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Yankees’ New Phenom: Tanaka’s First Pitch was to U.S. Immigration Agency

By [Thursday, April 10th, 2014]

Tanaka

BY AUSTIN COHEN, NYLS 2014

Masahiro Tanaka was a star pitcher in Japan putting together an impressive resume where he went 99-35 with a 2.30 ERA in seven seasons with his Japanese team, striking out 1,238 in 1,315 innings. This baseball season, however, the 25-year-old Tanaka agreed to a $155 million, seven-year deal to be the new prize pitcher in the Yankees rotation. (And if last night’s performance is any indication, he’s going to shine with his new team.)

Pitching in New York City, and specifically for the Yankees, can be a very daunting experience. However, it gave Tanaka the greatest financial opportunity as well as the competitive opportunity to play against the world’s best players. In order to get Tanaka over to spring training so he could start his new career in pinstripes, the Yankees had to get a member of Congress to intervene and expedite his visa process. Tanaka also teamed up with his agent Casey Close and lawyers with expertise in immigration law in order to facilitate the process. When it comes to foreign ball players looking to come play in the MLB, it is advantageous for the ballplayer to work with experienced immigration law professionals.

When foreign ballplayers come to the United States they usually apply for a P-1A visa. An athletic team that employs a P-1A alien must show he or she is “internationally recognized,” which the United States Citizenship and Immigration Services (USCIS) defines as “having a high level of achievement in a field evidenced by a degree of skill and recognition substantially above that ordinarily encountered, to the extent that such achievement is renowned, leading, or well-known in more than one country.” The biggest obstacle international athletes face is the “internationally recognized” test set forth above. For several of these athletes, however, this test is easily met, as long as they are signing a contract with a team within the major sports leagues in the U.S.

P-1A visas are awarded for an initial period of five years, renewable once for a second five-year period. In Tanaka’s case he signed for a 7-year contract and will have an initial period of five years on the visa and then will have to apply for an extension in order to complete performance of his Yankees contract. Moreover,  the P-1A  visa holder may arrive temporarily into the U.S., intending to depart voluntarily at the end of the contract and are required to have a residence abroad that they don’t intend to abandon. However, one with a P-1A visa may lawfully seek to become a permanent resident of the U.S.

Although the visa category requirements are quite specific, most athletes who play for major and minor league sports leagues may qualify. The P-1A visa also has benefits, because there is no limit on the number of athletes for whom a team may petition, and there is no national cap on the number of athletes who may enter the U.S. This flexibility allows teams to easily add players from abroad, assuming they encounter no difficulties from the USCIS or relevant consulate during the actual petition process. However, in 2005 Baltimore Orioles pitcher Sidney Ponson was scratched from a scheduled start and was not allowed to pitch in a game until he obtained a valid P-1A visa. Ponson was at the time on a visa waiver program, which allowed Ponson the ability to conduct business and travel to the United States for leisure for a 90-day period, but was not allowed to earn a salary in the United States. On the advice of his counsel Ponson did not apply right away for a P-1A visa because he had assault charges pending in Aruba after an altercation in which he punched an Aruban judge in the face. Ponson could have applied for the visa, even with the charges still pending. However, in order to obtain the work visa, you have to meet with an official from a U.S. and he would have been required to reveal the details of the incident. His representatives worried that the official could deny the visa request without a resolution to the case.

Like other visas available to individuals seeking to enter the U.S., the process of obtaining a visa can be time consuming, complex and stressful. Processing a P-1A visa application can take up to 30 days. With Tanaka scheduled to report on February 14, it was possible he wasn’t going to make it on time. The Yankees filed a petition for Tanaka’s P-1 with the USCIS, and wanted faster-than-normal approval of his case. The Yankees called New York Senator Chuck Schumer because they were worried about the length of time it can take for foreign players to get a visa. Senator Schumer contacted USCIS on behalf of the Yankees and requested that the pitcher’s application be processed quickly. This is something he has done previously with the New York Mets as well, when they had a visa issue with all-star shortstop Jose Reyes.

