The City of Oakland has suffered another setback in its litigation against the NFL over the Raiders’ relocation to Las Vegas.
Last Thursday the Second District Court of Appeal for California affirmed the NFL’s demurrer (requested dismissal) of Oakland’s complaint on grounds the city is not a third party beneficiary of the NFL constitution. Oakland has therefore come up short in asserting state law claims that allege breach and unjust enrichment.
The ruling comes 10 months after the NFL agreed to pay the city and county governments of St. Louis, as well as the public entity that owns the Dome at America’s Center, $790 million to settle a lawsuit regarding the Rams move to Los Angeles. In contrast to the California judges who have reviewed Oakland’s case under California law, a St. Louis judge found those three government entities had standing under Missouri Law and had pleaded logical arguments.
The Oakland ruling also comes as the city has petitioned the U.S. Supreme Court to review findings by the Ninth Circuit and a district court that Oakland’s federal antitrust case is also without merit.
Oakland’s state lawsuit hinges on whether it is a third-party beneficiary, meaning a party that is outside a contract but nonetheless has a protected and enforceable legal interest in the contract being performed. The league and its teams, Oakland argues, illegally failed to consider 12 factors listed in the league’s relocation policy before authorizing the Raiders’ move. An obligation for a team to engage in “good faith negotiations” with local officials about remaining and affording those officials a “reasonable amount of time to address pertinent proposals,” is one factor.
Another concern is the “extent to which fan loyalty to and support for the club” has been demonstrated by the current community. Oakland insists it didn’t get a fair shake and that the league and owners were unjustly enriched to the city’s detriment.
The league firmly disagrees with the city’s legal arguments and factual assertions. The NFL contends Oakland is not a third-party beneficiary and that the city’s rights were determined by its lease agreement with the Raiders.
A trial court sided with the NFL, finding that the league’s relocation policy is a private contract and it neither confers enforceable benefits to host cities nor makes actionable promises to them. The trial court also reasoned that the relocation policy’s 12 factors “simply inform” teams for evaluating a proposed relocation and “there is no affirmative promise or duty to consider those factors.”
Writing for a three-judge appellate panel, Associate Justice John Segal agreed that Oakland’s case lacks a viable theory. Segal offered a detailed history of the NFL’s relocation policy, which was issued “on the heels of proposed legislation that would have removed the League’s autonomy in making relocation decisions.” A revised policy came about following antitrust litigation over another Raiders move, the team going from Oakland to Los Angeles in 1982. Segal also explained how in 1996, the NFL and the U.S. Conference of Mayors issued a draft joint statement of principles that contemplated a “fair process” for evaluating franchise relocation requests.
Segal reasoned that while the relocation policy did intend to benefit host cities, “it does not follow that the [NFL and teams] reasonably expected host cities to be able to enforce the policy.” To that end, he stressed the legal distinction between a contract that may intend to benefit an outsider and the outsider gaining a right to enforce that contract.
Interestingly, the St. Louis litigation advanced much further on a similar argument that government entities, as third-party beneficiaries, could sue the NFL and its teams over the Rams relocation. The Rams case settled two months before a trial that would have featured Roger Goodell as a witness, but the presiding judge refused to dismiss the case upon the league’s urging that the government entities, as third parties, could not sue over a relocation policy that governs the league and its teams but not others.
The Rams and Raiders litigations featured differences in facts and state laws and, possibly of greatest significance, different judges.