In court cases involving professional sports, there may not be one in recent memory that will have the impact that CBC Marketing Inc. and the MLB Players’ Association and MLB Advanced Media is currently engaged in. CBC owns CDM Fantasy Sports, a fantasy sports company at the heart of the legal case.
In the simplest of terms, the case revolves around how the fantasy sports industry is able to use statistics in conjunction with MLB player names. The “Fantasy Stats” case, as it has been coined, will impact how rights of privacy, the First Amendment, and contractual obligation is interpreted. MLB, and other professional sports leagues that have filed supporting briefs, believe that by using a player’s name with their statistics, the player is being exploited. CBC has countered that name with the statistics is information protected by the First Amendment.
It also impacts revenues for both fantasy sports companies, and professional sports leagues looking to capitalize on the fantasy game frenzy. Online fantasy sports now constitute a billion-dollar industry, with between 15 and 18 million unique players participating every year in fantasy baseball or football, according to the Fantasy Sports Trade Association.
Rudy Telscher, with Harness, Dickey & Pierce, P.L.C. is CBC’s attorney in the case. Given the impact of the case (read from our Fantasy Stats Case section), the Biz of Baseball caught up with Telscher for this interview. It should be noted that the case is still not fully closed, and that the Business of Sports Network would like to present the opposing view of the case by way of the MLBPA and MLBAM to provide a balanced view of this important case. – Maury Brown
Maury Brown for the Business of Sports Network: The C.B.C. v MLBAM/MLBPA case has been referred to in some circles as "David vs. Goliath". How were you approached on the case, and what are the intriguing aspects of it?
Telscher: There is no question that this was a classic David vs. Goliath. Major League Baseball Players Association is a wealthy organization that staffed the case with multiple large national firms. The Players Association took a very aggressive approach, insisting that our client simply get out of the business. Further, if our client had lost, it would have meant that about 100-200 fantasy companies would have gone out of business. These are the same companies that helped build this industry to what it is today.
Bizball: With the 2-1 one ruling in favor to uphold the lower court's summary judgment, you gain yet another victory for CBC. Yet, even the judges ruling in favor raised concerns regarding CBC contractual obligations being broken. If for some reason the Supreme Court were to say that the case was certworthy, do you feel that the first amendment would continue to trump that aspect?
Telscher: The 8th Circuit's ruling is a major victory for our client, the 100 plus companies that built the fantasy industry and continue to run businesses that provide fantasy services (they would have gone out of business had we lost), and the fans who will not have to pay monopoly pricing and will greater alternative game formats that necessarily arise in a highly competitive market (imagine how few alternatives a consumer would have in the car market if there were only one or two manufacturers).
The 8th Circuit was unanimous that the First Amendment trumps player rights of publicity. Judge Colloton only dissented on the contract issue. That issue is specific only to whether CBC had the right to challenge MLB's rights, not whether the First Amendment trumps player rights of publicity. That issue is irrelevant to the overall issue and those companies that did not sign contracts with MLB.
I think the only reason the Supreme Court would take this case is if it is interested in the interplay between the First Amendment and state law rights of publicity. It has only decided one case in that area before and that was back in the 1970s. I doubt the contract issue will be enticing to it, especially given that the 8th Circuit ruled on state contract interpretation principles and not under federal preemption (the Supreme Court case of Lear v. Adkins).
Bizball: Was there a conscious effort by C.B.C. to sue before being sued, knowing that in doing so Missouri state law would come into play as opposed to New York state law?
Telscher: CBC did not pick Missouri because of any legal difference. When the Players Association refused to grant it a license to operate its fantasy games, it had no choice but to sue to have its rights declared. CBC is based in St. Louis and that is why St. Louis was picked as the place to bring the lawsuit.
Bizball: Many have asked what the difference is between how information on baseball cards differs from the information that is provided through fantasy sports companies. Can you describe the difference?
Telscher: I think that fantasy’s use of baseball statistics is more akin to a newspaper because newspapers and fantasy provide and use the mass statistics for all athletes, not just some as with baseball cards. That said, baseball cards provide the same information as newspapers and I would think that baseball card manufacturers should receive the same First Amendment protections for their information products as do newspapers. I would not be surprised to see baseball and other sports get challenged on this point.