Members of Congress cannot require that USCIS approve a particular applicant’s case. However, Members of Congress can influence these administrative agencies to expedite certain cases that are under review. For the everyday applicant, expedites are typically considered only for humanitarian or pressing medical reasons. But to please the hometown fans/voters, the New York senator used his influence on behalf of Tanaka in time for spring training.  Tanaka received his visa to report to spring training on February 14, and take the mound for the first time in Yankee Stadium on April 9.  As Senator Schumer stated “As a lifelong Yankee fan who is hoping for another World Series this year, I could not be happier.”

Northwestern University Football Players Can Unionize

By [Sunday, March 30th, 2014]

Read the National Labor Relations Board decision here. Read an analysis of the decision, and its impact on the future of college sports here.

Uncovering the Legal “Soul” Behind Boutique Fitness – Part II

By [Wednesday, January 8th, 2014]

BY NICOLE SCHWARTZ, NYLS ’14

Welcome to Part II of this two-part series on how boutique fitness studios flex their legal muscles.  See here for Part I.  Today’s entry discusses the legal issues raised by the studio-instructor and studio-customer relationships.

I.  TRAINERS WHO TAKE OFF ON THEIR OWN RIDE

equinox-fitness-club-logo1A. Legal Issues With Instructor-Employees

If you are a real boutique fitness aficionado, then you know that a web of incestuous relations exists. Your favorite Tracy Anderson instructor may or may not have been a Physique 57 instructor—and why not, the instructor’s fitness pedigree is confirmed. Stay tuned for the outcome of Equinox’s $40 million lawsuit against former trainers who opened Soho Strength Lab, 5 blocks away from their former stomping ground. Many successful boutique fitness businesses even have certification programs. Exhale offers a 200-hour certification program for $3,500.00, where teachers-in-training learn exercises that emphasize ways to tighten the core. Soul Cycle requires all instructors (once selected from competitive audition videos) to complete an 8-week training program prior to teaching.

Boutique fitness businesses give instructors a tempting platform and exposure to clients willing to pay a lot to look good.  Even I am guilty of asking boutique fitness instructors about private lessons on the side, without going through the studio—a possibly improper request given that most boutique fitness businesses market private lessons. Instructors in these situations can offer lower prices because administrative costs are lower if you train a client at home, or at the client’s private gym (and yes, the boutique fitness clientele likely has access to “normal” gyms, like Equinox).  The smart studio owner will make it clear in employment contracts with instructors that they cannot offer private lessons to clients they meet through the studio’s own classes, unless they do so through the studio’s private lesson program.

B. Competing Studios, Soliciting Clients, Client Lists, and Misappropriation of Trade Secrets

Another problem occurs when instructors ride off with client lists and open competing boutique fitness studios.  Pure Power Boot Camp and Warrior Fitness Boot Camp battled it out over this exact issue in Manhattan federal court in 2011. Pure Power owner, Lauren Brenner, hired Ruben Belliard and Alex Fell to work as “drill” instructors. Despite signing non-compete agreements, Belliard and Fell planned to replicate Pure Power, and in 2008 opened the competing Warrior Fitness. Brenner later obtained emails (received via login information stored on Pure Power computers) revealing that Belliard and Fell stole Pure Power customer forms, customer lists, training and instruction materials, and email exchanges with Pure Power clients, all in anticipation of establishing a competing business.

pure power boot campThe federal court ruled that the former employees violated the non-disclosure clause in their employment agreement and breached their duty of loyalty.  The court awarded damages to Brenner, requiring Belliard to forfeit the $55,197 he was paid by Pure Power during the time he was planning to open Warrior Fitness, and to pay Brenner $110,393 in punitive damages. Fell had to forfeit $40,177 in pay, and cough up $40,177 in punitive damages. Warrior Fitness however was not discouraged, since the boot camp remains open for drill calls.

