a licensee, would you have any money to give to the retired players? A. Q. No. Mr. Allen, if you gave away the retired player rights to

EA for free, would any licensee in the future ever pay for something you gave away for free?

ALLEN - RECROSS / KESSLER

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A. Q.

No. Thank you, Mr. Allen. MR. PARCHER: I have no further questions.

At the risk of an historic first, I

have no questions of this witness. THE COURT: Thank you. Just one second.

Before the witness is excused, I want to make sure I didn't goof up on a document. I said 1056 was received in

evidence, but Dawn is asking whether or not it was supposed to be a different number. MR. KESSLER: Your Honor, I don't know which one of But it was 2056.

us goofed up, so I'll take responsibility. 2056. THE COURT: 2056? Yes, not 1056. All right.

MR. KESSLER: THE COURT: that's out.

That's the compilation. I allowed in 1056, so And 2056 is the one

2056.

Back to not being admitted.

that's received. MR. KESSLER: THE COURT: Thank you, Your Honor. May the witness be excused

All right.

and discharged, not subject to recall? MR. PARCHER: MR. KESSLER: THE COURT: Yes, sir. Yes, Your Honor. You're free to go. You are

All right.

not subject to recall. Thank you, Mr. Allen.

BEACH - CROSS / KESSLER

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NONE. A. Q. I VIEWED THE -SIR, I'M NOT ASKING YOU -THE COURT: HE'S ENTITLED TO GET A DIRECT ANSWER -I AM SORRY, SIR.

THE WITNESS: THE COURT:

-- TO THE QUESTION OF WHETHER OR NOT YOU

HAD ANY INDIVIDUAL ENDORSEMENT AGREEMENTS. THE WITNESS: AGREEMENT. BY MR. KESSLER: Q. RIGHT. SO YOU DIDN'T HAVE THEM EXCLUSIVE OR YOU DIDN'T HAVE ANY, RIGHT? NO, I HAD NO INDIVIDUAL ENDORSEMENT

NON-EXCLUSIVE. A. Q. A. Q. A. Q.

I DON'T KNOW. NO, YOU KNOW WHAT AGREEMENTS YOU HAD INDIVIDUALLY. RIGHT. I KNOW THAT.

AND YOU HAD NONE. I HAD NONE. THANK YOU. THAT WAS MY QUESTION, SIR.

NOW, FINALLY, SIR, I JUST WANT TO UNDERSTAND YOUR POSITION WITH RESPECT TO EA, OKAY? YOU KNOW IN THE EA GAME, AS WE DISCUSSED, THEY DON'T USE YOUR NAME, AND THEY DON'T USE YOUR PICTURE, AND THEY DON'T USE YOUR NUMBER SINCE 2003, CORRECT? A. Q. YES. OKAY. IS IT YOUR BELIEF THAT THE NFLPA SHOULD HAVE GIVEN YOU KNOW THAT?

BEACH - CROSS / KESSLER

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AWAY YOUR NAME FOR FREE TO EA? A. NO. MR. KESSLER: THANK YOU, SIR.

I HAVE NO FURTHER QUESTIONS. THE COURT: RIGHT NOW? MS. NAYLOR: THE COURT: MS. NAYLOR: THE COURT: YOUR HONOR, WE HAVE NO REDIRECT. THANK YOU. YOU'RE WELCOME. THEN, MAY THE WITNESS BE EXCUSED AND ALL RIGHT. WILL YOU FINISH THE REDIRECT

DISCHARGED, NOT SUBJECT TO RECALL? MS. NAYLOR: MR. KESSLER: THE COURT: THANK YOU FOR COMING. THE WITNESS: THE COURT: THANK YOU. CAN WE GET STARTED ON OUR NEXT WE'RE GOING TO TAKE A BREAK IN YES. NO, YOUR HONOR, NOT SUBJECT TO RECALL. MR. BEACH, YOU'RE FREE TO GO.

ALL RIGHT.

OKAY.

WITNESS BEFORE WE TAKE A BREAK? ABOUT 15 MINUTES. MR. HUMMEL: THE COURT: MINUTES?

YES, YOUR HONOR. ALL RIGHT. SO CAN WE ALL GO ANOTHER 15

(JURY RESPONDED AFFIRMATIVELY.) THE COURT: WITNESS. EXCELLENT. WE WILL START WITH OUR NEXT

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SMALL EXCEPTION, WE NEVER REALLY HAD ANY ISSUES WITH THEM.

AND

THEY WERE ABLE TO LICENSE US ENOUGH OF THE RETIRED PLAYERS THAT WE NEEDED TO DO THE FEATURES THAT WE HAD IN OUR GAMES. Q. IS IT TRUE THAT YOU UNDERSTOOD THAT, IN EFFECT, THE NFL

PI, PLAYERS INC, WAS ACTING AS A SORT OF AGENT FOR RETIRED PLAYERS IN DEALING WITH YOU? A. YEAH, THEY WERE AN AGENT OR MIDDLEMAN TO -- BETWEEN THE

RETIRED PLAYERS AND US TO LICENSE THE RIGHTS OF THOSE RETIRED PLAYERS. Q. IS IT TRUE THAT YOU UNDERSTOOD THAT THEY ACTED AS A SORT

OF AGENT TO GET MERCHANDISING OR LICENSING DEALS FOR RETIRED PLAYERS? A. WELL, AT LEAST WITH RESPECT TO US THEY DID. I DON'T KNOW

ABOUT OTHER ENTITIES. Q. A. WITH RESPECT TO YOU THAT'S HOW YOU UNDERSTOOD IT? THEY HAD A PROVISION IN THEIR AGREEMENT THAT IF WE WANTED

THE RIGHTS TO RETIRED PLAYERS OR UPCOMING PLAYERS, FOR THAT MATTER, WE WOULD WORK THROUGH THEM TO DO THAT. Q. IS IT TRUE, SIR, THAT IN YOUR VIEW, IN FACT, THE NFLPA AND

PLAYERS INC NEVER EVEN TRIED TO GET EA TO ADD MORE RETIRED PLAYERS IN A GAME? A. Q. A. Q. NO. THAT'S NOT TRUE? NO. IS IT TRUE, THOUGH, THAT EA SELECTS WHICH PLAYERS IT

ROWLEY - DIRECT / HUMMEL

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OPINION AS TO WHETHER DAMAGES WOULD BE APPROPRIATE FOR THE BREACH OF FIDUCIARY DUTY CLAIM, IN PARTICULAR. I DON'T BELIEVE

THERE'S ANYTHING IN HIS EXPERT REPORT THAT WOULD SUPPORT SUCH AN OPINION. THE COURT: MR. HUMMEL: ALL RIGHT. WHERE IS THIS IN THE REPORT?

CAN YOU POINT TO HIS HONOR WHERE YOU'VE

ADDRESSED FIDUCIARY DUTY DAMAGES IN YOUR REPORT? MR. KESSLER: YOUR HONOR, MY ARGUMENT IS NOT THAT IT

WASN'T MENTIONED IN THE REPORT. MR. HUMMEL: MR. KESSLER: BASIS. YOUR HONOR WILL RECALL WE ARGUED THIS PRIOR TO TRIAL, AND YOUR HONOR SAID HE COULD TESTIFY WITH RESPECT TO THE CALCULATIONS -MR. HUMMEL: HONOR. MR. KESSLER: -- BUT NOT WITH RESPECT TO CAUSATION OR THIS IS A SPEAKING OBJECTION, YOUR IT IS DISCLOSED. MY ARGUMENT IS THAT THERE IS NO DAUBERT

OPINIONS THAT SOME DAMAGE MEASURE WAS APPROPRIATE, BUT SIMPLY THE CALCULATIONS. I BELIEVE THAT'S HOW YOUR HONOR RULED. THAT'S CORRECT, ISN'T IT? IT'S PARTIALLY CORRECT. WHAT'S THE INCORRECT PART? THE INCORRECT PART IS, IS THERE ANY

THE COURT: MR. HUMMEL: THE COURT: MR. HUMMEL:

DIFFERENCE IN YOUR CALCULATIONS BASED ON WHETHER THE JURY FINDS

ROWLEY - DIRECT / HUMMEL

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A BREACH OF CONTRACT AND/OR BREACH OF FIDUCIARY DUTY. IN HIS REPORT. MR. KESSLER:

THAT IS

WHETHER HIS CALCULATIONS ARE DIFFERENT, HE ASKED HIM A QUESTION WHETHER

I DON'T HAVE AN OBJECTION TO.

HE HAD AN OPINION AS TO WHAT WAS AN APPROPRIATE MEASURE OF DAMAGES. THAT YOUR HONOR HAS RULED OUT. THE COURT: LET ME EXPLAIN. THIS WITNESS IS NOT HERE TO TELL YOU WHETHER THERE WAS A BREACH OF FIDUCIARY DUTY. AND HE'S NOT HERE TO TELL YOU HE HAS ALREADY WELL, I THINK THIS IS NOT A HARD PROBLEM.

WHETHER THERE WAS ANY BREACH OF ANY CONTRACT. BASICALLY TOLD YOU THAT.

HE'S HERE TO CRUNCH NUMBERS AND TO RUN THROUGH SOME OF THE ALTERNATIVE ASSUMPTIONS AND DO THE MATH, AND THEN SHOW YOU HOW HE DID THE MATH SO THAT IT WILL HELP YOU IN THAT KIND OF ANALYSIS. SO I'M GOING TO OVERRULE THE OBJECTION AND ALLOW THE QUESTION. BUT BE MINDFUL THAT THIS JURY [SIC] IS NOT QUALIFIED

TO TELL YOU WHETHER THERE WAS ANY BREACH OF FIDUCIARY DUTY. THAT'S FOR YOU TO DECIDE, ANYWAY, NOT FOR THE EXPERT WITNESS TO COME IN HERE TO TELL YOU ABOUT TI. BUT HE IS QUALIFIED TO CRUNCH THE NUMBERS AND TO TELL YOU A METHODOLOGY BY WHICH IF YOU DECIDED THERE WAS A BREACH OF FIDUCIARY DUTY, ONE WAY IN WHICH YOU COULD GO ABOUT MAKING THAT CALCULATION.

ROWLEY - CROSS / KESSLER

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UNFAIR. THE COURT: WHAT DO YOU SAY TO THAT? YOUR HONOR, I FIRST ASKED HIM WHAT HE

MR. KESSLER: DID.

HE TOLD ME -- HE ARGUED, WELL, HE HASN'T CALCULATED I JUST WANT TO ESTABLISH FOR THE JURY THAT IN IT'S EITHER ONE OR THE

DAMAGES.

EVIDENCE HE HASN'T CALCULATED DAMAGES. OTHER. THE COURT: QUESTION. ALL RIGHT.

I'M GOING TO ALLOW THE

BUT ON REDIRECT YOU NEED SOME LEEWAY TO MEET THIS

CONTENTION. ALL RIGHT. BY MR. KESSLER: Q. SO YOU HAVE NOT CALCULATED ANY DAMAGES MEASURE IN THIS GO AHEAD.

CASE, CORRECT? A. Q. COUNSEL, I WAS ADVISED -CAN YOU SAY "YES" OR "NO"? THE COURT: THAT YOUR QUESTION? BY MR. KESSLER: Q. A. Q. HAVE YOU CALCULATED ANY DAMAGES IN THIS CASE? I HAVE NOT CALCULATED DAMAGES. CORRECT. NOW, YOU'VE TESTIFIED IN OTHER CASES IN WHICH WAIT. YOU SAID "DAMAGES MEASURE." IS

YOU HAVE CALCULATED DAMAGES, CORRECT? MR. HUMMEL: I OBJECT, YOUR HONOR. AGAIN, THIS IS I'LL

BASED ON THE MOTION IN LIMINE.

IT'S AN UNFAIR LINE.

ROWLEY - CROSS / KESSLER

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CLEAN IT UP, BUT I WANT TO BE VERY CLEAR ON WHAT WE'RE DOING. THE COURT: GO AHEAD. THE WITNESS: OPINE ON DAMAGES. BY MR. KESSLER: Q. IN FACT, TYPICALLY, WHEN YOU COME IN AS A DAMAGES EXPERT I HAVE BEEN ASKED IN OTHER MATTERS TO OVERRULED. OVERRULED.

YOU DO A STUDY OF WHAT'S CALLED THE "BUT-FOR WORLD," CORRECT? YOU KNOW WHAT THE "BUT-FOR WORLD" IS IN DAMAGES? A. Q. GENERALLY SPEAKING, YES. YES. AND THE BUT-FOR WORLD IS YOU TRY IN -- AS A DAMAGES

EXPERT IN THE CASE, IF THERE'S A BREACH OF CONTRACT ALLEGED OR A BREACH OF FIDUCIARY DUTY ALLEGED, TO DETERMINE WHAT WOULD THE WORLD LOOK LIKE IF THOSE BREACHES DIDN'T OCCUR. THAT'S WHAT

YOU WOULD DO IN A BUT-FOR DAMAGES ANALYSIS, CORRECT? A. Q. A. Q. YOU CERTAINLY COULD. AND YOU WERE NOT ASKED TO DO THAT IN THIS CASE, CORRECT? WELL, I WOULD DISAGREE WITH THAT. OKAY. WELL, LET'S GO WITH WHAT YOU WERE ASKED TO DO. BEFORE I GET THERE, I WANT TO GO TO MY OTHER LET

ME GO BACK. QUESTIONS.

YOU DIDN'T CALCULATE ANY MEASURE OF DAMAGES SEPARATELY FOR ANY AD HOC AGREEMENT LIKE THE HALL OF FAME AGREEMENT, CORRECT? A. THAT'S CORRECT.

GOICH - DIRECT / GREENSPAN

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POWERPOINT PRESENTATIONS, DISCUSSING IT WITH FRANK INDIVIDUALLY, AND WITH THE GROUP, DISCUSSING IT WITH THE GUYS AT THE CONVENTION, LISTENING TO DOUG TIME AND TIME AND TIME AGAIN. GENE, NOT SO OFTEN. BUT, GENE, YES, ALSO DISCUSSED

THE GLA WITH ALL OF US AT THE CONVENTION. Q. MR. GOICH, DO YOU RECALL WHAT INFORMATION ABOUT THE

RETIRED PLAYER GLA WAS PROVIDED? A. Q. A. Q. A. THE -- IT WENT THROUGH THIS. IT WENT THROUGH THE FORM? YEAH. DID -I'M NOT SO SURE IT -- I THINK IT WAS PART OF THE

POWERPOINT PRESENTATION. Q. WAS THE SUCCESS OR LACK OF SUCCESS OF THE RETIRED PLAYER

GLA EVER DISCUSSED? A. Q. A. YEAH. AND WHAT WAS TOLD TO YOU? THE MARKETABILITY OF RETIRED PLAYERS, FRANKLY, FROM THE

LICENSEES' PERSPECTIVE WASN'T THERE. I ALWAYS FELT IT WAS -- AGAIN, I'LL SAY IT -- A HOPE, A WING AND A PRAYER. I SAID, "IT'S NOT GOING TO WORK" WHEN

FRANK AND I WOULD TALK ONE-ON-ONE. I SAID, "WHAT YOU'RE TRYING TO DO IS LICENSE A DEAD HORSE."

ARMSTRONG - CROSS / LECLAIR

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WE TALKED MANY TIMES ABOUT LEADERSHIP, LEVERAGE, RESOURCES. THREE. TO BE SUCCESSFUL AS A UNION, YOU HAVE TO HAVE ALL

RESOURCES AND LEVERAGE OFTENTIMES COME FROM FUNDS. IF YOU LOOK AT A UNION YOU'RE FIGHTING THE COLLECTIVE

RESOURCES OF 32 CLUBS THAT ARE VALUED AT OVER A BILLION DOLLARS. Q. SO THAT MONEY VERY MUCH BENEFITED RETIRED PLAYERS.

SO IN YOUR VIEW, IT WAS NECESSARY TO RETAIN EVERY BIT OF

IT SO YOU HAD MAXIMUM LEVERAGE? A. Q. YES. ARE YOU AWARE, SIR, THAT DURING THE CLASS PERIOD MILLIONS

OF DOLLARS OF DUES WERE REBATED TO ACTIVE PLAYERS? A. Q. YES. SO, IN OTHER WORDS, YOU WERE GIVING BACK THE DUES TO THE

ACTIVE PLAYERS DURING THAT SAME TIME PERIOD, RIGHT? A. Q. YES, WE DID REBATE DUES. WHILE YOU WERE RETAINING THE LICENSING MONEY, YOU WERE

