Stan Kroenke has a solid argument for avoiding sole responsibility for the St. Louis verdict

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As the NFL inches toward a potential 10-figure reckoning in St. Louis, an important chunk of legalese has come to light.

Last month, owners learned that Rams owner Stan Kroenke is thinking about challenging the indemnity language that supposedly puts him on the hook for the full and complete legal consequences arising from the relocation of the Rams to Los Angeles. And it’s hardly a Hail Mary play by the spouse of a Walmart heiress.

Kroenke’s argument apparently holds water. A lot of water.

Ben Frederickson of the St. Louis Post-Dispatch has located in the official court file the minutes of the NFL’s meeting that resulted in Kroenke receiving permission to move to L.A. The minutes include the official “indemnity and hold harmless” clause.

Here’s the key sentence: “Any relocating club agrees to indemnify and hold harmless all other member clubs, including their owners, officers and employees, as well as the league and its employees, in respect of any costs, including legal fees and other litigation expenses, incurred in respect of any legal or administrative challenge, regardless of the party bringing the challenge, related to the relocation or covenants not to sue any of the foregoing persons or entities.”

Kroenke surely will argue that “costs” include “legal fees and other litigation expenses,” and not “judgments and settlements.”

If this is the actual language that applies to the commitments Kroenke’s made upon moving from St. Louis, it’s a failure of drafting by the NFL’s lawyers, frankly. Whether in-house counsel or someone from a billable-hour outside firm, someone should have written the clause to expressly articulate “judgments and settlements.”

We’ve heard that the lawyers have told the owners that the indemnity agreement is “ironclad.” It most definitely is not.

That said, the language obtained by Fredrickson confirms our prior report that the Commissioner has the power to resolve the issue. “The amount of such costs shall be determined by the Commissioner in consultation with the Finance Committee, and such determination shall be final and binding on any relocating club,” the clause provides.

This arguably means that Roger Goodell could interpret the clause to include “judgments and settlements” even though those words aren’t present in the indemnity clause. For this reason, Kroenke needs to be ready to challenge in court the power of Goodell to resolve the issue. Kroenke likely would argue that Goodell can’t be impartial on this; if Kroenke is able to skirt the terms of the indemnity provision, it’s ultimately Goodell’s fault.

Moreover, Kroenke could argue that the clause only gives the Commissioner the power to determine the amount of the covered costs, not the ability to interpret the clause to determine which types of costs are covered. Although the league’s Constitution and By-laws (or some other internal document) likely contain language requiring that dispute to be resolved by the Commissioner too, the bigger question becomes whether Goodell can be expected to make a fair and proper decision on this issue, when one of the two potential outcomes will get Goodell in hot water with 31 of his 32 bosses.

This means that not just Kroenke but the rest of the league need to be at the table for settlement talks. It also means that the potential dangling of an expansion team for St. Louis becomes a viable approach, since it would help Goodell avoid the potential internal consequences arising from the league left holding a billion-dollar bag, thanks to the failures of the lawyers whom Goodell entrusted to not screw the indemnity pooch.

33 responses to “Stan Kroenke has a solid argument for avoiding sole responsibility for the St. Louis verdict

  1. As an attorney, I agree that ‘costs’ would typically be exclusive of any judgment or settlement. Costs and fees are well-defined in litigation and generally distinct from the amount owed by judgment or settlement. Definitely not ironclad.

  2. St. