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Week in Review

By Chris Helsel

On the Day Jameis Winston Leaves F.S.U. for the National Football League, His Accuser Sues the School

The former Florida State University (F.S.U.) student who claims that she was sexually assaulted by the school's Heisman Trophy-winning quarterback, Jameis Winston, brought suit against the school on Wednesday. The suit alleges that F.S.U. violated the woman's Title IX rights by creating a "hostile educational environment."

As discussed in a previous "Week In Review" post (12/26/14), the incident in question occurred at Mr. Winston's apartment in December 2012. Mr. Winston does not deny engaging in intercourse with his accuser, but maintains that the encounter was consensual. Mr. Winston was not arrested or charged in the case, and was cleared of violating the school's code of conduct by retired Florida Supreme Court Chief Justice Major B. Harding.

According to the Education Department's Office for Civil Rights, "if a school knows or reasonably should know about student-on-student harassment that creates a hostile environment, Title IX requires the school to take immediate action to eliminate the harassment, prevent its recurrence and address its effects."

FSU president John Thrasher released a statement this week declaring that the university did not violate the civil rights of Mr. Winston's accuser. The school maintains that it complied with Title IX throughout the process by attempting - albeit unsuccessfully - to interview Mr. Winston at the time the allegation became public and by conducting the aforementioned conduct code hearing.

According to Title IX compliance expert Jim Ryan, a partner with Cullen and Dykman, penalties for Title IX violations are normally monetary, and it is therefore possible for F.S.U. to settle with Mr. Winston's accuser out of court. However, the university has made it clear that it intends to contest the suit in court.

"After a year of selective news leaks and distorted coverage, Florida State looks forward to addressing these meritless allegations in court," Mr. Thrasher said. "Evidence will show that through its confidential victim advocate program, F.S.U. did everything the plaintiff asked for, and that the assertions F.S.U. shirked its Title IX obligations are false."

Mr. Winston's accuser also retains the right to appeal the outcome of the conduct code hearing. If, upon appeal, Mr. Winston were found to have violated the conduct code, he would face expulsion from the university. However, such an action would be moot, because on Wednesday, the same day his accuser brought suit against F.S.U., Mr. Winston officially declared himself eligible for the National Football League (NFL) draft, thereby concluding his tenure at Florida State.


Former NFL Players' Video Game Likeness Suit v. Electronic Arts Survives Motion to Dismiss

This week, the Ninth Circuit allowed a case brought by former NFL players against videogame maker Electronic Arts (EA) to go forward, denying claims that the use of the players' likenesses in the games was "incidental" or sufficiently transformative to give rise to First Amendment protection.

The suit accuses EA of using the former players' likenesses in its "Madden NFL" series of video games without their permission. In denying EA's motion to dismiss, Judge Raymond Fisher wrote that the company's use of the former players' likenesses "is not incidental because it is central to EA's main commercial purpose -- to create a realistic virtual simulation of football games involving current and former NFL teams."

The court denied EA's First Amendment defense, concluding that the videogame maker did not sufficiently transform the players' avatars into expressive art works. Rather, wrote Judge Fisher, "Madden NFL replicates players' physical characteristics and allows users to manipulate them in the performance of the same activity for which they are known in real life -- playing football for an NFL team."

In 2013, the Ninth Circuit also ruled against EA in a similar lawsuit brought by former collegiate athletes regarding the use of their likenesses in the "NCAA Football" video game series. That suit, brought by former Nebraska and Arizona State quarterback Sam Keller, coincided with a Third Circuit decision in a similar case brought by former Rutgers quarterback Ryan Hart. Both courts ruled in favor of the former student-athletes, and EA reached a $40 million settlement of claims brought by Mr. Keller and others in May 2013. Mr. Keller, who was briefly under contract with the Oakland Raiders, is also a plaintiff in the current case.

Judge Fisher, in denying EA's motion to dismiss, called the company's defenses "materially indistinguishable" from those the court had rejected in the 2013 Keller case.


Former FBI Director's Report Concludes that NFL Officials Never Saw Rice Video

Former FBI director Robert S. Mueller, tasked by the NFL to lead an investigation into its handling of the Ray Rice domestic abuse incident, released his findings late last week. The report concluded that neither NFL Commissioner Roger Goodell nor anyone else at the league office had obtained or viewed the video footage from inside the elevator depicting Mr. Rice assaulting his then-fiancée prior to the video's public release.

