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June 1, 2015

Week in Review

By Chris Helsel

FIFA Executives and Others Indicted by U.S. Department Of Justice on Charges of Racketeering, Wire Fraud and Money Laundering Related to World Cup Bids and Media/Marketing Deals

On Wednesday, the United States Department of Justice (DOJ) indicted 14 individuals connected to world soccer's governing body FIFA for their roles in a decades-long system of "rampant, systemic and deep-rooted" corruption. According to U.S. officials, the on-going conspiracy included over $150 million in bribes and kickbacks and was designed to rig the selection of international tournament host countries, as well as the allocation of media and broadcasting contracts. Nine of the indicted individuals are FIFA officials, while the other five are sports marketing and broadcasting executives.

Seven of the 14 indicted individuals were arrested at a hotel in Zurich Wednesday morning by plainclothes Swiss officers. They face extradition to the United States where they will face federal corruption charges. Two of the FIFA officials arrested are currently vice presidents of the organization. The officials had all gathered in Zurich for FIFA's annual Executive Committee meetings this week, which this year included Friday's vote for the FIFA presidency. Incumbent FIFA president Sepp Blatter, who was not indicted but has long been dogged by corruption allegations of his own, easily won re-election for a fifth term despite the swirling controversy.

In announcing the indictment, U.S. Attorney General Loretta Lynch said the corruption "spans at least two generations of soccer officials who, as alleged, have abused their positions of trust to acquire millions of dollars in bribes and kickbacks." According to FBI director James B. Comey, "The defendants fostered a culture of corruption and greed that created an uneven playing field for the biggest sport in the world. Undisclosed and illegal payments, kickbacks and bribes became a way of doing business at FIFA." He continued, "When leaders in an organization resort to cheating the very members that they were supposed to represent, they must be held accountable."

FIFA has faced intense scrutiny from the international community since the simultaneous awarding of the 2018 and 2022 World Cups to Russia and Qatar, respectively, in 2010. Almost immediately, allegations of bribery and vote trading surfaced, with numerous officials resigning their posts as a result. In 2012, FIFA enacted highly publicized anti-corruption reforms, including the appointment of American attorney Michael Garcia as chairman of the investigative branch of the FIFA Ethics Committee. Mr. Garcia soon launched a two-year investigation into the 2018 and 2022 World Cup bidding process, and submitted his 450-page report to FIFA in September of last year.

Shockingly (or not), FIFA refused to make the report public, choosing instead to prepare a 42-summary and declare that Russia and Qatar were cleared of any wrongdoing during the bidding process. Mr. Garcia immediately resigned in protest, decrying the summary as containing "numerous materially incomplete and erroneous representations of the facts and conclusions (of the full report)," and declaring that his investigation had uncovered "serious and wide-ranging issues" regarding the bidding process.

The 166-page, 47-count indictment released this week lists far more specific instances of corruption than can be recounted here, but just to name a few:

- Former president of North and Central American and Caribbean soccer federation (CONCACAF) and FIFA vice president Jack Warner accepted a $10 million bribe from South Africa for his vote, which helped award the country the 2010 World Cup
- A FIFA official passed around envelopes containing $40,000 in cash to buy votes in the 2011 presidential election
- Numerous lucrative media and marketing rights deals for World Cup qualifying matches and other international events were secured through bribes

The indictment established U.S. jurisdiction over the alleged perpetrators by asserting that illicit funds were channeled through U.S. banks, consulting firms and other institutions. The U.S. and Switzerland agreed to an extradition treaty in 1990, which generally obligates each nation to extradite persons charged with specific domestic crimes, provided similar crimes exist in both countries and various other conditions are met.

In addition to the arrests made in Zurich, American officials also raided the CONCACAF regional headquarters in Miami early Wednesday morning. The raid included the arrest of Aaron Davidson, the president of Traffic Sports USA, who is accused of funneling money from Miami banks into offshore accounts in an attempt to hide millions of dollars involved in illicit bribes and kickbacks. He will be transferred to New York federal court and could face up to 20 years in prison if convicted.

Just hours after the FIFA officials were arrested on U.S. federal criminal charges, Swiss federal prosecutors revealed the existence of separate criminal proceedings of their own against "persons unknown." The prosecutor's office announced that the investigation was opened in March, and that Swiss jurisdiction was proper due to "suspicion of criminal mismanagement" at FIFA's Zurich headquarters as well as "suspicions of money laundering through Swiss bank accounts."

The Swiss prosecutor's office announced on Wednesday that it had seized "electronic data and documents" from FIFA's Zurich headquarters and will question 10 FIFA Executive Committee members who took part in the 2010 vote that awarded the 2018 and 2022 World Cups to Russia and Qatar. Swiss authorities said that their investigation was separate from the U.S. probe, but acknowledged that the two countries were working together.

Following the arrests, Qatari officials declined comment. Russian sports minister Vitaly Mutko, who also serves on the FIFA Executive Committee, said his country had "nothing to hide" and had "always acted within the law" - this despite refusing to allow the American FIFA investigator Mr. Garcia to enter the country during the course of his investigation and the discovery that Russian officials had destroyed their computers systems before investigators arrived.

On Wednesday, after the DOJ indictment was announced, the Russian foreign ministry released a statement denouncing the investigation. The statement called the DOJ's actions "clearly another case of illegal extraterritorial use of US law" and called on Washington to "stop attempts to make justice far beyond its borders using its legal norms and to follow the generally accepted international legal procedures."

Mr. Blatter, the FIFA president, released a statement on the day of the indictment declaring that his organization welcomed all efforts to wipe out corruption. "It should be clear that we welcome the actions and the investigations by the U.S. and Swiss authorities and believe that it will help to reinforce measures that FIFA has already taken to root out any wrongdoing in football," the statement read. "Let me be clear: such misconduct has no place in football and we will ensure that those who engage in it are put out of the game."

However, just days later (after his re-election to a fifth term as president was secured), Mr. Blatter sang a very different tune, accusing the U.S. and England of attempting to undermine him personally with the timing of the arrests. On late Friday night and into Saturday morning, he told gathered reporters that the arrests had stemmed from resentment by English and American officials, whose countries had failed in their bids to host the 2018 and 2022 World Cups. He also accused the U.S. of supporting his opponent in the FIFA presidential race, Prince Ali bin al-Hussein of Jordan, for political reasons, and declared that the Americans had no right to arrest FIFA officials on European soil: "The Americans, if they have a financial crime that regards American citizens, then they must arrest these people there and not in Zurich when we have a congress."

In addition to the 14 individuals indicted this week, the Justice Department has already secured guilty pleas from four other people, including former U.S. soccer head Chuck Blazer, and two corporations for actions related to the ongoing conspiracy.

According to Ms. Lynch, the corrupt soccer officials indicted this week have turned soccer "into a criminal enterprise." While Mr. Blatter and most of the highest-ranking FIFA honchos have thus far escaped arrest, U.S. officials have made it clear that their efforts to root out corruption in the sport have only just begun. Kelly Currie, acting U.S. attorney for the Eastern District of New York, said this week that the indictment "is the beginning of our work, not the end."

Faced with the prospect of up to 20 years in prison on U.S. felony charges, it should certainly be interesting to hear what those FIFA officials already in custody will have to say about Mr. Blatter and the others. Stay tuned.


United Nations Unanimously Resolves to Increase Fight Against ISIS Plundering

The 193-member United Nations (UN) General Assembly voted unanimously this week to adopt a new resolution calling for increased efforts to thwart and prosecute antiquities smugglers, ensure the return of plundered ancient treasures and counter the Islamic State's (ISIS) practice of "cultural cleansing" - that is, the systematic removal and destruction of any and all non-Islamic cultural heritage from conquered areas.

The resolution was sponsored in large part by Iraqi officials, who claim that ISIS militants raise as much as $100 million per year in antiquities trading. ISIS fighters have also been shown on high-quality, edited videos systematically destroying ancient and irreplaceable cultural heritage sites, calling the non-Islamic religious pieces an affront to Allah.

The resolution is non-binding, meaning it does not carry the enforcement power of a Security Council resolution, but its supporters consider the fact that it passed unanimously as a "turning point" in the universal effort to protect the cultural heritage of the war-torn Middle East.


University of Virginia Dean Sues Rolling Stone Magazine For Defamation Regarding Retracted Campus Rape Story

University of Virginia (UVA) associate dean Nicole Eramo has filed suit against Rolling Stone Magazine, its parent company, and journalist Sabrina Rubin Erdely, for defamation over her portrayal in Ms. Erdely's November 2014 article (which has subsequently been retracted) about fraternity gang rape and the university's indifference towards sexual assault on campus.

The article, entitled "A Rape on Campus," contained the detailed story of a UVA freshman (identified only as "Jackie") who claimed to have been brutally raped by seven men at a Phi Kappa Psi date party in September 2012. The story alleged that Ms. Eramo "brushed off" the victim's claims, "did nothing in response" and sought to suppress the story "to protect UVA's reputation." Ms. Eramo was also quoted (falsely, she contends) as telling Jackie that UVA does not publicize sexual-assault statistics "because nobody wants to send their daughter to the rape school."

The report was quickly called into question when several details from Jackie's story did not add up (e.g. she claimed to have used a back staircase that did not exist, and there was no party at the fraternity house on the night in question), and an independent review of Rolling Stone's reporting by the Columbia University journalism school found that the article was "deeply flawed." Further, the Charlottesville Police Department concluded that the allegations could not be substantiated, and noted that Jackie had refused to cooperate with its investigation on multiple occasions.

In April, Rolling Stone apologized and officially retracted the story.

Prior to the release of the article, Jackie apparently told Rolling Stone that she disagreed with its depiction of Ms. Eramo. Once the article went to print, the victim joined other sexual assault prevention activists and survivors in a letter of support for Ms. Eramo. She wrote, "Dean Eramo has truly saved my life. She listened attentively to my story and provided me with several resources ... I can't imagine what my life would be like not if it were not for Nicole Eramo."

