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Week in Review

By Martha Nimmer


For an excellent analysis of the recent Second Circuit decision in Authors Guild, Inc. v HathiTrust, see Barry Werbin and Bryan Meltzer's blog entry here:


Settlement Details Revealed

The NCAA announced on Monday that it had reached two proposed legal settlements, one with video game maker Electronic Arts (EA) and Collegiate Licensing Company -- thereby resolving a lawsuit that the NCAA filed in November 2013 -- and a second with former Arizona State quarterback Sam Keller, who sued the NCAA over "avatars of college athletes appearing in video games." Under the settlement agreements, the NCAA would pay $20 million to college football and basketball players whose likenesses appeared in certain EA video games.

The details of these two settlements were revealed on the first day of trial in the Ed O'Bannon suit against the NCAA, which some commentators have called "the sports trial of the century." The direct effect of the NCAA's two settlements is expected to be limited, however. First, as Sports Illustrated notes, O'Bannon's legal arguments are couched in antitrust law rather than the right of publicity law, which forms the basis of the action brought by Sam Keller. Specifically, O'Bannon argues that the NCAA and its member schools "formed an anti-competitive cartel to deprive players of an opportunity to license themselves in games and other properties." Keller, in contrast, accuses the NCAA and its members of violating the right of publicity law by "misappropriating players' images and likenesses in video games." Keller's settlement with the NCAA would, consequently, resolve any right of publicity claim, but not an antitrust claim. O'Bannon's suit also goes further in scope than Keller's, ultimately advocating for a "fundamental change to NCAA amateurism rules so that current and former Division I football and men's basketball players can negotiate deals for their names, images and likenesses." O'Bannon seeks to obtain this change through an injunction ordered by the presiding judge.

Despite the limited effect of the NCAA settlements on the O'Bannon case, the aftermath of the two settlements should not be ignored: the NCAA, which has long insisted that it can prohibit college athletes from earning money from on-field performance in school, will be giving a group of current and former players $20 million as compensation. However, whether this development signals a greater change in the world of amateur sports remains to be seen.


From the Basketball Court to Federal Court

It was only a matter of time: Donald Sterling has decided, once again, to pursue legal action against the National Basketball Association (NBA), thereby withdrawing his support from a deal that would have resulted in the sale of the LA Clippers to former Microsoft CEO Steve Ballmer. Instead, Sterling will be seeking $1 billion in damages from the NBA as he fights the organization for, in his words, attempting "to take away our privacy rights and freedom of speech." According to Sterling's attorney, Maxwell Belcher, his client was ready to approve the sale of the team, but backtracked when he learned that the NBA would not lift his lifetime ban and the $2.5 million fine imposed against him in May. "The Team," Sterling reiterated in a written statement, "is not for Sale."

In the written statement released by his attorney, Sterling summarizes the various reasons behind his decision to fight the NBA in court. The Clippers' owner calls the NBA leadership "incompetent, inexperienced and angry," and goes on to accuse the NBA of turning a blind eye to its "own transgressions." These transgressions, according to Sterling, include gender discrimination, which the NBA is seeking to sweep under the rug by going after Sterling. The embattled billionaire "goes on to say the NBA is run by a 'band of hypocrites and bullies' who are carrying out a 'reign of terror.'" The statement ends on a rousing, perhaps even patriotic, note: "[w]e have to fight for the rights of all Americans. We have to fight these despicable monsters. THIS IS THE REASON I WILL NOT SELL MY TEAM."

Despite the high dudgeon of Sterling's statement and his impending legal action against the NBA, the NBA seems relatively calm. That tranquility may be explained by the fact that, as Sports Illustrated's Michael McCann reports, the sale of the Clippers to Steve Ballmer could still go through; one scenario that would allow for the sale's completion would be for Sterling to be deemed mentally incompetent. Sterling's estranged wife, Shelly, has actually insisted that her husband is mentally incompetent, which gives her the power under the terms of the trust agreement to act as the sole trustee of the trust that owns the Clippers. As the sole trustee, she would be empowered to sell the team without her husband's consent. Shelly Sterling has insisted that she has medical documents that establish her husband's lack of mental competence, but Donald Sterling and his legal team unsurprisingly dispute her assertion. To resolve this question of mental competency, a Los Angeles Superior Court judge ruled on Friday that Sterling was entitled to a hearing to determine his mental competency. The competency hearing is scheduled for July 7th to July 10th. Both Shelly and Donald Sterling will have their own medical experts testify, and neurological results from scans of Donald Sterling's brain will be reviewed.

