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Volume 20 No. 41

Law and Politics

The NFL could pay $2.5 billion if it loses a federal class action lawsuit brought by retirees who say they were injured by concussions suffered from the sport, a league insurer recently told a New York state court. And that is on top of the hundreds of millions of dollars the NFL’s own lawyer told the same hearing the league might incur in legal costs, which would push the total outlay close to $3 billion.

While it’s generally been presumed the league’s potential liability, if it were to lose or settle the concussion case, could reach nine and perhaps 10 figures, the numbers suggested to the New York state judge last month represent the first time parties tied to the case have offered predictions.

NFL lawyer Paul Clement speaks outside federal court in Philadelphia, where the consolidated lawsuit over concussions is being heard.
Photo by: AP IMAGES
“If you take an average of $450,000 per claim, which is not an unreasonable amount when you’re talking about NFL players, many of whom are extremely well known, alleging severe and serious brain injuries, $450,000 is not the biggest amount in the world for those kind of damages,” Patton Boggs lawyer Larry Schiffer, an attorney for NFL insurer Alterra America, said during arguments last month in New York State Supreme Court over the insurers’ lawsuit seeking a ruling that the firm does not have to cover the NFL’s liability.

“And we’re not only talking about compensatory damages here,” Schiffer said. “We’re talking about … medical monitoring for the life of these people, plus punitive damages for intentional failures and things like that. So when you take $450,000 and you do the kind of math that we’ve been talking about, you get to about $2.5 billion.”

So far, more than 4,200 retirees have signed on to complaints, now consolidated in a single action in federal court in Philadelphia, alleging the NFL hid the risks of playing the sport. At $450,000 each, that comes to $1.89 billion, so the remaining $610 million would have to derive from punitive damages and medical monitoring costs. Schiffer did not respond to queries seeking further comment.

It is possible Alterra is motivated to offer a high figure. The insurer does not need to cover legal costs and is only responsible for excess liability, one source said. The NFL wanted Alterra’s case dismissed under the theory there is no actual controversy because the insurer at this point faced no such liability, but a high liability figure could ensnare Alterra and would save the case, a source said.

The NFL also is facing unprecedented legal costs. The NFL’s outside counsel, John Hall of Covington & Burling, told the court at the hearing that there could be “hundreds of millions of dollars in defense costs in this case.”
Hall declined to comment last week.

The NFL is already moving to get its insurers to pay defense costs, and they have done so to some degree, sources said, but not at the amount the league is seeking. The league also could look to the insurers to cover any liability assessed from the concussions litigation.

Lynda Bennett, chair of the insurance coverage practice at Lowenstein Sandler, said the figures proposed in court last month do not appear extreme.

“While the numbers are large, they are not particularly surprising to me given the fact that the underlying suits involve multiple players spanning a 45-year period,” she said. “In light of the $2.5 billion potential liability, coupled with the fact that this dispute is taking place on two coasts right now, the litigation expenses will certainly escalate.”

The NFL is seeking to move the insurance lawsuit to a California court, where the state’s laws are more amenable to policyholders.

The federal judge in Pennsylvania is expected to rule this summer whether to dismiss the concussion case, allow it to proceed, or let some of the lawsuit move forward. Under any scenario, appeals are expected.

A lawyer for the fans suing the NFL over the 2011 Super Bowl seating fiasco questioned whether Bill McConnell, a top league events executive, was in a “drunken state” the night before the game, according to a transcript of McConnell’s March 1 deposition, part of which was filed last week in Dallas federal court. The lawyer, Ahmed Ibrahim, asked the question after McConnell testified he did not remember sending an email that night that is key to the fans’ case.

The league’s lawyer took umbrage at the suggestion, underscoring the vitriol that’s seeped into the lawsuit.

“The purpose of you asking him if he was drunk … serves no permissible discovery purpose,” said Jonathan Pressment, an outside counsel for the NFL, speaking during McConnell’s deposition to Ibrahim, of the Eagan Avenatti law firm. Pressment interrupted Ibrahim repeatedly, according to the transcript, to prevent him from following up on the question of drinking.

“You think it’s an appropriate question to ask an executive if he’s drunk when he sent an email he doesn’t remember sending?” Pressment asked Ibrahim. “This man is an executive of the National Football League. … Have a little respect.”

At issue was an email McConnell sent the night before the game, in which temporary seats were not ready for thousands of fans. He testified that he did not remember it, leading to Ibrahim asking, “Are you in a drunken state when you write emails?” Soon after he asked him, “Sir, are you sober when you write emails?”

The email McConnell wrote to his boss, Frank Supovitz, said, according to Ibrahim, “But, as JJ said, let’s push what we want to do and deal with push-back when it comes.” JJ refers to Dallas Cowboys owner Jerry Jones, according the transcript, who Ibrahim argued was behind a move to set a Super Bowl attendance record and, as a result, let standards slip on the installation of seats.

The Cowboys are no longer a party to the lawsuit. The fans originally sued the team along with the NFL, but the court dismissed the team as a defendant.

McConnell told Ibrahim, “I can only guess as to what my motivation was for posing or attributing something to JJ when I can’t sit here right now to tell you with certainty that I knew or can.”

The tenor in the lawsuit has slipped noticeably. The NFL in February asked the court to sanction Ibrahim for walking out of a deposition. The league later dropped the motion after the judge held a hearing on the matter March 27 and “had some very stern words for Plaintiffs’ counsel regarding their improper conduct at this deposition,” according to an NFL filing last week. Also last week, the NFL asked the court to order Eagan Avenatti to pay for the cost of the most recent filings, which cover the NFL’s objection to the requested deposition of NFL Commissioner Roger Goodell. Twice the court has turned down the plaintiffs’ request, ruling Eagan Avenatti can return with a new motion for deposition if it can’t secure information from other executives. That’s the impetus behind the most recent effort to depose Goodell, to which the NFL replied.

“Given the absence of any legitimate basis upon which to demand the Commissioner’s deposition, it is clear that Plaintiffs’ only purpose in seeking the Commissioner’s deposition is to harass him,” the NFL motion said. “Indeed, if Plaintiffs’ questioning of the three NFL executives already produced for deposition in this action is indicative of the avenues of inquiry that Plaintiffs intend to pursue with the Commissioner, the Commissioner can expect to face irrelevant and patently inappropriate questioning.”

Michael Avenatti, a partner in Eagan Avenatti, did not respond for comment on whether Ibrahim was actually accusing McConnell of being drunk or using the suggestion to underscore a contention that it is ludicrous the executive could not remember the emails.