Ms. Eramo, who serves as the university's chief administrator dealing with sexual assaults, seeks $7.5 million in damages. According to the complaint, which was brought in Charlottesville (VA) Circuit Court, "Rolling Stone and Erdely's highly defamatory and false statements about Dean Eramo were not the result of an innocent mistake. They were the result of a wanton journalist who was more concerned with writing an article that fulfilled her preconceived narrative about the victimization of women on American college campuses, and a malicious publisher who was more concerned about selling magazines to boost the economic bottom line for its faltering magazine, than they were about discovering the truth or actual facts."


Gucci/Yves Saint Laurent Parent Company Sues Alibaba Again Over Sale of Counterfeit Goods

Luxury company Kering, the parent company of Gucci and Yves Saint Laurent, has once again sued Chinese e-commerce giant Alibaba over the sale of counterfeit goods on its websites. The suit, brought in Manhattan federal court, charges that items sold on Alibaba's "Taobao" general marketplace site under Kering brand names were fakes - and that Alibaba has a duty to do more to prevent such sales.

Alibaba has countered that the enormous scale of its e-commerce platform makes it nearly impossible to completely prevent the sale of any counterfeits. "Taobao" in fact has, in recent years, made significant strides in protecting consumers from knockoff goods: in 2012, the site was removed from the U.S. trade representative's list of "notorious markets" after the hiring of a former Bush Administration intellectual property attorney.

A similar suit was brought in 2014, but was dropped after only two weeks.

"This lawsuit is part of Kering's ongoing global effort to maintain its customers' trust in its genuine products and to continue to develop the creative works and talents in its brands," the company said in an email earlier this month.


Bottled Water Company Clashes With Graffiti Artists Over Charity-Related Hashtag

Bottled water company Wat-aah's health-awareness campaign intended to encourage children to choose water over soda has gone somewhat awry.

The campaign, entitled "Take Back the Streets," included the enlistment of street artists to design labels for the brand, as well as paint murals on city streets and donate artwork for a recent auction to benefit the Partnership for a Healthy America. Many of the volunteer artists have backed out, however, after questions were raised as to exactly how much money was to be donated to charity, and when.

Further, the company has ruffled some feathers by sending a cease and desist letter to the Little Italy Street Art Project, a donation-funded community group that sponsors local murals, after the group used the social media hashtag #takingbackthestreets to promote its art on Instagram. In the letter, an attorney for Wat-ahh said the phrase had been trademarked by the water company, and that its use by Little Italy could cause confusion about the company's charitable work.

Little Italy has decided to comply, but its leader did not hesitate to question Wat-ahh's intentions: "Had they just asked me, I would have said 'Sure,' since it's just a hashtag, But one thing I know, and here's my beef with them: It's not about a hashtag. Wat-aah is a for-profit business, but they went around telling artists their work was going to help a charity."


Flo & Eddie Class Certification

Here is the decision of the California federal court certifying a class of owners of pre-1972 recordings that have been performed without authorization since August 2009 by Sirius XM. Flo&EddieCaliforniaClassActiondec.pdf

The court has already granted Flo & Eddie's summary judgment motion and found Sirius XM liable. The class is being certified for damages.

The parallel state court litigation has been certified for appeal, but the federal case has not.

June 4, 2015

Center for Art Law Case Updates

The following case selection first appeared in this week's Center for Art Law newsletter:

Overton v. Art Finance Partners LLC, 1:2015cv03927 (S.D.N.Y. May 21, 2015) -- Kiwi art collector Stephanie Overton has filed suit in New York alleging that $10.8 million worth of her paintings were sold by a NYC art dealer without her permission. The paintings were allegedly bought by defendants, eight art companies, who should have known that they were being sold improperly by Timothy Sammons, Inc., a fine art agency which is not a party here. The suit asks for over $1 million in punitive damages for replevin, conversion and aiding and abetting TSI's breach of fiduciary duty.

Ryan v. Editions Ltd. West, Inc., 5:06-CV-08412-PSG (9th Cir. May 19, 2015) -- The Ninth Circuit ruled that pastel artist Victoria Ryan was improperly denied the full amount of attorney's fees stemming from her copyright battle against Editions Limited West, which had violated her 1995 publishing contract. Ryan sought $328,000 in attorney's fees but was awarded roughly a quarter of that amount because she prevailed on only one of her four claims. The district court failed to adequately explain this decision and the Ninth Circuit was therefore unable to sustain it.

Depew v. City of New York, 1:2015cv03821 (S.D.N.Y., May 18, 2015) -- Members of the Illuminator Art Collective have sued New York City alleging false arrest and First Amendment retaliation stemming from an incident last summer. The artists were charged with illegal advertising for using a projector to display text onto the exterior walls of the Met protesting the dedication of David H. Koch Plaza. The charges were dropped but the NYPD did not return the projector for over two months. The plaintiffs argue that this constituted an illegal prior restraint on speech.

John Eskenazi, Ltd. v. Maitreya Inc., 1:2015cv03695 (S.D.N.Y. May 13, 2015) -- British art dealer John Eskenazi has filed suit against NY-based Asian art dealer Nayef Homsi and his corporation, Maitreya Inc. alleging breach of warranty, fraud, civil conspiracy and unjust enrichment and demanding $80,000 in damages arising from Eskenazi's 2013 purchase from Maitreya of a 9th century. Indian statue of the god Bhairava which the Department of Homeland Security alleged was stolen from an Indian temple. The Manhattan DA filed a forfeiture action against Maitreya, alleging that it knew that the Bhairava and other statutes which it sold were stolen.

The Center for Art Law strives to create a coherent community for all those interested in law and the arts. Positioned as a centralized resource for art and cultural heritage law, it serves as a portal to connect artists and students, academics and legal practitioners, collectors and dealers, government officials and others in the field. In addition to the weekly newsletter (http://cardozo.us2.list-manage.com/subscribe?u=78692bfa901c588ea1fe5e801&id=022731d685), the Center for Art Law subscribers receive updates about art and law-related topics through its popular art law blog (http://itsartlaw.com/blog/)and calendar of events (http://itsartlaw.com/events/). The Center for Art Law welcomes inquiries and announcements from firms, universities and student organizations about recent publications, pending cases, upcoming events, current research and job and externship opportunities. To contact the Center for Art Law, visit our website at: www.itsartlaw.com or write to itsartlaw@gmail.com.

June 10, 2015

Three Things to Consider Before Purchasing Employment Practices Liability Insurance (EPLI)

By Kristine Sova

Employment practices liability insurance (EPLI) is a type of insurance coverage that protects businesses from financial consequences associated with employment-related lawsuits. However, as is the case with most insurance policies, EPLI policies vary wildly in terms of price and breadth of coverage. Below are three things to consider before a company purchases an EPLI policy.

1. Claims and Losses

Most policies restrict coverage to harassment and discrimination claims, and typically exclude coverage for claims involving wage-and-hour laws. In addition, while many policies cover damages like back pay, many disclaim coverage for losses like front pay and punitive damages, both of which are often very high. It's important to make sure that counsel knows what the company is getting when a policy is purchased, and more importantly, that the policy covers losses that post a true risk to the business.

2. Selection of Counsel

Before a business purchases a policy, it will also want to make sure to know what rights to retain insurance-related counsel it has under the policy. Many policies give the insurance company the right to designate counsel of its own choosing. Policies that don't often limit insured employers to selecting defense counsel from a pre-approved list of lawyers. If a business would like a specific lawyer or firm to represent it in the event of an employment lawsuit, one should try negotiating for a choice of counsel before purchasing the policy.

3. Consent to Settle

Many EPLI policies require insured employers to consent to settle any claim by not unreasonably withholding consent. Keep in mind that insurance companies often wish to settle claims, reasoning that they can do so for less than the anticipated defense costs plus potential damages that could be awarded in a lawsuit, whereas insured employers usually do not want to settle claims because they do not want to set a precedent for settlement and open a floodgate of litigation against the business. Naturally, disagreements arise between insurance companies and insured employers over whether a matter should be settled. For this reason, many policies include some form of hammer clause - which essentially renders the insured employer financially responsible should it go against the insurance company's recommendation to settle - to compel insured employers to settle cases.

Week in Review

By Chris Helsel

FIFA Update: President Resigns; Indicted Ex-VP Threatens "Avalanche" of Secrets; Interpol Adds Officials to Most Wanted List

This week, just days after calling himself "the president of everybody" and alleging that the American government's crackdown on FIFA corruption stemmed from resentment from the U.S.'s failed 2022 World Cup bid, FIFA president Sepp Blatter announced plans to resign the post he has held for 17 years.

This news comes on the heels of last week's bombshell dropped by the U.S. Department of Justice, which unsealed an indictment calling for the arrest of 14 individuals connected to soccer's governing body on racketeering, wire fraud and money laundering charges.

This week, the international police force Interpol, based in France, joined the fight by issuing a "red notice," which added six of the indicted individuals to its "Most Wanted" list. Two have already been arrested in their home countries, while the other four now risk arrest anywhere they travel in the world.

One of the men arrested was Jack Warner of Trinidad and Tobago, a former FIFA vice president. Mr. Warner, who faces a raft of charges, including racketeering, bribery, wire fraud and money laundering, is accused of, among many other things, accepting a $10 million bribe from the South African government in exchange for his vote for the country to host the 2010 World Cup (which it ultimately did). Two of Mr. Warner's sons, as well as his former Caribbean, North & Central American soccer federation (CONCACAF) colleague Chuck Blazer, were previously arrested, pleaded guilty, and are cooperating with American authorities.

While denying any personal wrongdoing, Mr. Warner has now come forward and proclaimed that he has intimate knowledge of the deep corruption running rampant throughout FIFA - and that he intends to share it. In a seven minute paid political television advertisement entitled "The Gloves Are Off," the embattled former executive revealed he had a trove of evidence linking various FIFA officials, including Mr. Blatter, to a slew of illicit payments and activities. "Blatter knows why he fell - and if anyone else knows, I do," he said. Mr. Warner declared that he had placed the files in "respected hands" - believed to be those of his attorneys - and promised, "I will no longer keep secrets for them who now seek to actively destroy the country which I love."

In his speech, Mr. Warner also said he "reasonably and surely" feared for his life. However, despite this fear, he vowed to continue naming names. At a rally shortly after his speech was broadcast, he said, "Not even death will stop the avalanche that is coming. The die is cast. There can be no turning back."

In addition to paraphrasing Julius Caesar, the former executive also invoked Gandhi, proclaiming that throughout history, tyrants always fall in the end.

Mr. Warner also curiously accused Mr. Blatter of directly manipulating Trinidad's 2010 government election, for reasons unknown.


41 Charged With Murder in 2013 Bangladesh Building Collapse

This week, Bangladeshi police formally charged 41 people with murder for their involvement in the collapse of a Dhaka building. The building, which housed several garment factories, collapsed in 2013, killing more than 1,100 people. It was the worst disaster in garment industry history.

Following the collapse, a state report found that the building was constructed with substandard materials in flagrant violation of building codes. The report also found that factory owners urged employees to return to work the day after an engineer inspected the building and deemed it unsafe. Specifically, the building's upper floors were illegally constructed, and housed heavy generators that caused the building to shake.

Among those charged were the owner of the building, his parents, several of the buildings' factory owners, and at least a dozen government officials. Those convicted could face the death penalty.

Bangladesh ranks second only to China in worldwide garment manufacturing output, with over 5,000 factories. Workers there earn the lowest wages in the world.


Triple Crown Winning Owner Sued Again, This Time for Libel

Ahmed Zayat, whose horse American Pharoah became the first since 1978 to win horse racing's Triple Crown this weekend, now finds himself facing yet another lawsuit.

Last year, Mr. Zayat was sued in federal court for breach of contract by Howard Rubinsky, who claimed that . Zayat failed to repay a $1.65 million gambling debt. Now, Mr. Rubinsky's attorney Joseph Bainton has brought suit in New Jersey court against Mr. Zayat for libel, alleging that the Egyptian-American thoroughbred owner knowingly made false, malicious statements about him after Mr. Rubinsky's federal suit went public.

According to the suit, when asked about the federal breach of contract suit, Mr. Zayat told the Associated Press: "It's a fraud. It's a scam from A to Z. It's a total fiction. It's a total lie. It is a case of blackmail by a criminal." These comments, says Mr. Bainton, damaged the sterling reputation he has cultivated over the course of a 40-year legal career. The suit seeks $10 million in damages.


Yahoo! Scores Rights to First National Football League Internet Live Stream

Yahoo!announced this week that it had struck an exclusive deal with the National Football League (NFL, league) to host the first free, live global webcast of a regular season game. The live stream will feature the October 25th matchup between the Buffalo Bills and Jacksonville Jaguars in London.

Yahoo!, which scored the deal over more successful rivals Google and Facebook, among others, apparently won over league executives with its connections to advertisers, technical ability to handle the enormous expected viewership and wide reach of approximately one billion users worldwide. Both sides declined to disclose the financial specifics of the deal, but industry insiders believe that the league will receive a seven-figure fee for the rights to air the single game. Yahoo! says it plans to sell video ads and sponsorships around the game, the proceeds of which will be kept by the company.

For the first time, football fans across the globe will be able to watch NFL football for free, with access available via smartphone, computer, video game console and smart TV.

To this point, the NFL has been hesitant to allow its games to be streamed online domestically for fear of cannibalizing its lucrative broadcast television deals. However, if the Yahoo! foray is successful, expect the league to parlay that fact into even higher fees for future television contracts that would include streaming rights.


Abbott and Costello Heirs Sue Playwright and Others Over Use of "Who's On First?"

Broadway hit "Hand to God," which came up empty at the Tony Awards this weekend despite five nominations including Best Play and Best Actor, now finds itself facing a federal copyright suit over its use of the famous Abbott and Costello baseball comedy routine, "Who's on First?"

The suit, brought by the comedians' heirs in the Southern District of New York, alleges that playwright Robert Askins and the show's producers and promoters violated the comedy tandem's copyright by incorporating a portion of the classic routine into a performance by the show's teenaged protagonist, delivered via sock puppet while attempting to woo a female friend. The estate says its cease-and-desist letters have been ignored since the play's Broadway debut in April.

According to an attorney for the heirs, "'Hand to God' is using 'Who's on First' not just to get laughs from the audience but also to get people to buy tickets." A spokesman for the production disputes that timeline, however, and insisted this week that "The lawsuit is baseless; the material in question is in the public domain, and the show's producer carefully vetted" it with the production's lawyers.

Lead producer Kevin McCollum agreed, telling reporters in an email this week: "Filing a lawsuit on the eve of the Tony awards is obviously nothing more than a stunt. Frankly, we welcome the attention."


Online Music Stream Service SoundCloud Reaches Deal With 20,000 Record Labels

The online music streaming service SoundCloud announced this week that it has struck a deal with 20,000 independent record labels through Merlin, an organization that represents small companies in large scale digital negotiations.

The Berlin-based company, which boasts 175 million monthly users, has also recently inked deals with Warner Music and the National Music Publishers' Association, although negotiations with Sony have reportedly reached an impasse. As a result, some mainstream Sony acts have been pulled from the service, including Kelly Clarkson and Adele. Negotiations with the Universal have also reportedly slowed.

Unlike fully licensed operators Pandora and Spotify, until recently SoundCloud lacked formal licensing agreements, and therefore paid no royalties. Predictably, this led to a tense relationship with the music industry, although many artists love the service for its wide reach and easy accessibility. Many, like then-17-year-old surprise 2014 Song of the Year Grammy-winner Lorde, choose to debut new songs on SoundCloud long before selling them through their labels.

Despite its enormous popularity, SoundCloud has struggled up to this point to generate significant revenue through its service. It did not establish an advertising platform until late last year, after which time it has only paid out $2 million in royalties.

This new agreement is seen as a major step towards convincing the industry - Sony and Universal specifically - that SoundCloud can in fact generate revenue for artists and labels alike. According to Charles Caldas, Merlin's chief executive, "For SoundCloud as a business, their relationship with the music industry long term without having some form of monetization would make their future incredibly difficult." Fans of the free streaming music service sure hope it can find a way to do just that.


June 16, 2015

Week in Review

By Chris Helsel

Amazon E-Books Business Under Scrutiny by European Union Antitrust Regulators

Online retailer Amazon, which only five years ago was celebrated for prodding the U.S. Department of Justice (DoJ) to bring an antitrust suit against Apple and five leading e-book publishers for price fixing, now finds itself under investigation for possible antitrust violations of its own.

European Union (EU) regulators announced this week that they were beginning an investigation into whether Amazon abused its dominant position in the e-books market to prevent innovators from breaking through by artificially lowering its own prices. Specifically at issue are certain clauses in the company's contracts with European publishers that require the publishers to inform Amazon when they offered more favorable terms for books to other digital retailers, allowing the American titan to lower its own prices in response.

Europe's top antitrust regulator, Margrethe Vestager, who became the EU's Competition Commissioner last year, made headlines earlier this year when she brought formal antitrust charges against Google for abusing its dominant search engine market position by skewing search results to favor its own shopping service. Ms. Vestager said in a statement on Thursday, "Amazon has developed a successful business that offers consumers a comprehensive service. It is my duty to make sure that Amazon's arrangements with publishers are not harmful to consumers, by preventing other e-book distributors from innovating and competing effectively with Amazon."

Amazon soon thereafter issued a statement in response to the EU announcement. The company said it was "confident that our agreements with publishers are legal and in the best interests of readers" and said it would "cooperate fully during this process."

If the European Commission (the EU's executive body) investigation determines that sufficient evidence exists to support a formal charges, and Amazon fails to successfully rebut those findings, the company could face a fine of as much as 10% of its annual global sales. The largest single fine levied by the Commission is €1.1 billion in 2009 against American chip manufacturer Intel for its dominance of the computer chip market. Another American tech giant, Microsoft, has paid a total of almost €2 billion in European fines over the last decade.

In a separate proceeding last June, the German Publishers and Booksellers Association submitted a complaint to the German antitrust authority, accusing Amazon of abusing its dominance of the e-book market in violation of competition law. The European Commission confirmed this week that its current investigation is distinct from the German dispute.

As mentioned above, five years ago Amazon found itself on the opposite side of the issue, accusing Apple and five major publishers of price fixing in New York federal court. In 2010, following the release of Apple's iPad, the company attempted to use its new device as leverage against Amazon and its popular e-reader, the Kindle. The publishers settled, and Apple lost at trial in 2013. That appeal is still pending, with a decision expected later this year.

Amazon is also the subject of a separate investigation in Luxembourg, home to its European headquarters, regarding its complex tax practices in that country.


After Denying Any Involvement, Top FIFA Official Admits Authorizing $10 Million Payment - But Insists He Did Nothing Wrong

Among the accusations levied against former FIFA executive Jack Warner in last month's DoJ indictment was the charge that he received a $10 million bribe from South African officials in exchange for his vote for the country's bid for the 2010 World Cup. The alleged bribe was dubiously classified as a "voluntary contribution" to a fund devoted to soccer development in Trinidad - and the fact that Mr. Warner hailed from Trinidad and was the most powerful man in Caribbean soccer was pure coincidence.

The indictment accused a "high-ranking FIFA official" of authorizing and facilitating the payment, and though it did not name the official, widespread speculation focused on one man: FIFA general secretary Jérôme Valcke of France.

On June 1st, Mr. Valcke told the New York Times in an email that of course had he not authorized the payment, for he lacked the power to do so. The next day, a FIFA official statement declared that "neither the Secretary General Jérôme Valcke nor any other member of FIFA's senior management were involved in the initiation, approval and implementation of" the "project" - i.e. the bribe paid to Trinidad.