REBATING THE DUES, CORRECT? A. Q. YES. ALL RIGHT, SIR. DID ANYBODY SUGGEST AT ANY TIME -- LET'S FOCUS ON THE PERIOD 2001 THROUGH 2003, WHILE THIS RETIRED PLAYER GLA AT ISSUE WAS IN EFFECT. DID ANYBODY SUGGEST THAT THERE MIGHT BE A POSSIBILITY OF A CONFLICT OF INTEREST FOR THE UNION AND THE BOARD CONCERNING THE INTERESTS OF ACTIVE PLAYERS ON THE ONE HAND, AND

NOLL - REDIRECT / KESSLER

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LICENSES THAT WERE SIGNED BY PLAYERS INC. AND THAT'S TO BE DISTINGUISHED FROM LICENSING THE TEAM LOGO AND THE TEAM IDENTIFICATION FROM THE NFL. Q. LET ME JUST MAKE SURE, BECAUSE I AGREE WITH YOU IT WAS

CONFUSING. WHEN YOU HAVE A HISTORIC TEAM WITH NO PLAYER NAMES AND NO PLAYER PICTURES, OKAY? TO FOR THAT TYPE OF A GAME: GOT THAT MONEY? A. Q. A. JUST THE NFL. THE NFL ARE THE OWNERS? THE OWNERS. THE OWNERS OF THE TEAMS. THE LEAGUE IS THE WHO DID EA PAY LICENSING MONEY WHO

NO PLAYER NAMES, NO IMAGES?

ONE WHO ACTUALLY DOES THE LICENSING THROUGH NFL PROPERTIES. AND THEN, TO THE EXTENT THEY MAKE MONEY OFF OF THAT THAT EXCEEDS THE COST OF DOING THE LICENSING, IT'S DISTRIBUTED AMONG THE TEAMS. Q. AND WHO DOES EA PAY MONEY TO WHEN IT'S LICENSING THE NAMES

OF PLAYERS? A. Q. PLAYERS INC, FOR THE IMAGES AND IDENTITIES OF THE PLAYERS. OKAY. THERE'S BEEN SOME DISCUSSION IN YOUR EXAMINATION DO YOU

ABOUT EA POSSIBLY TAKING RETIRED PLAYERS FOR FREE. REMEMBER THAT? A. Q. YES. OKAY.

AS AN ECONOMIST, OKAY, WOULD IT MAKE ANY SENSE FOR

PLAYERS INC TO THROW IN RETIRED PLAYERS FOR FREE?

NOLL - REDIRECT / KESSLER

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A.

NO.

IT WOULD MAKE NO SENSE AT ALL TO GIVE AWAY SOMETHING

FOR FREE. Q. A. Q. A. WHY NOT? MOREOVER -WHY NOT? FIRST OF ALL, YOU ONLY LET PEOPLE TO HAVE ACCESS TO THINGS THE RETIRED

WHEN YOU'RE GETTING COMPENSATED FOR IT, OBVIOUSLY.

PLAYERS, AGAIN, REMEMBERING THAT MOST OF THEIR INCOME IS BEING DERIVED FROM LICENSES THAT DO NOT COVER ALL -- ANY MORE THAN A HANDFUL OF PLAYERS, YOU KNOW, GIVING IT ALL AWAY, SO TO SPEAK, THOSE RETIRED PLAYERS WHO ARE GETTING PAID NOW SUBSTANTIAL AMOUNTS OF MONEY WOULD JUST BOLT. AND THEY WOULDN'T LET

PLAYERS INC HANDLE THEIR -- THEIR LICENSING IF THEY HAD TO SHARE THE REVENUES THAT WERE CREATED BY SIX OR SEVEN PLAYERS WITH 2,000. BY THE SAME TOKEN, THE NFL PLAYERS' UNION, THE ACTIVE PLAYERS' UNION WOULD NEVER AGREE TO SHARE ITS REVENUES WITH 13,000 RETIRED PLAYERS. YOU KNOW, THAT IS TO SAY THERE'S LESS

THAN 2,000 ACTIVE PLAYERS. THEY HAVE CREATED A UNION WITH EXCLUSIVE RIGHTS TO LICENSE THEIR STUFF. IF 2,000 PLAYERS THAT ARE ACTIVE VERSUS