This case is a classic example of the studio winning the battle but losing the war against former employees, because the non-competition clause in Pure Power’s employment agreements was found unenforceable. The agreement was unreasonable in terms of duration (ten-year prohibition) and in terms of geographic scope (worldwide). Brenner introduced no evidence to support the proposition that such a covenant was reasonable. Furthermore, the agreement prohibited Belliard and Fell from working at a place that calls itself a boot camp, and to enforce such an agreement would likely result in the loss of Belliard’s and Fell’s ability to earn a living as fitness instructors. Why? Because so many exercise classes in New York City advertise the boot camp method, Exhale Core Fusion Boot Camp, NYC’s 5 Best Boot Camps, The People’s Bootcamp, Barry’s Bootcamp, Stacy’s Bootcamp, Equinox “ETC” Bootcamp.

C. Preventive Steps for Boutique Fitness Owners

So, what’s the moral of the story for fitness owners in dealing with instructor employees?

1.  Keep the customer list on a need to know basis. Do not allow an instructor to moonlight as a front desk staff member. While it is not a perfect fix, it certainly limits access between instructors and the sign-in process.

2.  Require instructors to sign non-disclosure agreements.  The most significant points to include:

  • The instructor shall not make, use or sell the disclosed information without first entering into an agreement with studio to do so
  • The instructor shall not disclose any information to a third party
  • The instructor agrees that he or she shall not compete with the studio for products, clients and services offered by the studio for a reasonable amount of time
  • The instructor shall not duplicate or replicate in any manner the products, or services provided by the studio

3.  Craft non-competition clauses in instructor employment agreements that are reasonable in duration and geographic scope so that a court will be willing to enforce them later.

4.  Treat instructors well and they are less likely to run/ride/yogi off. While it is your studio, allowing instructors to give meaningful input will allow instructors to feel part of the bigger picture. Dismiss an instructor’s ideas and you will create a culture of disgruntled employees. Try to consider every comment and implement their ideas where appropriate. Open communication will foster an environment where instructors will seek advice from you.

II.  CUSTOMER WAIVER OF LIABILITY

It is 20 minutes before your first Barry’s Bootcamp class and you get to the studio in plenty of time. A good-looking, toned, front desk attendant asks for your name and to complete a waiver. You sign without reading, or reading enough to know they want you to fill in your name—then you scurry off to the racks of tanks that once purchased will signify your entrant to the Barry’s cult. The waiver form will never cross your mind again. You will attend numerous classes, love the new smoothies they offer and forget about that silly form—and for good reason, you are here to workout. But what is that waiver really all about? A waiver is a contract between a fitness studio and a participant signed prior to participation by which the participant agrees to absolve the studio of any liability for injuries resulting from the negligence of the studio, its instructors, or its other employees.

A. Sample Waiver Forms

To get a better flavor of what fitness studio waiver forms are trying to accomplish, let’s look at two that are fairly standard.  First, the Barry’s Waiver is titled “ENLISTEE INFORMATION, INFORMED CONSENT AND RELEASE.” The form itself plays into the theme of Bootcamp, with a specific space for your Dogtag number. The form states, “by signing this document, you acknowledge that you have been fully informed of the strenuous nature of this exercise program and the possibility of adverse psychological occurrences including, but not limited to…death. By signing this document, you assume all risk for your health and wellbeing and hold harmless for any responsibility, cost or damages Barry’s Bootcamp LLC, its instructors, members and employees…”

Physique 57’s Waiver is more detailed. Participants sign to release Physique 57 not only for themselves, but the term “Participant” also includes members of the Participant’s family, e.g., Participant’s spouse, parents, children, heirs and assigns. Physique’s waiver also includes a provision just about Participant’s knowledge, that Participant “had the opportunity to view the site of the exercise classes, review instructor qualifications, had the scope of risks explained, and had the opportunity to ask questions regarding the classes and risks associated with Physique’s exercise classes.” I can attest to the fact that at Physique 57’s original location on 57th Street, prior to entering the locker room facilities, posted on a wall in neat frames are instructor biographies, including but not limited to their dance experience, training certifications and general interests. Physique’s waiver specifically includes that Participant assumes full responsibility for risks of bodily injury, property damage or death to Participant due to ordinary negligence or gross negligence of Physique 57 and the ordinary negligence, gross negligence, or willful misconduct of any third party including others participating in Physique 57’s exercise classes.

B. Are Waivers Worth Their Weight?

Despite the efforts taken by fitness studios to protect themselves from negligence claims, these types of waivers are usually unenforceable, at least in New York state.  New York’s General Obligations Law, Section 5-326 states:

“Agreements exempting…gymnasiums, places of public amusement or recreation and similar establishments from liability for negligence void and unenforceable. Every covenant … in connection with any contract, membership application … or similar writing, entered into between the owner of any…gymnasium, place of public amusement or recreation, or similar establishment and the user of such facilities, pursuant to which such owner receives a fee for the use of such facilities, which exempts the said owner from liability for damages caused by or resulting from the negligence of the owner or their agents, servants or employees shall be deemed to be void as against public policy and wholly unenforceable.”

Thus, Physique 57’s waiver provision that exempts the studio from claims of ordinary negligence, gross negligence, or willful misconduct, is void and unenforceable.  No participant enters a boutique fitness class and expects willful misconduct— it seems unlikely a court would be sympathetic to an instructor who slams a 10-pound dumbbell in a Participant’s face.

Boutique fitness owners however should still insist on participants signing waivers. Waivers demonstrate that the boutique fitness owner at least took minimal steps to ensure that all participants were made aware of the risks associated with exercise. 

Uncovering the Legal “Soul” Behind Boutique Fitness – Part I

By [Tuesday, January 7th, 2014]

spinningHow Barry’s Bootcamp, Physique 57 and Soulcycle Flex Their Legal Muscles (Part I of a two-part series on boutique fitness studios).

BY NICOLE SCHWARTZ, NYLS ’14

New York City is where boutique fitness dreams are made of: Soul Cycle, Exhale Mind Body, Physique 57, Flywheel, The Bari Studio.  If you want to sell one-time classes at $36-$40 a pop—or a 10-pack in the $30/class range—NYC is where to start. Although Barry’s Bootcamp originated in Los Angeles, its recent migration to NYC has already made marks on the abs of Chelsea and Tribeca. There are rumors that people want to rename the Flatiron District, the “Fitness District” in light of the many boutique fitness businesses that have located there. With so many fitness studios popping up, it is time to explore the legal challenges these businesses face.  Part I of this series will address the trademark and intellectual property issues facing boutique fitness businesses.  Part II, to be published tomorrow, will address the legal issues raised by the studio-instructor  and studio-customer relationships.

TRADEMARKING A STUDIO NAME

Trademarks are essential to boutique fitness businesses. In fact, it is the only way to distinguish one set of abs from the next. Trademark law is about using a particular word, symbol, or phrase to identify a service or product and thereby protecting consumers from confusion. For example, if someone unrelated to Barry’s Bootcamp created a Barry’s BarreCamp class, it is likely fitness consumers may believe Barry’s Bootcamp now offers barre classes. It is also possible that Barry’s Bootcamp could claim infringement against the newcomer, arguing that its choice of name purposefully feeds on the goodwill established by the Barry’s Bootcamp brand.

A. Trademarks and Distinctiveness

physique 57A lawsuit like the one hypothesized above actually was brought in 2009.  Physique 57 sought to enjoin Barre Physique from using the word “physique” in its name. Physique 57 unsuccessfully argued that its mark is inherently distinctive because the term “57”: (1) connotes the duration in minutes of Physique 57’s class; (2) refers to the first location of Physique 57 (on 57th Street in New York City); and (3) was chosen because it sounds similar to the famous club Studio 54. Alternatively, Physique 57 argued that its use of the generic term “physique” had achieved secondary meaning because the primary significance of the term “Physique 57” in the minds of the consuming public is not the product—a barre class to improve your physique—but the producer. In other words, Physique 57 argued that consumers associate the word only with its classes, not just any old barre, Lotte Berk Method class.  This argument also failed.

To achieve secondary meaning, the courts inquire into the consumer’s attitude toward the mark. Relevant factors to this inquiry are:

  1. Amount and manner of advertising, e.g., Physique 57 has grown to an extent that it has attracted well-known celebrities, such as Kelly Ripa, and has a strong presence online via its website;
  2. Volume of sales, e.g., the Physique 57 Workout DVD sold approximately 35,000 copies in the first seven weeks of distribution;
  3. Length and manner of use, e.g., Physique 57 currently operates six locations nationwide and one location in Dubai, Physique 57; and
  4. Results of consumer surveys, e.g., a Facebook page with 30,968 “likes.” (For comparison, Barry’s Bootcamp New York and California only have 16,307 “likes”).