The story unraveled quickly, however, as a letter from a South African soccer official to Mr. Valcke discussing the payment soon surfaced. In response, FIFA amended its position, claiming in a new statement that the payment had been authorized by then-chairman of its finance committee, Julio Grondona. Conveniently, Mr. Grondona died last year.

Following the release of the South African letter and amid ever-increasing pressure from around the globe, FIFA president Sepp Blatter announced his decision to resign his post last week.

This week, the official story about the South African transaction changed again, with Mr. Valcke now declaring that yes, he had authorized the payment - apparently forgetting his denial from two weeks ago - but no, there was nothing illegal or improper about it. Mr. Valcke defiantly blamed seemingly everyone but himself for the apparent misunderstanding.

If anyone is at fault for any misappropriation of the funds, he said, it is Caribbean regional soccer association who should have tracked the use of the funds.

"Why is this the fault of FIFA when the money is not FIFA's money, FIFA has no responsibility on this money, it is South Africa's money, and it was a gift to the African diaspora in the Caribbean?" he said. "You've decided that, after Blatter, I'm the head to be cut?"

Mr. Valcke was not named in the American indictment and claims not to have been questioned by police.



Apple and Record Labels Subject of Antitrust Probe

As Apple prepares to unveil its new premium music streaming service, Apple Music, the attorneys general of two states have commenced an investigation seeking to determine whether the tech giant and major record labels have violated federal antitrust law by attempting to squeeze out popular "freemium" streaming services such as Spotify and SoundCloud.

These freemium services, much like many smartphone apps, entice consumers with free introductory trials or "light" versions supported by advertising before offering a premium paid service free of ads. Such services have increasingly drawn the ire of top record label executives in recent months, who feel that they fail to produce significant revenue and deprive consumers of any incentive to pay for music. Spotify, for instance, reported a net loss of $197 million last year - despite boasting 60 million users and generating $1.3 billion in revenue.

The attorneys general of New York and Connecticut are now concerned that Apple has either pressured, or is conspiring with, major record labels such as Sony, Universal and Warner to withdraw support from the freemium services in order to steer consumers to Apple.

"It's important to ensure that the market continues to develop free from collusion and other anticompetitive practices," said a spokesman for New York attorney general Eric Schneiderman.

The first of the major labels to respond to respond in writing to the antitrust inquiry was Universal, which denied any wrongdoing and promised to cooperate with the ongoing investigation.

This is the second time these two attorney generals, Mr. Scheiderman of New York and George Jepsen of Connecticut, have pursued Apple on antitrust grounds. In 2013, a federal judge found that Apple had run afoul of antitrust law by colluding with book publishers to raise e-book prices to the detriment of Amazon (which now finds itself accused of antitrust violations of its own, as discussed above).

Apple Music is scheduled for release at the end of this month.


Explosion in Yemeni Capital Destroys Cultural Heritage Site

On Friday, an explosion believed to have been caused by a Saudi missile or bomb destroyed a 2,500-year-old Unesco World Heritage site in the Yemeni capital of Sana. The Saudi military has denied responsibility for the attack, which also killed an unspecified number of residents in the ancient multi-story homes, towers and gardens.

Despite the Saudis' denial, the attack is believed to have been part of a concerted campaign by a coalition of Arab states, led by Saudi Arabia, against Yemen's Houthi insurgent group, which is allied with Iran. A Saudi coalition spokesman denied involvement, insisting that the group's bombings are aimed only at military targets and that perhaps the most recent incident was the result of a rebel ammunition storehouse exploding.

Unesco director general Irina Bokova released a statement following the explosion calling on antagonists in the ongoing Yemen conflict to respect the country's irreplaceable cultural treasures. "I am profoundly distressed by the loss of human lives as well as the damage inflicted on one of the world's oldest jewels of Islamic urban landscape," she said. "I am shocked by the images of these magnificent many-story tower-houses and serene gardens reduced to rubble." The statement also noted that the destroyed cultural site "bears witness to the wealth and beauty of the Islamic civilization."


Federal Judge Rules That Because Spanish Law Applies, Museum Need Not Return Nazi-Looted Pissarro to Former Owner's Heirs

Judge John F. Walker of the District of California ruled this week that because the ownership of a 1897 Pissarro painting is governed by Spanish law, the Spanish government and Madrid museum where it is housed need not return it to the heirs of its former owner. The painting, "Rue Saint-Honoré, Après-midi, Effet de Pluie," depicts a Paris street scene and was forcibly "purchased" from Lilly Cassirer by a Nazi art appraiser in 1939 for $360.

Judge Walker ruled that Spanish law applied because "although plaintiffs' relationship to California is significant, the painting's relationship to California is not." Under Spanish law, he said, the museum has no obligation to return the painting to the Cassirer family. He noted that in addition to the $360 paid by Nazi authorities in 1939, Ms. Cassirer had received adequate postwar compensation for the painting from the German government.

Her heirs, however, insist that Ms. Cassirer had only agreed to the postwar settlement "because the location of the painting was unknown." It later surfaced in California in 1951, before making its way to Baron Hans Heinrich Thyssen-Bornemisza in 1976. The painting has been on display in the Thyssen-Bornemisza Museum in Madrid since it opened in 1992.

Although he ultimately ruled that the Thyssen-Bornemisza had no duty to return the work, Judge Walker called on the museum to "pause, reflect and consider" working out a resolution privately in lieu of continuing to litigate the issue.

The foundation that runs the museum appears not to be interested in any such resolution, as its managing director said this week that it was "very satisfying" to have an American court recognize the museum's ownership of the painting. "The judge makes it very clear that the foundation is the legitimate owner," he said. The best he could offer Ms. Cassirer's heirs, he said, was perhaps a form of "moral recognition," such as a plaque next to the painting indicating its Nazi history.

The Cassirer family plans to appeal the ruling. An attorney for the defendants, however, believes that the issue has been decided on the merits, which "effectively ends the case." He continued, "What is very significant about this case is that plaintiffs have repeatedly tried to bring these cases in courts in the United States, but the courts have said that we need to respect the laws in other countries. One country can't decide to be the world court."


After Three Decades at the Helm, Library of Congress Chief Resigns Under Fire

James H. Billington, who has chaired the Library of Congress since 1987, announced this week that he would resign his post effective January 1st. The announcement comes on the heels of the latest of a series of government investigations revealing the Library's weakness in managing its technological resources.

The 86-year-old librarian has been accused by co-workers and government officials of failing to keep the institution current with the rapid advancement of modern technology. A 2013 audit conducted by the Library's inspector general revealed that just a small fraction of its 24 million books are available to read online. Additionally, millions of other items, some dating back to the 1980s, remain piled in overflowing buildings and warehouses, hidden from the world.

Further, a series of investigations over the past two decades shed light on troubling technological issues that a Government Accountability Office report this year said put "the library's systems and information at risk of compromise."

Some current and former Library employees reported that Dr. Billington does not use email and often communicates through a fax machine at his house.

Prior to his appointment to his current post, Dr. Billington spent a decade leading the Woodrow Wilson International Center for Scholars, a leading policy think tank. Before that, he was a Princeton valedictorian, Rhodes scholar, U.S. army officer and Harvard professor.


June 23, 2015

Week In Review

By Chris Helsel

Major League Baseball's Cardinals Under FBI Investigation For Hacking Astros' Internal Database

The St. Louis Cardinals, one of Major League Baseball's (MLB) oldest and most storied franchises, acknowledged this week that it is under investigation by federal officials after evidence surfaced that the club's front-office officials hacked into the internal networks of an opposing team.

According to an unnamed law enforcement official, the FBI and Justice Department have uncovered sufficient evidence that Cardinals' employees may have stolen confidential information from the Houston Astros to warrant an investigation. If the allegations are true, this would represent the first known instance of corporate espionage involving American professional sports teams.

The Astros general manager, Jeff Luhnow, worked as an executive in the Cardinals front office until he was hired for his current role in December 2011. Mr. Luhnow is considered an expert in the modern advanced statistical approach to baseball analysis (see Michael Lewis' bestselling book and subsequent Brad Pitt film, "Moneyball"). In fact, upon joining the Astros, Mr. Luhnow hired Sig Mejdal, a former NASA engineer, to apply the work he had done on astronauts' decision making to improving the team's draft selections. Mr. Mejdal's title is "Director for Decision Sciences."

The New York Times reported this week that during his tenure with the Cardinals, Mr. Luhnow created a computer network called Redbird that housed much of the club's baseball operations information, including scouting reports and prospect evaluations. After joining the Astros, Mr. Luhnow created a similar system called Ground Control, which was apparently hacked by low-level Cardinals employees recently. Specifically, the FBI discovered that the Astros Ground Control network had been accessed from a computer in the residence of one or more Cardinals' officials.

The FBI's Houston office declined to comment on the matter, but has been confirmed to have issued subpoenas to the Cardinals and MLB officials for electric correspondence. The Cardinals, who currently have the best record in baseball with 44 wins and just 23 losses, declined to comment as well.

For his part, Mr. Luhnow believes that even if his system were hacked, it would hardly provide rival teams any competitive advantage, due to the rapidly evolving landscape of baseball analysis and ever-changing player evaluations. In an interview with Sports Illustrated, Mr. Luhnow said, "If you were to take a snapshot of the database of one team, within a month it would not be useful anymore, because things change so quickly. Not to mention that the types of analysis you would do back in 2011, versus 2012 or '13, is evolving so quickly ... I wouldn't trust another team's analysis even if I had it."

MLB said in a statement that it "has been aware of and has fully cooperated with the federal investigation into the illegal breach of the Astros' baseball operations database. Once the investigative process has been completed by federal law enforcement officials, we will evaluate the next steps and will make decisions promptly." Possible sanctions from MLB against the Cardinals include heavy fines and the loss of draft picks.


"Straight Outta Compton" Film Release Intersects With Suge Knight Murder Trial

As reported in a previous Week in Review from January 29th, rap mogul Marion "Suge" Knight killed one man, his former associate Terry Carter, and injured another when he gunned his pickup truck at a Compton, California burger stand. At the time, the burger stand was serving as a set location for the video shoot of a trailer for the biopic "Straight Outta Compton," which chronicles the exploits of late '80s-early '90s outlaw rap group N.W.A. Mr. Knight is a co-producer for the film.

