Championsworld L.L.C. v. United States Soccer Federation, Inc. et al

Filing 114

MEMORANDUM Opinion and Order Signed by the Honorable Harry D. Leinenweber on 11/7/2008:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION CHAMPIONSWORLD LLC, Plaintiff, v. Case No. 06 C 5724 UNITED STATES SOCCER FEDERATION, INC., MAJOR LEAGUE SOCCER, L.L.C. and DOES 1 through 10, Inclusive, Defendants. Hon. Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER I. BACKGROUND

On May 4, 2007, this Court granted the Defendants', United Sates Soccer Federation, Inc. (the "USSF") and Major League Soccer, Motion to Stay Pending Arbitration of the parties' dispute over the arrangement and promotion of international professional men's

soccer matches played on U.S. soil.

The Court determined that an

arbitration clause contained in a "Match Agent's Regulations" bound Plaintiff, because its CEO, Charles Stillitano (hereinafter,

"Stillitano"), had agreed to be bound by such regulations when he entered into a "Match Agent's Agreement" with the Federation Internationale de Football Association (the "FIFA"). had personally entered into this agreement rather Stillitano than the

Plaintiff corporation because the rules of FIFA only permitted "natural persons" to be Match Agents. The Court ruled that

Plaintiff was bound because its agent had clearly entered into the agreement on its behalf. The Court further held that the issues

between the parties, which included RICO, the Sherman Act, and related state laws, were subject of the arbitration clause because the provision provided that "[i]n the event of a dispute between a match agent and a national association, . . . the complaint shall be submitted to the FIFA Payers' Status Committee for consideration and resolution." The Court reaffirmed the ruling on July 31, 2007. On November 8, 2007, Plaintiff filed a Claim for Arbitration against the Defendants. claims: restrain Plaintiff's petition raised the following

(1) vertical conspiracy between the two defendants to competition through the use of USSF's unreasonable,

arbitrary and discriminatory sanctioning fee terms; (2) conspiracy by the two defendants to monopolize the market for sponsorship of soccer matches by using predatory sanctioning fees against

Plaintiff; (3) racketeering activities by the defendants operating as an association-in-fact enterprise to carry out an extortionate and fraudulent scheme against competition through use of

sanctioning fees; (4) fraudulent inducement that USSF had exclusive and required authority to sanction matches; (5) unjust enrichment; (6) restitution due to USSF having no legal right to sanction matches; (7) restitution due to unconscionability of its contracts with USSF based on Plaintiff's lack of bargaining power to resist the imposition of exorbitant and discriminatory sanctioning fees

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and bonds; and (8) restitution based on enforceability due to doctrine of duress. On December 7, 2007, FIFA's Director of the Legal Division and its Deputy Head of Players' Status issued a letter stating that "our organization is not in a position to intervene in the present matter," due to the fact that its rules provided that only

individuals could be parties before the decision making committees of FIFA. Plaintiff subsequently made repeated requests for a In response, on August 13, 2008,

formalized decision from FIFA.

FIFA wrote to Plaintiff reiterating its position that Plaintiff "cannot constitute a party before our deciding bodies." It also

stated for the first time that Plaintiff's RICO and antitrust claims were not within the categories of disputes that its

regulations allowed its deciding bodies to hear. With this latest letter in tow, Plaintiff filed a motion in this Court to lift the stay. The Defendants objected on the

grounds that they had not been appraised of Plaintiff's application and therefore had not had an opportunity to press their case for arbitration before FIFA. The Court granted Defendants sixty (60) On September 4,

days to see if they could change FIFA's mind.

2008, the Defendant, USSF itself, sought to institute arbitration before FIFA, naming Stillitano rather than ChampionsWorld as the respondent. The USSF raised claims that did not facially implicate either RICO or the antitrust laws.

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Specifically, Defendants' petition asks FIFA to decide whether USSF had the authority to require matches between foreign national teams first be sanctioned by USSF; does USSF have authority to impose sanctioning fees and require the posting of a bond to secure the fees; does USSF have to return the sanctioning fees previously paid to USSF; and does USSF have the right to notify FIFA if a match agent refuses to pay the sanctioning fees or post the bond. On October 16, 2008, FIFA requested that Stillitano provide it with his reply by October 31, 2008. This letter stated that it was

opening an investigation but that doing so was without prejudice to the question of whether FIFA had jurisdiction in the matter. Based on this letter, Defendants sought an additional sixty (60) days to obtain an official determination whether FIFA will accept

jurisdiction to hear the case.

The Plaintiff objected on the

ground that it has a right to sue in U.S. Court because otherwise it would be required to forfeit its first-filed, non-arbitrable claims. The Court promised to rule on the request for an

additional stay. Since the parties were in court, Mr. Stillitano wrote FIFA objecting to FIFA considering USSF's request for arbitration

against him.