However, Mr. Mueller's report did indicate that the NFL could and should have done more to properly investigate the actions of Mr. Rice prior to announcing his initial suspension of two games (the suspension was later increased to "indefinite" before being overturned by an independent arbitrator). The report concluded that more information was available, even without the elevator video, than that which the NFL relied upon in determining Mr. Rice's initial suspension. Specifically, the league failed to contact the Atlantic City Police Department, prosecutor's office or Revel Hotel and Casino, where the assault occurred. According to the report, the NFL also failed to ask Mr. Rice or his attorney whether they would make the video available, or follow up with Mr. Rice's employer, the Baltimore Ravens, to determine whether the club had acquired any additional information after the league's initial contact with the team.

The report acknowledged the strides the NFL has taken in recent weeks to strengthen its personal conduct policy, but offered additional suggestions, including the creation of an investigative team specifically responsible for domestic violence and sexual abuse cases.

NFL club owners Art Rooney II and John Mara, of the Pittsburgh Steelers and New York Giants, respectively, who were tasked to oversee the investigation, released a joint statement following the release of the report. They admitted that "the NFL did not have a sufficient policy in place to deal with players or other personnel accused of domestic violence" at the time of the Rice assault and described the league's investigation into the matter as "inadequate." However, they went on to commend the NNFL for implementing a new, stricter policy concerning domestic violence and other conduct policy violations in the wake of the Rice affair.

An Associated Press (AP) report previously indicated that an anonymous law enforcement official had sent the in-elevator video to the NFL office, and produced a 12-second voicemail confirming that the league had received it. The AP refused to reveal the identity of its law enforcement source, nor did it provide the source's contact information to investigators. The source, who told the AP that he took active steps to avoid being identified, was never reached by Mr. Mueller's investigatory team. Further, the Atlantic City Police Department declined to cooperate with the investigation, refusing to make any of its employees available.


Son of Former Beatles and Rolling Stones Manager Wins Art Lawsuit Against Late Father's Girlfriend

Allen Klein, a former manager for the Beatles and the Rolling Stones, died in 2009, leaving the bulk of his estate to his estranged wife and three children. Notably absent from the will was his live-in girlfriend of over 30 years, Iris Keitel. Ms. Keitel claimed that Mr. Klein gifted to her over $1 million worth of art and furniture prior to his death. Mr. Klein's son, Jody Klein, brought suit in 2013 to reclaim the pieces bequeathed to him in his father's will.

The pieces, which include a $120,000 Jeanne Rij-Rousseau painting and a $4,400 Edouard Bouquet desk lamp, join a John Lennon painting entitled "Let's Have a Dream" on the list of items the younger Mr. Klein claims Ms. Keitel had improperly acquired. He brought suit to reclaim the Lennon piece in 2012.

Manhattan surrogate judge Nora Anderson ruled in late December that Ms. Keitel did not prove that the elder Mr. Klein had gifted the pieces to her, and therefore they must be returned to his son. Jody Klein, who claims his father "didn't give gifts," denied Ms. Keitel's assertion that the pieces were given away. Ms. Keitel tried to establish his pattern of gift-giving through accessing his tax receipts, but Judge Anderson ruled that there was "no correlation." According to the judge, "Even if she were able to establish, for example, that decedent gifted 90 percent of his estate to others, that fact would be useless in helping her prove decedent gifted anything to her."


Major Auction Houses Return to High-Risk, High-Reward Strategy of Guaranteeing Art Prices

Christie's and Sotheby's, the world's largest auction houses, have resumed the practice of guaranteeing prices on some works of art they sell.

This speculative practice calls for the auction house (or an outside financier) to provide the owner of a piece a guarantee that it will sell for above a certain price at auction; if it does not, the guarantor is obliged to cover the difference. The practice therefore carries quite a risk. However, it can also be highly profitable for the auction houses, because typically the seller and the house split any profit above the guaranteed price evenly.

This represents a transition away from the more traditional model, whereby auction houses charged high commissions to buyers and sellers. In recent years, increased market competition and shrinking profit margins have driven those commissions down, and the houses have responded by bringing back the price guarantees.