Mr. Knight stands charged with murder and has pleaded not guilty. He is also the subject of a wrongful-death civil suit brought by the wife of Mr. Carter.

Mr. Knight's attorney has insisted that his client was acting in self-defense, as he was being ambushed by film employees and associates charged with keeping Mr. Knight away from the set. Allegedly, Mr. Knight and the other filmmakers had been engaged in a months-long rivalry and financial dispute. The man injured during the incident, Che Sloan, who is a security consultant for the film, revealed during an interview with sheriff's investigators that he taunted and punched Mr. Knight as the incident unfolded.

Mr. Knight and Andre Young, better known as Dr. Dre and also a co-producer for the film, were business associates during the N.W.A. era. The two co-founded the group's record label, Death Row Records, in 1991. They have since had a major falling out, largely due to Mr. Knight's insistence that he is owed a 10% share - $300 million - of the proceeds from Mr. Young's sale of the Beats Electronics music brand to Apple last year.

The film is sure to strike a chord with many viewers in the wake of the recent instances of apparent police over-aggression. According to the trailers, the filmmakers have intentionally drawn a parallel between the urban unrest of the late '80s and early '90s with the well-documented current discord between American minorities and law enforcement.

While N.W.A. member O'Shea Jackson (aka Ice Cube) insists that the group represented nonviolent protest in the era of Rodney King, many believe that the ensemble's explicitly anti-establishment lyrics and weapons-laden tour bus suggest otherwise. In one memorable 1989 incident, for instance, the group was prohibited from performing a certain protest song at a Detroit concert for fear that it would incite violence against local police officers. In protest, the group performed the song - "F*** Tha Police" - anyway, prompting police officers to storm the stage, set off M-80s and send the crowd into a panic.

For context, one memorable verse of the aforementioned song includes the following lyrics:

"Punk police are afraid of me, huh
A young n**** on the warpath
And when I'm finished, it's gonna be a bloodbath
Of cops, dying in L.A."

Mr. Knight's trial was slated to begin on July 7th, but has been postponed. The film is due for release in August.


5Pointz Graffiti Artists File Federal Lawsuit

Nine spray-paint artists whose work at the "Graffiti Mecca" of 5Pointz in Long Island City, Queens, was whitewashed in preparation for a residential development have filed a federal lawsuit seeking punitive damages.

The mural space known as 5Pointz has been a renowned locale for some of the world's top graffiti artists for decades. In fact, in 1993 a group of artists formalized the arrangement by striking a deal with the property's owner, Gerald Wolkoff, which granted them free reign to decorate the buildings to their liking so long as there were no political, religious or sexual messages or images. The arrangement called for the artists to work for free, but they were entitled to retain the copyrights to their works. In 2002, Mr. Wolkoff appointed one of the artists, Jonathan Cohen, curator of 5Pointz, and gave him an office from which to conduct his business.

However, the artists faced a serious problem 11 years later when Mr. Wolkoff sold the buildings to a developer with intentions to erect a new housing development. Mr. Cohen found himself faced with an eviction proceeding and, along with other artists, filed a federal suit seeking an injunction to stop the buildings' demolition in October of 2013. Mr. Cohen alleges that he reached a settlement with the realtor requiring him to vacate on November 30th of that year. Despite that agreement, he says, the developer "under the cover of night" sloppily whitewashed the existing art on site on November 19th - the night before the court ruled on the injunction.

The next day, Judge Frederic Block of the Eastern District of NY denied the injunction, but noted that the plaintiffs could be owed damages if their graffiti works qualified for "recognized stature." Such works are covered by the U.S. Visual Artists Rights Act of 1990, which protects the moral rights of artists.

Earlier this month, the artists filed another suit in the same court, this time seeking punitive damages. Mr. Cohen alleges that the premature whitewashing, which included a crude "smiley face" in white paint and left portions of the artwork still visible, "was clearly calculated to cause maximum indignity and shame" to the artists and, importantly, caused financial harm by depriving the artists of the opportunity to retrieve their work.

"Our clients seek justice for the unlawful destruction of their artwork. This case will demonstrate that these cherished works of art must be protected to the fullest extent of the law," said the plaintiffs' attorney, Eric Baum of Eisenberg & Baum. "This case is not only brought on behalf of plaintiffs, but it sends a message to everyone that the unlawful destruction of artwork will not be tolerated. If anyone violates federal law under the Visual [Artists] Rights Act, they must be held accountable."

According to the complaint, at the time of the whitewashing, the iconic buildings were home to more than 350 distinct works of graffiti art. The buildings were demolished last summer.


Warner Music To Pay $4.2+ Million To Settle Unpaid Intern Class Action Suit

Papers filed in Manhattan federal court earlier this month reveal that Warner Music Group Corp. has agreed to pay hundreds of former unpaid or underpaid interns more than $4.2 million to resolve a class action lawsuit that sought compensation for their labor.

The settlement covers interns who were paid below minimum wage - or nothing at all - during periods dating back to June 2007. Warner Music reserved the right to terminate the settlement if the number of claimants exceeds 1,135.

In a statement following the settlement, Warner Music said, "We continue to stand by our internship program as an invaluable educational experience for students looking to obtain hands-on, real-world training."

The suit is one of many in the wake of the June 2013 Black Swan decision, in which a Manhattan federal judge held that 21st Century Fox should have compensated two interns for their work on the film. Since then, NBCUniversal, Condé Nast, and Viacom have all settled similar multi-million dollar claims.


Russian Moves to Limit Participation in the Olympic Games

By Sergey Yurlov

Sports Law Researcher, sport judge and member of the Russian National Union of Sport Lawyers, member of the International Association of Sports Law (IASL)

On April 7, 2015, a State Deputy introduced Bill No.763029-6 "On the amendments to Article No.36 of Federal Law on Physical Culture and Sport in the Russian Federation" (Russian Law on Sport, Bill), to limit the participation of the Russian athletes in the Olympic Games. (http://asozd2.duma.gov.ru/main.nsf/%28SpravkaNew%29?OpenAgent&RN=763029-6&02)

In accordance with its Explanatory Note (Note), the Bill is aimed at stopping injured and older athletes from occupying places of younger promising athletes. The Note posits that some athletes monopolize their rights to take part in the Olympic Games. Apparently, it claims, repeat Olympic champions continue participating and do not provide an opportunity to younger athletes who want to prove themselves on the international level. The Note also emphasizes that sometimes an athlete who represents the Russian Federation on the international level withdraws his or her participation immediately before a particular race, and cites an incident that occurred at the Sochi Winter Olympic Games when Russian figure skater Evgeni Plushenko withdrew his participation due to the back injury.

If the Bill becomes law, the proposed changes will have a significant impact on the Russian sport and negatively affect the rights of athletes.

The Bill proposes an amendment to Article No.36 of the Russian Law on Sport, which is labelled as follows: Formation of sport teams, sport delegations of the Russian Federation. The Bill provides for the following provision to be included: "Athlete's participation in the Olympic Games for more than 2 (two) consecutive times is prohibited"

On its face, it is reasonable to provide more opportunities for young athletes. In the meantime, nobody can be restricted from practicing a sport that includes the training procedure and participation in a wide range of sporting competitions, including the Olympic Games.

As a general rule, nobody can be restricted from practicing a sport. Each athlete has the right to participate in the election procedure regardless of his or her age and other criteria. However, if the Bill is adopted, many athletes will be prohibited from the Olympics.

Most of the Russian Olympians practicing summer sports already participated in the summer Olympic Games in Beijing 2008 and London 2012. They therefore would fall under the provisions of the Bill and be deemed ineligible.

To help provide more opportunities for young athletes, sports federations should address this issue. Each sports federation could create a special committee which role is to evaluate a particular athlete and to deliver an opinion as to whether he or she meets the eligibility requirements, based on analysis of the following criteria:
• results of an athlete, and his or her performance in the last or/and current season;
• dedication of the athlete to the training procedure;
• evolution and projection of the athlete in the future (i.e. potential results);
• universality of the athlete i.e. an ability to compete in a number of sporting events (for example, in swimming this means an ability to compete in the Breaststroke, Freestyle, Individual Medley etc.); and
• the health of the athlete.

It is to be noted that the Court of Arbitration for Sports (CAS) has confirmed the use of the abovementioned criteria (see http://www.tascas.org/fileadmin/user_upload/DOC.pdf).

Therefore, the election procedure should be based not only on the prohibition of athletes' participation, but also on the election criteria. If a 30 year old athlete who has been participated in four Olympic Games meets the eligibility requirements, then he or she should be elected, regardless of the fact of past participation.

It is to be noted that several Russian high-level athletes have commented on the Bill. Two-time Olympic pole vault champion Yelena Isinbaeva said that the Bill bears no relation to real life, and was proposed by an individual who does not know sport. Isinbaeva emphasized that each athlete has the right to compete for as long as he can qualify for the Olympic Games, and that the Bill will deprive athletes from their dreams (see http://m.sovsport.ru/news/text-item/794190).

Russian figure skater Evgeni Plushenko is confident that the Bill will not be adopted (see http://super.ru/news/113732).

As of today, nobody knows whether the Bill will be adopted by the Russian Parliament. However, the fact that it was introduced into shows that there: 1) is a misapprehension of the basics of sports law, and 2) a miscommunication among athletes, sports federations, the Russian Ministry of Sport and the Russian Parliament. There is no common approach on the eligibility issues, as Russian sports bills are often prepared by officials who do not have special sports law knowledge. Consequently, they propose vague and controversial bills.

As of May 18, 2015 the Bill has been adopted by the responsible committee of State Duma - Physical Culture, Sports and Youth Affairs Committee (Committee). More importantly, the Bill has been included into the legislative program of State Duma for the spring session of 2015. The Committee also decided to send the Bill to other committees of the Russian Parliament, the Russian President, the Audit Chamber of the Russian Federation, and other subjects of the Russian Federation for the submission of reviews and suggestions. The deadline for reviews and suggestions was June 18, 2015.