In the letter, he advised FIFA that the claims were

brought by a group of creditors of ChampionsWorld with the approval of the U.S. Bankruptcy Court in New Jersey, rather than

ChampionsWorld itself.

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Shortly thereafter, on November 5, 2008, FIFA telefaxed a letter to Defendant USSF advising that it would submit the matter to the FIFA Players' Status Committee (apparently the arbitrational body) on November 27, 2008 to determine jurisdiction. II. DISCUSSION

Some principles supply the guide to whether this request to continue the stay should be granted. First, as stated previously,

the question of arbitrability is one of contract interpretation and a party cannot be required to arbitrate any dispute which he has not agreed to arbitrate. U.S. 238, 241 (1966). Atkinson v. Sinclair Refining Co., 370

It is up to the courts to determine whether

the claim on its face is covered by the contract, United Steel Workers of America v. American Manufacturing Co., 363 U.S. 564, 568 (1960). scope of As a matter of federal law, any doubts concerning the arbitrable issues should be resolved in favor of

arbitration.

Volt Information Sciences, Inc. v. Board of Trustees

of Leland Stanford Junior University, 489 U.S. 468, 475-76 (1989). Where the issue is fairly debatable, then the construction and the scope should be decided by the arbitrator. Butler Products Co. v.

Unistrut Corp., 367 F.2d 733, 736 (7th Cir., 1966). Here the initial decision to compel arbitration was made as a result of a fairly clear provision in the Match Agent License application. There Stillitano agreed to be bound by the Match

Agent Regulation that provided quite clearly that the matters in -5-

issue should be arbitrable. FIFA rules governing

While the Court was unaware that the limited applicability to

arbitration

individuals, this fact would not necessarily excuse Stillitano from being personally obligated to arbitrate, because he was the

signatory to the license application and was the license holder. He certainly can arbitrate on his own behalf as well as on behalf of his corporation. Where a principle is bound under the terms of

a valid arbitration clause, its agents are also covered under the terms of such agreements. Pritzker v. Merrill Lynch, Pierce,

Fenner & Smith, Inc., 7 F.3d. 1110, 1121-22 (3rd Cir., 1993). While the Court notes that Plaintiff is being represented by its creditors, the Court does not believe that the creditors could not also be bound by the agreement to arbitrate. Concerning which issues will be decided in arbitration and which will not, it is apparent from the correspondence from FIFA that it will not entertain the antitrust and RICO issues. The

question is whether the Court should continue the stay or allow the Plaintiff to proceed to litigate the non-arbitrable issues now before this Court. However, FIFA has not stated what, if any, On any issue FIFA decides to arbitrate, Merit Ins. Co. v. Leatherby Ins. Co., 581 However, whether to stay the

issues it will consider. the stay is mandatory.

F.2d 137, 142 (7th Cir., 1978).

remaining non-arbitrable issues is considered to be within the discretion of the trial court even though this may lead to

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piecemeal litigation. 361 (7th Cir., 1997).

Pryner v. Tractor Supply Co., 109 F.3d 354, However, an exception to discretion to hear

non-arbitrable issues while arbitration is proceeding, is where there is a risk of inconsistent rulings and where the pending arbitration is likely to resolve issues material to the nonarbitrated issues. Volkswagen Of America, Inc. v. Sud's Of Peoria, Inc., 474 F.3d 966 (7th Cir., 2007). Applying these principles to the case before the Court, it is apparent that the stay ought to be continued to determine what if any issues FIFA will agree to decide. The basic issue that may

well be decided by FIFA is whether USSF has the authority to sanction soccer matches and, as a corollary, whether it has the authority to charge sanctioning fees and require posting of bonds. It is Plaintiff's contention that it has no such authority because the statutory authority and mandate of the Ted Stevens Olympic and Amateur Sports Act, 36 U.S.C. §§ 220501, et seq., upon which USSF relies, grants the USSF only the right to exercise jurisdiction over international amateur athletic activities and not

professional.

Whether the USSF has exceeded its mandate is an Should to

issue intertwined through all of Plaintiff's seven claims. FIFA hold one way and the Court the other could

lead

inconsistent decisions.

Granted, whether FIFA holds that USSF has

sanctioning authority does not decide the issue whether USSF has exercised its authority in conformance with RICO and antitrust law,

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but for all other claims and, certainly, as a measure of damages, a decision as to the USSF's authority to impose fees and a bond will be necessary. III. CONCLUSION

The Court, therefore, will exercise its discretion to continue the stay for another sixty (60) days in order to determine what, if any, issues FIFA will consider. However, the Court will not wait The

an unreasonably long time to allow FIFA to make the decision.

Plaintiff has already waited a year and one half since the Court ordered arbitration in order to receive its day in court. IT IS SO ORDERED.

Harry D. Leinenweber, Judge United States District Court DATE: November 7, 2008

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