Despite these factors, however, Physique 57 lost its argument to stop Barre Physique from using the word “physique.” While the court’s reasoning is not publicly available, it is possible that the court found the term “physique” to be generic, meaning the term “physique” by itself does not automatically connote to a consumer the fitness studio Physique 57. Alternatively, the court may have found the term too descriptive, meaning consumers interpret the term “physique” to describe the goods or services provided, and it has not acquired secondary meaning. Here, the court may have noted that the dictionary definition of the word physique is not such a stretch from the services offered by Physique 57.

Additionally, the court may have found that the word is helpful to Physique 57’s competitors’ in describing classes offered. For example, competitor Pop Physique describes to clients that taking its classes will result in a “popular physique” that is long, with lean muscles and flat abs. Competitors Mary Helen Bowers similarly describes the resulting ballet physique as toned and sleek, and Ballet Physique includes the word in its name. The word “physique” also effectively describes the desired results of non-barre classes offered by Fighter Physique, Superhero Physique, and Beach Physique. Even manufacturers of “physique” exercise equipment use the word. The word clearly can describe whatever “fill in the blank” physique the company is selling.

What does this mean for boutique fitness owners? Try not to name your fitness studio “THE GYM,” or your barre class, “Barre Pro” as it will make the argument for a valid trademark a lot more difficult. It is better to create an arbitrary mark that includes a word which is used in a way that has nothing to do with its meaning.  A good example is Soul Cycle, because the meaning of the word “soul” has nothing to do with indoor cycling classes (that is, before Soul Cycle rode onto the cycling scene).  Even better, create a fanciful mark consisting of a made-up word invented strictly to be used as a trademark.  How about the Fhitting Room, anyone?

B. Trademarks and Domain Names

Another legal battle that faces boutique fitness owners is establishing rights to Internet domain names. Tracy Anderson finally won the rights to her domain name. If you do not know who Tracy Anderson is, you need to exercise your fitness world awareness muscles. Known for her body-transforming superpowers, Anderson’s work is displayed worldwide via the physiques of celebrities who swear by Anderson. Anderson’s business partner, Gwyneth Paltrow, appeared on the cover of Self Magazine and shared the coveted secrets to getting true Anderson Abs. So, at the rumored $900.00 per month (plus the $1500.00 initiation fee), what is the Tracy Anderson Method all about? Anderson pioneered dance cardio, which is a hybrid of the toning moves you would get from a barre class, mixed with the heart pumping cardio associated with dancing at a club or running on a treadmill, if you could run in all directions (forwards, backwards, sideways and at all different inclines). Sounds fun right?

tracy andersonSomeone had squatted on the domain name tracyanderson.com.  To win back the domain name, Tracy Anderson had to file a challenge with the Arbitration and Mediation Center of the World Intellectual Property Organization (WIPO), and prove three factors:

First, the challenger must show that he or she owns a trademark and it is confusingly similar to the domain name.  Tracy Anderson held the registered trademark “Tracy Anderson Method” and asserted that the disputed domain name “tracyanderson.com” is confusingly similar.  Anderson presented evidence of her rights in the trademark via the Federal Registration Certificate for “Tracy Anderson Method,” that the trademark’s first use in commerce predated the registration of the disputed domain name, and publications featuring the Tracy Anderson Method similarly predated the registration of the disputed domain name. To prove confusion, Anderson showed that the disputed domain name is her name, and that the chances of consumers performing “Tracy Anderson”-related web searches will yield both the disputed domain name and tracyandersonmethod.com, which strongly indicates that the web-based marketing of her business will confuse consumers.  The arbitration panel agreed that the disputed domain name was confusingly similar to Anderson’s trademark, and the mere fact that “Anderson” and “Tracy Anderson” are common names was not sufficient to avoid confusion with Anderson’s trademark.