It is expected that State Duma will consider the Bill in the first reading in July 2015.

Graffiti Artists Spray 5Pointz Property Owners With Second VARA Suit

By Barry Werbin

Reviving a fight that began 18 months ago, on June 3, 2015, nine "street" artists filed an action in the Eastern District of New York against owners and developers of the so-called 5Pointz property located in Long Island City, alleging that the 2014 whitewashing of their "Aerosol Art Center" prior to developing the property for a luxury high-rise residential development violated their rights under the Visual Artists Rights Act of 1990 or VARA (Section 106A of the Copyright Act).

For well over a decade, some 1,500 graffiti and street artists adorned an old water meter factory with intricate colorful murals and "tags" that became a major tourist destination. Known colloquially as the 5Pointz Aerosol Art Center, the artists had long-time permission from the property owner's principals, Jerry and David Wolkoff, to paint the abandoned building's façade, with only some restrictions on the type of street art so as to keep it in good taste.

When plans to demolish the property and develop the residential project later emerged, and the New York City Landmarks Commission denied protection, a group of the artists filed suit in the fall of 2013 seeking injunctive relief, alleging that the proposed destruction of the art would amount to a VARA violation. VARA provides qualified protections to the author of a work of visual art to prevent the "intentional distortion, mutilation, or other modification of that work which would be prejudicial to his or her honor or reputation." VARA further gives such author the right "to prevent any destruction of a work of recognized stature, and any intentional or grossly negligent destruction of that work is a violation of that right."

On the eve of a preliminary injunction hearing, however, most of the art was whitewashed over. The District Court ultimately declined to grant a preliminary injunction, ruling on November 12, 2014 that denial of such relief was warranted because of the "transient nature" of the art based upon the artists' knowledge that the building eventually would be demolished, as well as the availability of monetary relief for damages (which precludes the necessary showing of irreparable harm). The case was nevertheless kept alive for ultimate trial. The court also noted that the issue of "recognized stature," which is not a defined term under the VARA statute, is best determined after the case has been prepared for trial.

In the newly filed action, however, the artist plaintiffs seek only monetary and punitive damages based on mutilation of the art, not destruction. The complaint alleges that "the [2014] whitewashing was entirely gratuitous and unnecessary," that defendants "were far from ready to demolish the buildings in question" and that the whitewashing was "disgracefully crude" and done in an "unprofessional manner which was clearly calculated to cause maximum indignity and shame to plaintiffs." Unlike the section of VARA that requires proof of "recognized stature" with respect to the destruction of a covered work, the new claim avoids that burden but must establish instead that the distortion and mutilation of the artwork were prejudicial to each of the artist's "honor or reputation." The plaintiffs allege such harm, as well as "humiliation, mental anguish, embarrassment, stress and anxiety, loss of self-esteem, self confidence, personal dignity, shock, emotional distress, inconvenience, emotion pain [sic] and suffering and any other physical and mental injuries Plaintiffs suffered due to Defendants improper conduct pursuant to VARA and the common law."

A copy of the complaint is here.5pointz-complaint.pdf

June 28, 2015

Who Is The Owner of Alex Rodriguez's 3,000th Hit Milestone Ball?

By Daniel S. Greene

Reaching the 3,000 hit mark is one of the greatest accomplishments for career baseball players. Every player to reach the "3,000 Club" has been elected the National Baseball Hall of Fame, with the exceptions of Pete Rose (banned from baseball), Rafael Palmeiro (steroid allegations), Derek Jeter (not eligible yet), and Alex Rodriguez (still active). Hence, joining "the club" makes one a lock for "the Hall." The importance of this honor was featured in the 2004 sports comedy film "Mr. 3000", staring Bernie Mac.

Jeter obtained his 3,000th hit on July 9, 2011, by knocking a home run into the left field bleachers at Yankee Stadium. On June 19th of this year, Rodriguez reached the 3,000 hit plateau by depositing a home run into the right field bleachers in the Bronx. Jeter and Rodriguez became the 28th and 29th members of the 3,000 hit club, respectively, and the second and third players to record their 3,000 hits via home runs (the first being Wade Boggs in 1999).

While Jeter and Rodriguez have this feat in common (as well as being All-Star infielders for the Yankees), the big difference between these historic events involved the men who caught each respective milestone ball. Jeter's ball was caught by Christian Lopez, a 23-year-old cellphone salesman from Highland Mills, New York. Lopez immediately returned the historic ball back to Jeter, and in return, the Yankees rewarded him with luxury suite tickets for the remainder of home games that season (valued at $32,000), autographed balls, bats, and jerseys, and a 2009 World Series ring (http://www.nydailynews.com/sports/baseball/yankees/guy-caught-derek-jeter-3-000th-hit-no-zack-hample-article-1.2265253).

The man who caught Rodriguez' ball, Zack Hample, is not your average baseball fan. Hample is a professional baseball snatcher, having caught approximately 8,000 baseballs throughout many Major League Baseball (MLB) games. He even has his own website where he updates his latest ball-hawking exploits (http://zackhample.mlblogs.com/2015/06/20/a-rods-3000th-hit/#comments). Further, Hample has refused to give Rodriguez the baseball despite Yankees personnel trying to negotiate with him by offering a plethora of merchandise and publicity. Shortly after seizing the ball, Hample stated, "[Rodriguez] will not be in possession of this ball tonight, unless he personally mugs me outside on 161st Street." (http://www.nydailynews.com/sports/baseball/yankees/famous-ballhawk-snags-a-rod-3-000th-hit-won-return-article-1.2264699).

As expected, Rodriguez was disappointed that he would not be receiving the historic ball. "The thing I was thinking about is, where's [Jeter's] guy," said Rodriguez after the game. "The guy that caught [his] ball? That's the guy that I needed here. Where is that guy? I wasn't so lucky." Some Yankees fans were also upset, including Bald Vinny, the leader of the Yankees fan group the "Bleacher Creatures". He proclaimed, "That guy sucks. He pushes little kids out of the way. He is the worst ever. That guy is the worst ever. There is literally-- nobody worse could've gotten that home run ball than that [expletive] guy." (http://www.nydailynews.com/sports/baseball/yankees/famous-ballhawk-snags-a-rod-3-000th-hit-won-return-article-1.2264699).

While fans have discussed among themselves as to whether they would return the ball to Rodriguez, others have mentioned that Hample should return it, as he is not truly the rightful owner. Whomever owns the ball is likely to make a pretty penny if he or she decides to sell it. This ball does have tremendous value, as one auctioneer estimates that Rodriguez' ball could be worth $500,000 (http://www.foxsports.com/buzzer/story/alex-rodriguez-zack-hample-3000-hit-ball-062315). Other historic balls have been bought for even higher prices (http://www.forbes.com/sites/davidseideman/2014/04/13/historic-home-run-balls-keep-smashing-auction-records/), including Barry Bonds' record-breaking 756th home run ball that was sold for $752,467 about 10 years ago (http://www.nytimes.com/2008/07/02/sports/baseball/02ball.html?_r=2&).

Hample does not technically have to return the ball to Rodriguez, the Yankees, MLB, or anyone else. While there is no true legal doctrine on the ownership of home run balls, it does seem that Hample is likely the legal owner this one.

There is very little case law on these types of situations, but in 2002, the Superior Court in San Francisco County (California) decided a similar issue regarding the ownership of Barry Bonds' record breaking 73rd home run, which set the mark for most home runs in a season. In Popov v. Hayashi, the issue regarded which fan (Popov or Hayashi) gained rightful possession to the milestone home run ball when one man caught it, but the ball was knocked out and rolled over to another man. While the Rodriguez-Hample situation is different, the court did lay down some legal principles, though while not binding in New York, can help us figure out ownership under these circumstances.

First, it was agreed the before the ball was hit, MLB owned it, and that once the ball was hit it became intentionally abandoned property. Therefore, the person who came into possession of this abandoned property became the new owner. (Popov, 2002 WL 31833731, at *3.) Second, the court formulated a definition of possession under baseball circumstances. It stated that the legal question in this situation is whether the person "did enough to reduce the ball to his exclusive dominion and control. Were his acts sufficient to create a legally cognizable interest in the ball?" (Popov, 2002 WL 31833731, at *4.)

Here, in accordance with the Popov court's ruling, the ball became abandoned property when it was hit by Rodriguez. In addition, since Hample reduced the ball to his exclusive dominion and control and created a legally cognizable interest in the ball when he caught and held onto it, and then had it authenticated by MLB officials, he became its new owner. Therefore, under the principles set by Popov, Hample has the right to do whatever he wants with the ball.

However, some may argue that the person who hit the ball is the rightful owner, since he is the reason why that specific ball is so valuable, and without the hitter, the ball has no significance. This argument has been made by Professor Steven Semeraro, who stated that the doctrine of accession applies to these types of milestone situations. This is so because when the batter "combines his labor with an ordinary baseball owned by the home team to create a ball worth potentially thousands or even tens of thousands of times the value of the original ball . . . This increase in value is more than sufficient to trigger the doctrine of accession." (Steven Semeraro, An Essay on Property Rights in Milestone Home Run Baseballs, 56 SMU L. Rev. 2281, 2293-94 (2003).)

Professor Semeraro also argues that a home run ball cannot be abandoned property since it doesn't satisfy the legal elements of abandonment, mainly that the home team did not have the intent to abandon the ball. (Id. at 2286.) Further, he discusses that allowing fans to keep milestone baseballs goes against competing common baseball practices. (Id. at 2290.) For example, Professor Semeraro notes that when a pitcher strikes out his 3,000th batter, the home team gives him the ball. (Id. at 2291.)