Bizball: While the case has focused on statistics and their use, the real issue at hand has been about the use of player names in association with the statistics. From your point of view, is that truly the case, or would any case involving information that is readily available via a host of mediums by way of boxscores, etc. never find the light of a courtroom?
Telscher: I interpret your question to be whether the resolved issue in this case has broader implications. In our case, the 8th Circuit affirmed the district court's decision that the use of publicly available statistics in fantasy games, even though it uses, by definition, the names of the players is protected by the First Amendment and supersedes any rights of publicity that the players might otherwise have. Similar situations already exist. For example, asking questions about the movies of Brad Pitt or Jennifer Aniston involve the use of their names and associated data/accomplishments in a game for profit as used in Trivial Pursuit and Jeopardy. So does Las Vegas' practice of betting on the accomplishments of individual players performances during a specific game. The broader holding of the case is legitimately interpreted to be that use of historical information that relates to famous people in any way they see fit (there may be some limits depending on individual fact patterns) is protected by the First Amendment.
Bizball: What preparations, if any, are you and C.B.C. doing now that the 8th Circuit has affirmed the lower court ruling?
Telscher: The Players Association and Advanced Media (the owners group) have both filed petitions for rehearing and rehearing en banc. These petitions are rarely granted. After that, the Players Association can file a petition for Supreme Court review, which is also rarely granted. Until it exhausts those final avenues, the case is not final. When the process is final, all of the fantasy industry will be able to operate fantasy games without the Players Association interfering.
Bizball: If MLBAM/MLBPA decides to drop the case, or the Appeals Court or Supreme Court decide not to take the case, how will it impact the fantasy sports industry?
Telscher: The 8th Circuit decision stands for the proposition that use of player statistics in fantasy is protected under the First Amendment. MLB would be bound by the decision and could not ever relitigate it. The implications of the decision extend to any fantasy sport though. The only caveat is that the NFL could sue some company in another circuit, for example, the 2nd Circuit in New York, and as a matter of federalism, the 2nd Circuit is not technically bound by the 8th Circuit's decision. It would be possible, although not likely in my view, that the 2nd Circuit could resolve the First Amendment issue differently than the 8th Circuit. If the latter did occur, however, the odds of the Supreme Court taking the case (split in the Circuits) would go way up. Given that the 8th Circuit's decision is consistent with some similar type cases (Cardtoons, Gionfriddo, and ETW), I think the odds are that other Circuits will follow the 8th Circuit's lead, but there are no guarantees.
Bizball: Do you think that those companies that have licenses with MLBAM may now reconsider?
Telscher: Absolutely. Whether they can back out of those agreements and on what terms may be governed by the actual provisions, but most contracts would provide the ability to exit. Further, most contracts of this nature have relatively short terms and will therefore likely expire in the next year or so in any event. Given the ruling, I doubt that many, if any, companies will renew their contracts in the event that they cannot terminate immediately.
Bizball: Lastly, this will become key case law at some point, impacting not only Major League Baseball, but a host of other professional sports. What are your philosophical views on the outcome of C.B.C. v. MLBAM?
Telscher: The reasoning of professional players regarding why fans should pay them to play fantasy and why they should monopolize this industry is because they contend that their rights of publicity are being violated. Rights of publicity are designed to put more money into the pockets of professional athletes and famous people more generally. There are times when that is fair, for example, when a famous person is used to advertise and promote a product. With fantasy sports, however, consumers are not led to believe that professional athletes are endorsing the fantasy games. Everyone plainly knows that they are not. Thus, there is no legitimate reason to think that consumers should have to pay monopoly pricing to play fantasy sports, no more so than professional athletes should be able to charge for the use of their statistics in newspapers, which would drive up the cost of newspapers. Professional athletes played no part in building the fantasy industry and they should not be able to come in 25 years later and take over an industry that they did not build.
Interview conducted and edited by Maury Brown