Second, a challenger must show that the owner of the domain name has no legitimate interest or right in the domain name. There are three types of legitimate interests a domain name owner  can claim: (1) that he or she was selling goods and services prior to notice of the dispute, (2) that the owner has been commonly known by the disputed domain name, or (3) that the  owner is making legitimate noncommercial or fair use of the name without intent of commercial gain, or misleading or diverting consumers or tarnishing the trademark at issue. Here Anderson, explained that the disputed domain owner is neither affiliated with her nor licensed to use her trademarks. Furthermore, Anderson offered evidence that while the owner of the disputed domain name is in the business of selling domain names, the fact that tracyanderson.com is offered at a price ten times that of other domain names offered for sale, including other “Anderson” names, makes it clear the owner’s use of the disputed domain name is in bad faith.  The arbitration panel agreed with Anderson that, even though the disputed domain owner’s legitimate business is selling domain names, the argument is undermined by the high price tag, which suggests the domain owner was targeting Anderson’s trademark.

Third, a challenger must show that the domain name was registered in bad faith. Here, Anderson pointed to the Anti-Cybersquatting Consumer Protection Act of 1999 that provides for the transfer of domain names based upon celebrity names. The panel rejected the disputed domain owner’s argument, that he was unaware of Anderson’s celebrity status, because the exorbitant price tag suggested otherwise.

C. Trademark Tips for Boutique Fitness Owners.

The key advice for any boutique fitness owner is to register and establish use of the trademark to claim and protect ownership of your studio’s name.

(1) Register the mark. Courts will give a presumption of validity if the mark is registered. How do you register? The Lanham Act provides for a national system of trademark registration and protects the owner of a trademark against the use of similar marks if such use is likely to result in consumer confusion, or if the dilution of a famous mark is likely to occur. A registered mark has many sections of the Act at its disposal, unlike an unregistered mark that can only state a claim pursuant to section 43(a).

(2) Build a library of evidence that demonstrates the mark has achieved secondary meaning in the minds of consumers. So, when someone says, “I JUST BARRY’D,” listeners know he just ran his face off at Barry’s Bootcamp.  Some smart moves on this score include:

> Collect and file press clippings about the fitness studio.

> Appear on news segments to promote the studio.

Market the studio through product placement on television shows.

(3) Demonstrate consumer knowledge of the mark via social media, e.g., track Facebook followers, email subscribers, Twitter followers, Instagram followers, etc.

Stay tuned for tomorrow’s post, Part II of this series, on legal issues confronting the boutique fitness business.

The Aaron Hernandez-Patriots Contract Dispute: Waived, Voided, and Branded a Criminal

By [Tuesday, December 3rd, 2013]

aaron hernandezBY MICHELLE TORRES, NYLS ’14

In August of 2012 the New England Patriots negotiated a handsome five-year $40 million contract extension with the tight end Aaron Hernandez to play through the 2018 season. Fast-forward and both parties are unexpectedly in a dispute. The breakup began shortly after the June 2013 arrest of Hernandez for the murder of Odin Lloyd. The Patriots waived the tight end within a half hour of the arrest.

There is no dispute that the Patriots were entitled to use the NFL waiver system, described below, as a form of contractual relief from employing the indicted criminal. However, the Patriots announced they would void all future payments after examining their legal rights under the NFL collective bargaining agreement (CBA). The NFL Players Association (NFLPA) disagrees with the team’s decision to void such payments and filed grievances to make the Pats cough up the remaining amounts. The Patriots are denying payment on the basis that Hernandez forfeited future guarantees when he engaged in conduct detrimental to the best interest of the league. Hernandez will contend he is contractually entitled to the guaranteed money, and the contract lacked forfeiture language with respect to these amounts. Furthermore, if the Pats’ goal was to recover past payments or block future ones, they shouldn’t have waived Hernandez, but kept him under contract. Hernandez pled “not guilty” to six charges, including murder and gun possession charges and is being held without bail. He is due back in court on the unlucky Friday, the 13th of December.