These issues have also been discussed by Professor Paul Finkelman, who has taken an opposing stance to Professor Semeraro in a law review article entitled "Fugitive Baseballs and Abandoned Property: Who Owns the Home Run Ball?" In the article, Finkelman argued that the batter has the weakest claim to the ball. (Paul Finkelman, Fugitive Baseballs and Abandoned Property: Who Owns the Home Run Ball?, 23 Cardozo L. Rev. 1609, 1611 (2002).) Here, he analyzes this situation under traditional property law, the "common law of baseball," and contract law associated with purchasing a ticket. In doing so, Finkelman notes that the batter "never had [the ball] in the first place; did not want it; and used all his might and skill to make it go away." (Id. at 1612.) He further compares the idea of the batter increasing the value of the ball to that of art, an autograph, a discovery, or an invention, noting that the connection between the batter and the ball is more similar to a celebrity's connection to a place or event. Finkelman uses the example of an inn that claims that "George Washington slept here," which, he argues, does not give Washington (or his heirs) property claims in the inn. (Id.)

As seen by the stances taken by these two professors, legal minds have different opinions on this specific issue. While there is no clear-cut answer to this question, one must also look to the common practices among MLB teams. Many not only allow fans to keep home run balls (http://newyork.mets.mlb.com/nym/ballpark/information/index.jsp?content=guide), but some openly promote it (the Arizona Diamondbacks allow those "who catch D-backs' home run balls arrange to have the ball autographed by the player who hit it." http://arizona.diamondbacks.mlb.com/ari/ballpark/information/index.jsp?content=guide). It essentially seems that, along with statements like the one made by the Diamondbacks, once a patron buys a ticket, there is a binding contract between the person and the franchise that allows the person to keep any ball to come out of play. This notion is even seen by Professor Semeraro as the patron's strongest argument. (See Semeraro at 2292-93.) However, he does note that this claim is different when a milestone ball is at issue, proclaiming, "one should not extrapolate an agreement contemplating $12 souvenirs to extremely valuable pieces of memorabilia. Is a ball a ball when the value differs by a factor of 10,000?" (See Semeraro at 2292.)

Yet what is the definition of a milestone ball? Some balls are small milestones and some balls don't become valuable until many years later. Does it depend on projected value? If so, what is the cutoff number? While Professor Semeraro makes a strong argument, it is difficult to know what constitutes a milestone ball. Basically, any ball hit out of play is up for grabs. If a team really wants to own a milestone ball, it must make it very clear before a game where a milestone can occur that the fans do not have the right to own the ball if anyone catches it. Figuring out how this could be done is another story.

So, what should the next player to reach 2,999 hits do when he is up next? Don't hit it over the wall. A chopper up the middle will do just fine. Oh, and make sure you know where Zach Hample (or Christian Lopez) is sitting, just in case you do hit a home run.

UPDATE: http://sports.yahoo.com/blogs/mlb-big-league-stew/alex-rodriguez-will-receive-his-3-000th-hit-ball-from-zack-hample-164901812.html.

June 30, 2015

Week In Review

By Chris Helsel

SiriusXM Settles Suit Over Pre-1972 Song Royalties

As astute Week in Review readers surely know by now, federal copyright protection for song recordings applies only to those created in 1972 or later. For that reason, digital radio services such as SiriusXM and Pandora have long escaped paying recording royalties for the golden oldies. However, that may all change in the wake of a settlement agreement reached this week between SiriusXM and a group of major record labels.

On Friday, the satellite radio provider announced that it would pay $210 million to Sony, Universal, Warner and Abkco (an independent company that owns rights to early Rolling Stones songs). The settlement concludes a major California state court suit that followed on the heels of a similar one brought by members of the 1960s band the Turtles, who sued in three federal courts under state laws in New York, California and Florida. The Turtles' suit, which was granted class action status, remains unresolved in New York and California, though SiriusXM was granted summary judgment in Florida this week.

The settlement, which was reached in June but only disclosed this week, covers SiriusXM's use of pre-1972 songs through 2017. Beginning in 2018, the company will negotiate new licenses for the use of the old tunes. The settlement also drastically decreases the size of the class in the Turtles' suit, as SiriusXM said in its filing that the labels and Abkco supplied around 80% of the pre-1972 songs it played.

The labels also have a similar case pending against the Iradio portal Pandora. Despite the SiriusXM settlement, Pandora has expressed its intention to continue its defense of declining to pay royalties on pre-1972 songs. "We are confident in Pandora's legal position on this issue," said the company in a statement.


Taylor Swift Speaks, Apple Listens

Apple's highly-anticipated new streaming service, Apple Music, is due for worldwide release this week. The service, which will compete with mostly-free music streaming platforms such as Spotify and Rhapsody, will include a $10 streaming subscription plan, a free Internet radio station and a media platform designed to allow artists to upload songs and other content for fans, in addition to direct access to the iTunes download store.

Despite the obvious appeal of such a comprehensive and innovative service, its impending release caused dismay among many within the music industry due to the company's announcement that it would not be paying any royalties to artists during Apple Music's trial period.

Among those upset with this news was multi-platinum record selling and seven-time Grammy Award winner Taylor Swift. The 25-year-old singer-songwriter, whom Forbes named the 65th most powerful woman in the world earlier this year, took to the social media site Tumblr to air her grievances. In a letter posted last Sunday morning entitled "To Apple, Love Taylor," she sharply criticized the company's royalties policy and announced that she was withholding her latest album, "1989," from Apple Music. Ms. Swift made it clear that she was speaking not only for herself, but also for countless other musicians who were too afraid to speak out against the tech titan.

In her letter, Ms. Swift, who also pulled her music from Spotify last year in a similar royalties dispute, called Apple's stated policy "shocking, disappointing and completely unlike this historically progressive company. We don't ask you for free iPhones," she added. "Please don't ask us to provide you with our music for no compensation."

Not even 24 hours later, Apple (which even prior to the new service's release is already the world's biggest music retailer) completely changed its course. In an interview last Sunday night, Eddy Cue, Apple's senior vice president of Internet software and services, said, "When I woke up this morning and read Taylor's note, it really solidified that we need to make a change." The company confirmed that it will now pay full royalty rates for music during the free trial.

Prior to succumbing to Ms. Swift's letter, Apple's original policy called for a royalty-less three-month free trial, after which time the company would pay a rate slightly higher than industry standard - 71.5% of sales, compared to the usual 70%. This plan outraged (and terrified) many record executives, particularly at smaller independent labels with thin margins, as the prospect of surrendering a large chunk of royalties for three months could have spelled financial ruin.

Instead, thanks to the efforts of Ms. Swift, Apple now plans to pay full royalties to both record companies and music publishers for the use of music during the trial period. While Apple declined to reveal how much money the added royalty payments would cost the company, it did receive a bit of good news later in the week: Ms. Swift's entire catalog - including "1989" - will be available on Apple Music.

Following his announcement, Mr. Cue took to Twitter to address the policy change: "We hear you @taylorswift13 and indie artists. Love, Apple."

An hour later, Ms. Swift responded in kind, much to the delight of her nearly sixty million Twitter followers: "I am elated and relieved," she wrote. "Thank you for your words of support today. They listened to us."


Justin Bieber and Usher Face "Blurred Lines"-esque Copyright Suit

A federal appellate judge in Virginia ruled last week that the trial court erred in dismissing a 2013 copyright claim brought against pop musicians Justin Bieber and Usher T. Raymond IV (known professionally as simply Usher) over their 2010 hit, "Somebody to Love."

The plaintiffs, Devin Copeland a/k/a De Rico and his songwriting partner, Mareio Overton, alleged that Mr. Raymond had been played an early version of their song of the same title, which was written in 2008. According to the suit, which seeks $10 million in damages, Mr. Raymond then played the song for young Mr. Bieber, who soon thereafter recorded a substantially similar tune without the songwriters' permission. The song, which is apparently unrelated to the same-named classic tunes by Jefferson Airplane and Queen, originally appeared on Mr. Bieber's 2010 debut album and a remix featuring Mr. Raymond that was released later that year climbed to No. 15 on the Billboard chart.

Last year, a trial court judge dismissed the case after finding that the two songs sounded considerably different. Judge Pamela Harris of the Fourth Circuit wasn't so sure, however, and held that the two songs' "choruses are similar enough and also significant enough that a reasonable jury could find the songs intrinsically similar." Judge Harris also demonstrated her music critic chops in declaring that it was irrelevant that the versions released by Mr. Bieber and Mr. Raymond were "dance pop, perhaps with hints of electronica" while Mr. Copeland's recording was "squarely" R&B.

In any event, the determination of whether the defendants illegally copied elements of the plaintiffs' recording is now up to a federal jury.

In a similar dispute decided recently, a federal jury sitting in Los Angeles found that Robin Thicke and Pharell Williams improperly incorporated elements of the 1977 Marvin Gaye number "Got to Give It Up" into their 2013 mega-hit "Blurred Lines." The Gaye family was awarded $7.3 million in damages. If the allegations against Mr. Bieber and Mr. Raymond are indeed true, the plaintiffs' claim could be even stronger than that of the Gaye family's, considering the fact that Mr. Copeland's representatives allegedly brought "Somebody to Love" directly to Mr. Raymond and the two songs' lyrics overlap considerably.

Regarding Judge Harris's decision in the instant case, plaintiffs' attorney Duncan Byers celebrated the ruling, telling the media that the appeals court "recognized what my clients have said all along: It's the same melody and the same chorus."


Comic-Con Finally Demonstrates Willingness to Defend Trademark Rights Against Increasing Number of Similarly-Named Rival Fantasy Conventions

San Diego's Comic-Con International, popularly known as Comic-Con, commences once again this week in Southern California. Since 1970, the convention has brought together enthusiasts of a variety of fantasy genres, including graphic novels, superhero movies, video games and animation. The exploding popularity of the event has spawned a plethora of imitators across the globe, and Comic-Con's legal team has only recently begun actively defending its trademark in the courtroom.