13,000 THAT AREN'T, IF YOU BUNDLED IT ALL TOGETHER AND SAID YOU HAD TO TAKE IT ALL OR NOTHING, ALMOST ALL THE MONEY WOULD GO TO RETIRED PLAYERS, AND THE UNION WOULD JUST FOLD. IT WOULD JUST

NO LONGER BE IN THE LICENSING BUSINESS BECAUSE THE PLAYERS

NOLL - REDIRECT / KESSLER

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WOULDN'T STAND FOR IT. Q. PROFESSOR NOLL, YOU GOT ASKED SOME QUESTIONS ABOUT AD HOC

LICENSING AND THE -- VERSUS -- I THINK THEY CALLED IT "SHARED VERSUS UNSHARED LICENSING." DO YOU REMEMBER THOSE QUESTIONS? A. Q. I DO. OKAY. NOW, FOR THE ACTIVE PLAYERS, ARE YOU FAMILIAR WITH

THE 35-AND-UNDER RULE? A. Q. YES. OKAY. AND WHEN YOU EXPLAIN -- WHEN PLAYERS INC LICENSES

35 OR FEWER ACTIVE PLAYERS, IS THAT MONEY SHARED WITH ALL THE ACTIVE PLAYERS OR SOME PARTICULAR GROUP; DO YOU KNOW? A. Q. A. IT'S JUST -- NO, IT'S NOT SHARED WITH EVERYONE. WHO IS IT SHARED WITH? JUST THE GUYS WHO GET LICENSED. YOU CAN GET GROUP

LICENSES FROM PLAYERS INC FOR ANY NUMBER OF ACTIVE PLAYERS YOU WANT. AND THERE'S TWO PARTS TO THE STORY. THE FIRST PART IS TYPICALLY THESE LICENSES THAT ARE FOR A SUBSET ARE A FAIRLY SMALL SUBSET, AND THEY ARE LIMITED TO THE PEOPLE IN THAT GROUP. SECONDLY, THE PAYOUTS, EVEN WITHIN THAT SUBSET, DON'T HAVE TO BE EQUAL. IN FACT, MOST OF THEM AREN'T. THEY PAY

DIFFERENT AMOUNTS TO DIFFERENT PLAYERS. Q. AND TALKING ABOUT THE GROSS LICENSING REVENUE POOL YOU

WERE ASKED ABOUT, THAT IS SHARED TO ELIGIBLE ACTIVE PLAYERS?

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WHAT WE ARGUE.

BUT LET'S ASSUME IT'S REJECTED THAT WE'RE LET'S ASSUME THAT THE LANGUAGE ABOUT

ACTUALLY IN THE LANGUAGE. MENTIONING

RETIRED PLAYERS ISN'T EVEN THERE.

IF THEY HAD, IN FACT, HAD A CONTRACT THAT HAD BOTH -IF WE SAY: "WHAT YOU SHOULD HAVE DONE IS JUST -- YOU ENDED UP -- USING THESE RETIRED PLAYERS." THERE'S NO QUESTION THEY USED THEM. LOTS OF OTHER LICENSEES USED THEM. IF THEY HAD WRITTEN A LICENSE AGREEMENT THAT SAYS: "YOU HAVE ALL THE ACTIVE PLAYERS TO CHOOSE FROM, AND YOU HAVE THIS GROUP OF RETIRED PLAYERS TO CHOOSE FROM," IF THEY HAD DONE THAT, WHICH WE SAY WAS WHAT THEIR FIDUCIARY DUTY REQUIRED THEM TO DO, WE WOULD HAVE SHARED IN THE MONEY. HAVE SHARED IN THE GROUP MONEY. TO THE DAMAGES FROM THAT. AND THE BREACH IS THAT THEY DIDN'T DO THAT, AND THEY DIDN'T DO THE CONFLICT OF INTEREST. THE COURT: HYPOTHETICAL. YOU HAVE GONE OFF AND NOT ACCEPTED MY WE'D EA USED THEM.

AND THAT'S WHY WE'RE ENTITLED

YOU SAID -I TRIED TO, YOUR HONOR. I APOLOGIZE.

MR. LECLAIR: THE COURT: INTEREST.