Price guarantees were somewhat common in the early 2000's, with the robust economy allowing for hefty profits. Following the economic downturn of 2008, however, the market dried up and guaranteed pieces began failing to fetch their base prices, costing the auction houses millions. In one season alone, Sotheby's lost about $52 million when its consigned works did not sell at their guaranteed prices, and it had to pay sellers the difference.

This year, price guarantees have returned to the forefront. In two major November auctions, guaranteed works amounted for over 40% of total revenue at both Sotheby's and Christie's.

In addition to auction houses themselves guaranteeing prices, in many instances the houses outsource the risk; that is, the auction houses arrange for independent financiers to guarantee the minimum price, in return for a share of the final sale price above the guaranteed amount. This practice has caused considerable controversy, as Sotheby's and Christie's both allow outside guarantors to bid on works they back.

Critics contend that this gives the financiers an unfair advantage because, in addition to artificially driving prices up, the outside guarantors are aware of the guaranteed price, whereas the rest of the bidders are not. The auction houses insist that the process is fair, as they fully disclose which works carry a guarantee and whether a piece is guaranteed by the house or by an outside party.

For now, the shift towards the speculative price-guarantee model has proven highly profitable for the auction houses, while also providing sellers a safety blanket in case their piece does not fetch its minimum price. Should the market take another turn for the worse, however, the auction houses may be left out to dry once again.


NCAA Agrees to Pay For Student-Athletes' Families to Attend Football and Basketball Championships

College Football Playoff LLC, the organizing body of this year's inaugural four-team National Collegiate Athletic Association (NCAA) football playoff, announced this week that it had received a waiver from the NCAA allowing it to reimburse players' parents or legal guardians for travel, hotel and meal expenses associated with their attending Monday's championship game. The game, which will be played between the University of Oregon and Ohio State University, takes place Monday night in Arlington, Texas. The stipend allows for up to $1,250 per parent, and is part of a pilot program. The NCAA also announced that it would reimburse family members up to $7,000 during the Final Four of this year's men's and women's NCAA Division I basketball tournaments. The cost of reimbursing basketball players' families is estimated to total $300,000 to $350,000 per school.

College Football LLC is a company established specifically to organize and administer the playoff, and is jointly owned by the 10 Football Bowl Subdivision conferences and Notre Dame (which is independent, i.e. unaffiliated with any conference).

This announcement comes on the heels of other significant victories for student-athletes, including the groundbreaking Ed O'Bannon lawsuit, which authorized limited compensation for the use of college players' likenesses. Additionally, last year the NCAA removed limits on meals and approved autonomy for the five major football conferences (Southeastern Conference, Big Ten, Big XII, Pacific XII and Athletic Coast Conference).

Importantly, the funds distributed to the parents of this year's football championship will come not from the schools, but directly from College Football LLC. As the schools themselves are not providing the money, the pilot program can proceed without official NCAA legislation. This is an important distinction, according to NCAA executive vice president Mark Lewis, because "it's not providing a competitive or recruiting advantage for any school."

In order for the pilot program to become permanent, the NCAA will need to pass legislation, which requires a vote of all 350 NCAA Division I member institutions. It is widely expected that such a vote will occur in the near future.

While many larger schools with successful athletic programs have long supported directly providing athletes more benefits, that sentiment is far from universal. Many schools with fewer resources are opposed to it, citing financial constraints and the seemingly sacred collegiate ideal of amateurism. For some schools, the financial burden of the current system, let alone one allowing for extra benefits, has become too much to bear. Following this past season, for example, the University of Alabama at Birmingham announced that it was terminating its football program, because the sport had become financially unsustainable.

Despite the concerns of these less-successful programs, all signs point to a shift toward an increased focus on the financial welfare of student-athletes and their families. While this comes as welcome news to those schools that can afford it, many non-profitable football and basketball programs' days may be numbered.


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This page contains a single entry from the blog posted on January 10, 2015 9:02 PM.

The previous post in this blog was Paying Domestic Help Taxes and Benefits -- "Who Does This?".

The next post in this blog is Discretionary Bonuses: What Are They, and Why Should You Care?.

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