Interestingly, although the convention has used the "Comic-Con" name since 1970, San Diego Comic Convention (the nonprofit that operates the event) did not formally register the trademark in the name until 2007. The belated move came after numerous competing conventions with similar names - many of which are operated for profit - began popping up across the country and even overseas. One such competitor, New York Comic Con (note the lack of a hyphen), became the first comic book convention in North America to draw more attendees (151,000 to 130,000) than the San Diego original last year.

Despite Comic-Con's delay in registering the mark, its attorneys correctly point out that registration is not required to protect a trademark. Historically, the nonprofit has been hesitant to bring suit to protect its trademark, with litigation used only for "the most egregious cases."

Recently, however, one competitor went too far, and the San Diego group brought action. The nonprofit sued the operators of Salt Lake Comic Con for infringement last August after the group drove Audis decked out in advertisements for the Utah convention through the streets of San Diego. Rather than back down, Salt Lake Comic Con countersued, asking the Southern District of California to declare the San Diego nonprofit's trademark claims invalid. The litigation remains active.

As the original Comic-Con continues to grow in both size and star-power (in recent years, Hollywood studios have spent lavishly to use the platform to promote superhero blockbusters and the like), it should come as no surprise that more imitators continue to sprout up with each passing year. Further, given the nonprofit's recently demonstrated willingness to defend its mark in the courtroom, I should think we can expect a hike in related litigation as well.


Oracle v. Google

Yesterday, on June 29th, the Supreme Court denied cert in Oracle v. Google. There was no opinion. Therefore, it will be remanded back to the district court regarding the fair use issue, pursuant to the Circuit opinion.

MMA Remains Illegal in New York

By Daniel S. Greene

Mixed Martial Arts (MMA) supporters in New York thought that this was the year they would go the distance-- the year when MMA would finally be legalized in the Empire State. Yet once again, the bill legalizing MMA in New York failed, leaving the state with the World's Most Famous Arena (Madison Square Garden) as the only place in North America where professional MMA is illegal (http://www.newsday.com/sports/mixed-martial-arts/mma-in-new-york-a-timeline-of-events-1.5515307). "It boggles your mind," said Brandon Muecki, a manager of the Buffalo Brazilian Jiu-Jitsu Academy in West Seneca, New York. "Take a strict religious state like Utah. Legal. Montana. Legal. Florida, Hawaii, it's all legal. But New York state . . . you have an event at Madison Square Garden or at the First Niagara Center, that's gonna generate millions of dollars" (http://www.wgrz.com/story/news/politics/2015/06/26/mma-bill-fails-again/29310161/).

New York enacted the Combative Sports Ban in 1997 (the Ban), prohibiting any "combative sport" within the state's boundaries. While the term "combative sport" included MMA, it excluded boxing, wrestling, judo, karate, and tae kwon do. (N.Y. Unconsolidated Laws, Section 8905-a). In the hearings held by the New York State Legislature leading up to the Ban of "extreme fighting," those in support of the bill based their disapproval of the sport on two reasons: "(1) MMA fights posed a health and safety risk to fights, and (2) MMA fights undermined public morals and had a negative influence on New York youths" (Jones v. Schneiderman, 974 F. Supp. 2d 322, 328-29 (S.D.N.Y. 2013)).

In 2013, the Ban was challenged in federal court by prominent figures in the MMA community, alleging that the law violated the First Amendment, Due Process Clause, Equal Protection Clause, and Commerce Clause (Id. at 326). However, the Southern District of New York dismissed all but one of the plaintiffs' claims, holding that MMA was not expressive conduct or protected speech, the statute was neither overbroad nor vague facially or as applied to bar and gym owners, and did not violate the dormant Commerce Clause. While the court did not dismiss the plaintiffs' as applied vagueness challenges to the Ban, it later found in March 2015 that the plaintiffs did not have sufficient standing to bring their vagueness claim, essentially ending the challenge in court at that time. (See generally Jones v. Schneiderman, No. 11-CV-8215 KMW (S.D.N.Y. Mar. 31, 2015)).

Just a few months ago, the State Senate passed the bill ending the Ban of mixed martial arts for the sixth straight time. In addition, Assembly support seemed higher than ever, considering that former New York State Assembly Speaker Sheldon Silver, who has blocked the vote on the bill in the past, was no longer in power due to corruption charges (http://sports.yahoo.com/news/new-york-appears-close-to-legalizing-pro-mma--but-ufc-isn-t-celebrating-yet-221539557-mma.html). However, the bill never reached the Assembly floor for a vote on the last day of the legislative session on June 25th, which was surprising, since current Assembly Speaker Carl Heastie was its sponsor in prior years (http://www.reviewjournal.com/sports/mma-ufc/proposed-mma-bill-fails-again-new-york-legislature). All that was needed was 76 delegates of the 150-seat Democrat-controlled Assembly to vote "yes" (https://sports.yahoo.com/news/mma-denied--new-york-legislature-once-again-acts-like-loons-211821728.html). On the last day of the legislative session, the bill's sponsor, Majority Leader Joseph Morelle (D-Irondequoit), noted that his biggest challenge to getting the bill passed that day, despite the support, was "that a number of members who are counted as supporters were just unavailable . . . because of the of the scheduling, that we weren't expected to be here this long" (http://polhudson.lohudblogs.com/2015/06/25/mma-expected-to-falter-in-assembly/?utm_source=dlvr.it&utm_medium=twitter). In the end, there was not enough support and the bill lifting the Ban failed.

The major question among New York MMA fans is why hasn't the State legalized this sport, one that is one of the fastest growing in the United States? For starters, some people, including Assemblywoman Deborah Glick (D-Manhattan), find the sport to be extremely barbaric, noting that MMA is all about inflicting the most amount of harm on the opposition (http://www.newsday.com/sports/mixed-martial-arts/mma-bill-faces-familiar-foe-the-new-york-state-assembly-1.10116493). Further, some find MMA to be "anti-woman," which is a bit peculiar since Ronda Rousey, the undefeated UFC Women's Bantamweight Champion, is arguably the biggest name in the sport today and has lobbied for support of the bill in Albany (http://www.reviewjournal.com/sports/mma-ufc/proposed-mma-bill-fails-again-new-york-legislature).

In another issue, the Ultimate Fighting Championship (UFC), the biggest MMA promotion company in the world, believes the lack of support is partly due to Las Vegas Culinary Union Local 266 (the Union) using its "political muscle" to block the legalization of MMA in New York. The theory is that the Union, which represents workers in the Las Vegas hotel and restaurant industry, is afraid that it would be losing money, since more fights would be taking place in New York (http://www.reviewjournal.com/sports/mma-ufc/ufc-president-blames-culinary-union-blocking-mixed-martial-arts-new-york-state). When Silver was arrested on corruption charges in February, many MMA supporters believed that their suspicions about the Union were actually true.

Just by looking at the reasoning and arguments for why this bill was not passed, it is remarkable that MMA still remains illegal in New York. First, on the argument that the sport is brutal and barbaric, it should be noted that boxing, a similar and equally brutal sport, is legal in the state. While MMA has been banned in New York since February 1997, boxing has been a legally sanctioned sport for many years. In addition, in the 23-year existence of the UFC, there have been no fatalities That is not a claim that boxing or football can make (https://sports.yahoo.com/news/mma-denied--new-york-legislature-once-again-acts-like-loons-211821728.html).

Further, there are numerous MMA matches that take place in New York, but they are unregulated amateur and underground pro matches. This makes an already dangerous sport even that more unsafe. With a lack of regulation, there are no medical exams of the fighters before or after matches, no drug testing, unqualified referees, no emergency personnel at events, and no pregnancy testing for female participants (http://sports.yahoo.com/news/new-york-appears-close-to-legalizing-pro-mma--but-ufc-isn-t-celebrating-yet-221539557-mma.html). Since the New York State Athletic Commission has no power to halt these unsanctioned fights, and with no alternative to see MMA in the State, these risky events will continue to take place. Therefore, the danger of the sport argument is a relatively weak one, and the complete opposite argument actually holds stronger. In order to make the sport safer in New York, the bill must pass so that it can be regulated.

With the arguments about barbarism and sexism of the sport being relatively weak, what else is holding back the State Assembly? This leaves us with the corruption allegation. While there is no way know if there is corruption here a this point, it is curious why the vote hasn't even reached the floor. For instance, just a few days ago, the New York legislature and Governor Andrew Cuomo passed a bill declaring July 29th as "Chicken Wing Day" (http://sports.yahoo.com/news/mma-denied--new-york-legislature-once-again-acts-like-loons-211821728.html). I love chicken wings as much as the next New Yorker, but it's odd that voting on a bill about chicken wings was more important than voting on the legalization and regulation of a popular sport that would generate about $70 for the New York economy (http://www.wgrz.com/story/news/politics/2015/06/26/mma-bill-fails-again/29310161/). Yahoo Sports columnist Kevin Iole has proclaimed that this process has shown "the seamy underbelly of state politics" (http://sports.yahoo.com/news/mma-denied--new-york-legislature-once-again-acts-like-loons-211821728.html).

New York MMA fans will have to wait at least another year for the sport to arrive in the sports capital of North America, which is extremely disappointing, since UFC 194 was slated to take place in December at Madison Square Garden (http://www.newsday.com/sports/mixed-martial-arts/ufc-reserves-december-date-at-madison-square-garden-in-case-mma-becomes-legal-in-new-york-this-year-1.10280488). Yet this is not the end of the fight, as UFC refuses to tap out. "We're a fighting organization and we're going to keep fighting," said Marc Ratner, Vice President of UFC. "We're not going to give up. It's still a question of when, not if" (http://www.nydailynews.com/news/politics/mma-supporters-fail-legalize-sport-assembly-wraps-article-1.2272107). There seems little holding the passage of the bill back at this point, so don't be surprised if the Empire State catches up with the rest of the continent very soon.

About June 2015

This page contains all entries posted to The Entertainment, Arts and Sports Law Blog in June 2015. They are listed from oldest to newest.

May 2015 is the previous archive.

July 2015 is the next archive.

Many more can be found on the main index page or by looking through the archives.