If Sterling is ruled mentally competent and remains a trustee of the Sterling Family Trust, the NBA is not out of options. Even though Sterling would still be the legal co-owner of the Clippers, the NBA could move to oust him again, assuming its "initial strategy: hold a termination hearing where the Board of Governors would decide whether to oust Donald Sterling." Under Article 14(g) of the NBA's constitution, if at least 22 of the 29 team owners vote to sustain the charges against Donald Sterling, the Clippers' membership in the NBA would be terminated.

Membership termination does not automatically mean that the Clippers would cease to be a team; rather, Article 14(g) would require a second vote whereby 19 of the 29 team owners vote to end only Donald Sterling's ownership of the Clippers. If that vote is cast, the team's NBA membership would not be terminated and instead, Shelly Sterling would become the controlling owner of the Clippers. Team owners are only likely to cast that pivotal second vote, however, if Shelly Sterling remains committed to selling the team; if she were to have a sudden change of heart -- as her husband has been known to do -- and decide to remain in control of the team, the team owners are unlikely to cast the second vote called for under Article 14(g) that would avoid the Clippers' membership termination. If that second and all-important vote failed to occur, per Article 14A(a), the Clippers' membership would be terminated. Article 14A(a) would then compel the office of commissioner Adam Silver to take over the Clippers; the commissioner's office would eventually put the team up for sale. Such a situation would, undoubtedly, be long and difficult, likely protracted further by more disputes and more litigation, which the NBA would prefer to avoid as it seeks to put the Sterling saga far behind it.




The Ninth Circuit has revived an heir's lawsuit aimed at returning two 16th-century paintings taken from the heir's father-in-law by Nazi Reichsmarschall Herman Göring during World War II. The plaintiff, Marei Von Saher, has been trying since 2007 to convince the Norton Simon Museum of Art in Pasadena, California to return two life-size panels of Adam and Eve, which date back to 1530. Von Saher claims that the panels, painted by Lucas Cranach the Elder, were stolen from Jacques Goudstikker, the father of her deceased husband. Goudstikker was a Dutch art dealer who was forced to flee the Netherlands during World War II; tragically, he died a short time after escaping when he fell from a ship en route to South America. According to the complaint, Goudstikker "left behind a black notebook that listed the contents of his art collection, including the Cranach panels."

Before hanging in the country home of Herman Göring, the Cranach panels are said to have decorated the walls of the Church of the Holy Trinity in Kiev, Ukraine, until being relocated by the Soviet Union in 1930 to the Art Museum at the Ukrainian Academy of Science in Kiev. The Soviet Union auctioned the two works in 1931, and they eventually became part of Goudstikker's collection. To complicate the history of the panels even further, the two works may have, at some point, been part of the Stroganoff family collection in Russia before being seized and sold by Soviet officials. The Dutch government believed as such, and gave the panels to a Stroganoff descendant in 1966, all while failing to inform the wife or son of Jacques Goudstikker. The Dutch government also -- inexplicably -- maintained that Desi, the wife of Jacques Goudstikker, had voluntarily sold the art works and other belongings to the Nazis. The Stroganoff descendant, George Stroganoff-Scherbatoff, sold the two panels to the Norton Simon Museum in 1971.

Von Saher, as the only remaining heir of Jacques Goudstikker, sued the museum in 2007 under a California law that "allowed claims to recover confiscated Holocaust-era artwork from museums or galleries until the end of 2010." A federal judge ruled in 2009, however, that the California law in question was unconstitutional, dismissing Von Saher's claim and setting up the case for its first trip to the Ninth Circuit. A three judge panel later affirmed the lower court ruling, but remanded to allow the plaintiff to amend her complaint in light of changes to the California law, which was amended by the state legislature so as to extend the filing deadline from three to six years. As expected, the museum moved to dismiss the complaint, arguing that the claims conflicted with federal law and policy on recovered art. Unfortunately for Von Saher, the presiding U.S. district court judge agreed and dismissed her case, "citing a petition for writ of certiorari by the U.S. Solicitor General that supported a policy of "external restitution" and respect for the decisions of foreign governments." Von Saher's case did not end there, however: last Friday, an appellate panel reversed the U.S. district court's decision, thereby reviving Von Saher's claims, and remanding the case to Los Angeles. The appellate panel, which ruled 2-1, wrote, "Von Saher's claims do not conflict with any federal policy because the Cranachs were never subject to postwar internal restitution proceedings in the Netherlands." Consequently, the appellate panel's decision opens the door for Von Saher's claims to be decided on the merits.


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This page contains a single entry from the blog posted on June 14, 2014 5:03 PM.

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