YOU SAID THAT THE PROBLEM WAS CONFLICT OF OKAY. WHAT WOULD THEY HAVE DONE IN

THAT THEN SAYS:

THE ALTERNATIVE? THE ALTERNATIVE WOULD HAVE BEEN MR. HOLLYWOOD.

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LIKELIHOOD THAT THE JURY IS GOING TO BELIEVE THAT. ASSUME FURTHER -THE COURT: WELL, THE EXPERT, MR. NOLL, CAME CLOSE TO

SAYING THAT AT THE END. MR. PARCHER: THE COURT: YES, HE DID.

HE SAID THAT THERE WAS EVIDENCE THAT "SOLD OUT."

DEFENDANTS HAD "SOLD OUT," WAS THE PHRASE HE USED. MR. PARCHER: ON MY -THE COURT: YEAH. OKAY. I HEARD IT.

I ACTUALLY WROTE IT DOWN

MR. PARCHER:

ASSUME FURTHER THAT THE

DEFENDANTS FOUND THEMSELVES IN A DILEMMA WHEN THEY STARTED. WHEN THEY STARTED, THEY DESPERATELY WANTED AS MANY PLAYERS AS POSSIBLE, PAST, PRESENT, EVEN TRYING TO LAY THE GROUNDWORK FOR THE FUTURE, SO THEY COULD BE THE ONLY GAME IN TOWN, SO THAT THE BOSSES OF THE TRACE ARMSTRONGS OF THIS WORLD WOULDN'T BE IN THERE COMPETING, OR SUCCESSFULLY COMPETING, BECAUSE THEY PRACTICALLY GOT A MONOPOLY AS A RESULT OF WHAT OUR GUYS GAVE THEM ALONG WITH THE ACTIVES. AND THEN, THEY FOUND THEMSELVES IN THE A QUAGMIRE. AND THE QUAGMIRE WAS THEY NEEDED TO PLEASE -- "THEY" IS ALLEN AND MR. UPSHAW, THE LATE MR. UPSHAW -- THEY NEEDED TO PLEASE THEIR CONSTITUENCY, WHICH, AFTER ALL, AT THE END OF THE DAY ARE ACTIVE PLAYERS. OUR PLAYERS ARE DOG FOOD. THEY NEEDED TO

PLEASE THEIR CONSTITUENCY BECAUSE THEY VOTE.

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AND ONE OF THE VOTES THEY COULD CAST IS TO CAST MR. UPSHAW AND MR. ALLEN OUT OF OFFICE, AND PERHAPS GET SOMEBODY ELSE IN THERE. AND SO, THEREFORE, THEY WANTED AS MUCH MONEY AS POSSIBLE TO GO INTO THE ACTIVE TILL. BY THE SAME TOKEN, THEY DID NOT WANT THE RETIREDS TO BOLT AND SIGN UP MR. ARMSTRONG'S BOSSES, BECAUSE IF THEY SIGNED UP MR. ARMSTRONG -- IF THE RETIREDS WERE SIGNED UP BY MR. ARMSTRONG'S BOSSES THERE'S A VERY STRONG LIKELIHOOD THAT THE JOE MONTANAS AND THE JOE NAMATHS OF THE WORLD, WHO ACTUALLY BECAME JOE NAMATHS AND JOE MONTANAS BECAUSE SOME OF THESE FELLOWS BLOCKED FOR THEM, AND SOME OF THESE FELLOWS TACKLED FOR THEM, AND SOME OF THESE FELLOWS CAUGHT PASSES FOR THEM, THAT WHEN THEY'RE PLAYING POKER OR DRINKING BEER, OR GOING TO CHURCH, OR WHATEVER THEY DO WHEN THEY GET TOGETHER, THEY MIGHT HAVE SAID: "DO YOU LIKE YOUR AGENT? CALLED HIM "MR. HOLLYWOOD." IT'S ACTUALLY SOME GUYS IN PINSTRIPED SUITS AND ATTRACTIVE TIES WITH DIMPLES IN THEM, YOU KNOW, THAT SOME OF THESE MEN AND WOMEN ACTUALLY LIKE. THEY ARE NOT ALL YOU LIKE YOUR" -- YOU

STEREOTYPICALLY WHAT MAKES SAMMY RUN. IN FACT, MR. ARMSTRONG WAS ONE OF THEM, AS YOUR HONOR QUITE AN ATTRACTIVE YOUNG MAN. AND SUPPOSE THE RETIREDS SAID:

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"SURE.