The Patriots legally waived  Hernandez from employment under CBA Article 29’s procedure on waivers of player contracts.  The waiver is a labor-management practice that gives other clubs the opportunity to claim a waived player and his contract from the releasing team. A player can be waived for any reason and neither the player nor the new club suffer penalty or require compensation from the releasing team. However, if the player is unclaimed through the waiver system then he becomes a free agent. The releasing team is relieved from continuing employment and paying unguaranteed salaries to the free agent and may have to make the remaining (unpaid) guaranteed payments under the contract.  According to the CBA, Hernandez’s contract was subject to waiver because he is shy of a four-year tenure within the league. It came to no surprise when Hernandez cleared the waiver system, going unclaimed by the other 31 NFL teams and becoming a free agent. The waiver gave the Patriots the right to refuse continuation of employment and the right to refuse payment of unguaranteed salaries. But, the Patriots remain on the hook for payment of guaranteed money, unless they can cite to specific clauses in the contract and/or the CBA that justifies  doing otherwise.

Payment of guaranteed money is subject to the CBA, the NFL Standard Player Contract, and player-specific addendums. The standard player contract is a collectively-bargained contract that, other than yearly base salaries, contains structured and unalterable terms applicable to every player. In addition, each contract contains an addendum negotiated between the player’s agent and the team, which  covers guaranteed money, bonuses, incentives, and forfeiture. Base salary is money the player earns for playing during the season and does not require actual participation in a game. A workout bonus is earned for participating in a negotiated percentage of off-season workouts. A signing bonus is earned for signing with the team. It is typically paid in one lump sum to the player, but for salary cap purposes, teams prorate the signing bonus over the life of the contract. If a player is cut, the remaining portion of the signing bonus accelerates to that year. Guaranteed portions of the base salary, workout bonus, and signing bonus are protected from skill, injury, and cap terminations under the standard player contract. In other words, if Hernandez’s skill level decreased, if he suffered serious injury, or if the Patriots simply needed salary cap space, they could waive him but would still have to remit all guaranteed payments.

With respect to waivers for any other reason, the CBA requires the parties to negotiate the “Voiding of Guarantees”–this contractual forfeiture language in the addendum dictates guarantee obligations.  NFL contracts usually contain “failure to perform,” “failure to practice,” and “failure to report” clauses. The practical effect of these clauses protects teams from player suspensions or other legal woes, giving the team the right to void guaranteed payment under these circumstances. Ian Rapoport of the NFL Network reports that Hernandez’s contract lacks language that forfeits guaranteed base salary and signing bonuses in the event of the player’s default. The only forfeiture clause in Hernandez’s contract   apparently covers just his workout bonuses.  Arguably, this means Hernandez may be entitled to guaranteed payments even if he’s incarcerated.

Accordingly, the NFLPA dutifully filed grievances on behalf of Hernandez seeking payment of:

  1. $1.323 million in guaranteed 2013 salary;
  2. $1.137 million in guaranteed 2014 salary;
  3. $82,000 for guaranteed 2013 workout bonus;
  4. $500,000 for guaranteed 2014 workout bonus; and
  5. $3.25 million installment from his signing bonus.

The NFLPA believes the team wrongfully voided the portion of Hernandez’s 2013 salary that became guaranteed and due on March 17, 2013, months before police found Lloyd’s body near Hernandez’s home. The 2014 salary, although due after Hernandez’s arrest, is guaranteed without forfeiture language. Henandez earned the 2013 workout bonus when he successfully completed at least 90 percent of the offseason workouts from April to June, 2013. The 2014 workout bonus is guaranteed, and although subject to forfeiture per the contract, the Patriots waived him before he could breach the contract in the 2014 year. Lastly, Hernandez argues he earned the deferred signing bonus the second he signed the extension.

The Patriots nonetheless assert that the CBA gives them the right to void Hernandez’s guaranteed payments.  A Pats executive told Ben Violin of the Boston Globe that the contract “was guaranteed for skill and injury. It wasn’t guaranteed for personal conduct that cast the club in a negative light. We know the CBA. We are well within our rights.” In other words, the Pats believe the guarantees disappear because they cut Hernandez under Paragraph 11 of the Standard Player Contract, which allows termination when the player “has engaged in personal conduct reasonably judged by Club to adversely affect or reflect on Club, then Club may terminate this contract.”

