NFL CONCUSSION LAWSUIT SETTLEMENT TO REACH $1 BILLION
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On April 22nd, 2015, a federal judge approved a settlement agreement that is expected to cost the NFL $1 billion over 65 years to resolve thousands of concussion lawsuits. The NFL will welcome the court’s approval, coming a week before the NFL draft, allowing it to draw a line under a four-year litigation and re-focus on growing its global brand and revenue stream.
Background
On January 31, 2012, several individual lawsuits against the NFL were consolidated into one master case known as In re National Football League Players’ Concussion Litigation. The master lawsuit claimed negligent conduct and fraudulent concelament on the part of the NFL, resulting in neuro-degenerative disease and injury to professional football players. In the amended complaint the players' claimed that “the NFL has been aware of the growing body of scientific evidence and its compelling conclusions that professional football players who sustain repetitive MTBI (Mild Traumatic Brain Injury) during their careers are at greater risk for chronic neurocognitive illness and disabilities both during their football careers and later in life. “
Approximately 6,000 of the league’s 20,000 retired players were a part of the master lawsuit against the NFL. The alleged breach of the NFL’s duty of care to its players concerned the NFL’s failure to disclose the known risks of repeated concussions to players who returned to the field.
Among the plaintiffs were star footballs, unknown players and the spouses of retired and deceased athletes. Each of them claimed compensation for pain, suffering and related expenses (primarily medical), which was argued they would have never incurred had the NFL acted responsibly and revealed the information it possessed.
Given the popularity of the NFL, the lawsuits sparked national interest, which led to debate and research about the health dangers of football-related head injuries. Many felt the NFL litigation had the potential to reach the scale of the tobacco litigation of the 1990’s, with which it shares many similarities. Like the tobacco litigation, there can be no dispute the players knew playing football was dangerous, but the plaintiffs questioned what exactly the NFL knew. The litigation had such wide implications it placed huge uncertainty over the future of the NFL.
The NFL responded to the lawsuits by filing a motion to dismiss the claims, relying on a federal employment pre-emption defense. The argument being that the plaintiffs’ action “is a labor dispute, the resolution of which depends upon an interpretation of the terms of the applicable CBAs (Collective Bargaining Agreements)”. The CBAs require arbitration to resolve an employment dispute, which is a significantly less costly process. The NFL also argued that the plaintiffs had failed to properly state a claim and that the suits were time-barred (not filed within the appropriate time limit).
The NFL’s defenses were strong enough to make many independent legal commentators feel that the plaintiffs’ case would fail, which of course gave the NFL significant bargaining power.
The settlement
Under the terms of the settlement, awards could reach $1 million to $5 million for those diagnosed in their 30s and 40s with Parkinson’s disease or Lou Gehrig’s disease, or for deaths involving chronic brain trauma. NFL representatives say the average individual award is likely to be about $190,000.
U.S. District Judge Anita B. Brody approved the settlement after twice sending it back to lawyers after reservations the proposed fund of $765 million might run out. Those negotiating the settlement did not increase the original $765 million proposal, but agreed to remove that figure as a cap. NFL general counsel Jeff Pash said that Judge Brody’s approval of the settlement “powerfully underscores the fairness and propriety” of the landmark agreement.
The settlement means the NFL does not have to disclose what it knew about the risks and treatment of concussions, so the public may never find out just how culpable the league was in ignoring the consequences of head injuries. However, the NFL has committed to addressing the concussion epidemic publicly, agreeing to changing protocols for evaluating injured players during games and launching an advertising and social media campaign to promote safe play at all levels of football.
Is this a fair settlement?
Despite the size of the settlement, critics believe the NFL is getting off lightly given that the league generates annual revenues of approximately $10 billion. To put the NFL’s revenues in perspective, the league generates more money than the annual GDP of 54 countries (as reported by the IMF in 2014). But should a company’s annual revenue be a factor in establishing a fair amount of compensation?
Many feel that the NFL’s decision not to disclose the damaging effect the game had on its players should have resulted in a far heavier penalty, whether in terms of additional compensatory awards to the players or a fine for the NFL. $1 billion over a 65-year period is unquestionably small change to the league, but it is the figure that both parties to this dispute have negotiated and agreed.
The NFL was able to use the delay of a trial as leverage during its negotiations. The league and the retired players knew that a failed settlement would lead to a trial, delaying financial awards and medical treatment for several years. With many of the retired players, and their families, requiring financial support and urgent medical testing, there was great incentive for them to reach a settlement with the NFL.
That said, like most lawsuits of this scale, a trial would represent years of costly litigation and even Justice Brody made reference to the fact that the ex-players’ lawsuit faced an uncertain prospect of success. With this in mind, and the fact that several of the players may not have much time left, given the nature of the diseases from which the suffer, the settlement is seen by some as a positive and sensible outcome. Ex-players can receive the treatment they need immediately and can enjoy their remaining years with their families without the stress of litigation.
Has the lawsuit hurt the NFL?
Amazingly, despite the several years of media and legal focus on the health risks and inadequate safety protocols, the NFL, and football as a sport, remain as popular as ever. Statistics show that there has only been a slight decline in the number of high school students playing football. Perhaps more surprising is that only 5 percent of parents polled last summer by Associated Press-GfK (public opinion polling) said they have discouraged their child from playing in the last two years as concern over head injuries has increased.
According to Forbes, the NFL is the highest-grossing sport league in the world. In 2010, NFL Commissioner Roger Goodells set the ambitious goal of the league generating $25 million by 2027. This was seen as fanciful at the time, but with talks of expanded playoffs, larger television deals and an NFL franchise in London, record making profits look set to continue.
What can we learn from this high-profile litigation?
From a legal perspective, the dispute highlights the responsibility of companies, associations or private individuals, to carefully consider the duties of care they owe and the steps they need to take in order to discharge that duty. In the case of the NFL, it concerned the disclosure of information highly relevant to the health and safety of professional athletes to whom they owed a legal responsibility. But the importance of the disclosure of information in any industry could be just as damaging. For example, there may be significant liability for failure to disclose the potential negative effects of a new drug in the pharmaceuticals industry or failing to disclose the risks associated with a financial investment scheme within the banking industry.
This is a landmark lawsuit in which the NFL ultimately chose to remove the risk and uncertainty of litigation that had the potential to not only result in a substantial damages award, but could have led to irreparable harm to a brand that generates billions. By ensuring that it does not have to disclose what it actually knew about the effect head injuries had on the league’s players, the NFL has protected itself and its image from further media scrutiny, the potential backlash of it’s worldwide fan base and most importantly its commercial sponsors.
Despite the apparent strength of the NFL's defenses, credit should be given to the NFL's legal and PR team for managing and disposing of a lawsuit that could have had catastrophic consequences. This should be a lesson to other defendants who find themselves in high value and high profile lawsuits; where there is an exit route, even a very costly one, you should always look to preserve the future success of a marketable brand or product.
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