WE WERE BEING SOLD DOWN THE RIVER BY --

BY THE SO-CALLED 'UNION AGENT.'" THE COURT: YOU'RE GOING. ALL RIGHT. SO LET'S -- I SEE WHERE

THAT'S WHERE MR. LECLAIR WAS GOING.

SO LET'S SAY THAT MR. ARMSTRONG'S COMPANY SIGNED UP THE ENTIRE CLASS. MR. PARCHER: THE COURT: RIGHT.

HOW MUCH OF A ROYALTY COULD THAT CLASS

COMMAND IN THE MARKETPLACE? MR. PARCHER: THE COURT: I THINK THAT'S THE WRONG QUESTION.

WHAT IS THE -THE QUESTION IS -- FIRST OF ALL, THE

MR. PARCHER:

FIDUCIARY CLAIM CARRIES WITH IT NOT ONLY COMPENSATORY DAMAGES, WHICH IS OSTENSIBLY EQUAL TO THE CONTRACTUAL DAMAGES, ASSUMING OUR VIEW OF THE CONTRACT PREVAILS, BUT ALSO CARRIES WITH IT PUNITIVE DAMAGES. AND WHAT -- AND WHAT IS IT WORTH, WHAT IS IT WORTH IF YOU FIND OUT THAT YOUR AGENT, THE PERSON THAT YOU -- THE COMPANY THAT YOU TRUSTED, THE ONES THAT YOU THOUGHT WERE GOING TO HELP YOU, THE ONES THAT YOU HELPED TO BUILD INTO THE POWERHOUSE THEY ARE, WERE NOT ONLY SELLING YOU DOWN THE RIVER BUT WERE WRITING YOU THINGS LIKE "GROUP LICENSING IS ESSENTIAL," LONG AFTER, SIX, SEVEN, EIGHT, NINE, TEN YEARS AFTER THEY REALIZED THAT THERE WAS NOBODY -- YOU KNOW, THAT NOBODY WAS SIGNING UP. WHAT IS IT WORTH? WHAT IS IT WORTH

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HERE WHEN YOU FINALLY FIND -- WHEN YOU FINALLY FIND OUT THAT YOU WERE STABBED IN THE BACK? AND THE REASON YOU WERE STABBED IN THE BACK AND THEY KEPT LURING YOU BACK IN WAS THEY DIDN'T WANT YOU TO GO ELSEWHERE, BECAUSE IF YOU WENT THAT MIGHT START THE RUN ON THE BANK AND UNRAVEL THE WHOLE CABOODLE. NOW, I'M SAYING THAT TO YOUR HONOR WITHOUT ANY -WITHOUT ANY NECESSARILY INSERTION INTO ANY CHARGE, OR PERHAPS THERE IS AN INSERTION, BUT TO RAISE YOUR HONOR'S CONSCIOUSNESS HERE AS TO WHAT PROBABLY WAS GOING ON. BECAUSE, OTHERWISE -THE COURT: MR. LECLAIR SAID? WHAT I'M SUGGESTING TO YOU IS IF YOU -- IF YOU PURSUE THAT THEORY, AND THEN MR. HOLLYWOOD HAS GOT TO BE BROUGHT INTO THE PICTURE BECAUSE YOU HAVE TO ASK THE QUESTION: "ALL RIGHT. IF THIS GROUP HAD BEEN REPRESENTED WHY IS THAT ANY DIFFERENT FROM WHAT

BY AN INDEPENDENT AGENT WITH NO BREACH OF CONTRACT -- I MEAN, NO BREACH OF FIDUCIARY DUTY, WHAT WOULD THEY HAVE NEGOTIATED ON BEHALF OF THIS GROUP?" MR. PARCHER: AND IF THE GROUP HAD BEEN REPRESENTED

BY AN INDEPENDENT AGENT WHO, AS A RESULT OF THE REPRESENTATION OF THAT GROUP WAS ABLE TO PERSUADE AD HOC PLAYERS TO COME OVER, STAR RETIRED AD HOC PLAYERS TO COME OVER, EVENTUALLY TO GET THE UNION -- TRACE ARMSTRONG AND THE LOVEABLE MR. GOICH TO REALIZE