Hernandez’s grievances raise several novel issues. First, when a player’s contract omits forfeiture language for guaranteed payments, does conduct-based termination nonetheless allow the team to void the guarantees, and if so, which ones? Section 9 of the CBA on “Forfeiture of Salary” expressly allows teams to void contracts and recoup bonus money in the case where a player commits a “forfeitable breach” due to incarceration. However, the Patriots waived Hernandez before his incarceration caused him to miss any football-related activities. Had Hernandez been under contract and unable to play because he was in jail, or suspended by the League, the Pats could have easily recouped the previously paid bonus money and voided any remaining payments. Although it is understandable that the Patriots wanted to distance themselves from Hernandez, their disregard of CBA procedure may well have financial consequences.

It’s also important to note that Section 9 is new to the 2011 CBA, in  recognition of the prior CBA’s failure to adequately protect teams from paying incarcerated players. The Michael Vick and Plaxico Burress incidents paved the way for this development. The  Hernandez situation may influence the League to seek further protection under the CBA when a player is waived for an arrest relating to personal conduct reasonably judged by Club to adversely affect or reflect on Club. The NFLPA should also seek clarification as to how the League’s “conduct detrimental” disciplinary standard interacts with CBA conduct provisions.

The Pats may also find grounds to forfeit and recoup bonus money in yet another provision in Hernandez’s contract. The contract contained a representation that Hernandez knew of no then-existing circumstances that would prevent his continuing availability throughout the contract. He is now being investigated for committing or participating in a double murder in July 2012, before he signed the contract. If Hernandez was involved in the July 2012 murder of Danny Abreu and Safiro Furtado, then he made a misrepresentation and breached the contract. The Patriots’ obligations with respect to the signing bonus may have to await a determination of Hernandez’s role, if any, in the double murder.

While some question the NFLPA’s advocacy on behalf of Hernandez,  the NFLPA said in a statement to USA TODAY Sports, “On behalf of all players, it is our responsibility to protect the rights in the collective bargaining agreement. We are not tone-deaf to what the allegations are in this case, but for the benefit of all players, there are important precedents here we must protect.” The NFLPA must pursue these grievances for players regardless of the accusations, in order to promote player trust and confidence in the union.  Meanwhile the NFLPA understands it faces a volume of criticisms for attempting to secure millions of dollars for an accused murderer. According to analyst Samer Ismail, the Hernandez drama may encourage the NFLPA to “lead teams to take harder stances in future contract negotiations with players regarding legal issues. For example, a ruling in Hernandez’s favor could easily lead to less guaranteed money for such players and more salary assigned to roster bonuses per game.”

And what about this murder rap? The details are long and complicated. Hernandez was indicted in August 2013 by a grand jury for the murder of Odin Lloyd. The prosecution’s biggest hurdle is the lack of a star witness and murder weapon. From the NFL’s perspective, it may be well-served by continued incarceration of Hernandez after all the negative media buzz involving the fallen star. Multiple murder charges, gun trafficking operations with other NFL players, and consistent drug use are just a few reasons Hernandez’s conduct may be detrimental to the best interest of football.

The NFL announced in a statement that if Hernandez “enters into a player contract prior to the resolution of the charges pending against him, the contract will not be approved or take effect until Commissioner Roger Goodell holds a hearing. The purpose of the hearing would be to determine whether Hernandez should be suspended or face other action prior to the charges being resolved.” Considering the severity of the charges piling up against Hernandez, any NFL suspension will likely be of the permanent variety. Even if Hernandez is found not guilty of all of charged offenses, and those on his legal backburner, the NFL response could be similar to the $250,000 fine imposed on Ray Lewis. Lewis also faced murder charges, and ultimately pled guilty to a misdemeanor for obstruction of justice. The NFL’s cited the negative stereotype of the admitted conduct as the basis for the fine.

Legal experts in the eye-opening Rolling Stone article on Aaron Hernandez assert, “In these cases, juries think that reasonable doubt means no doubt at all.”  If Hernandez is acquitted, the Patriots may still try to deny him millions of dollars, but the NFL can’t deny an innocent man a jersey.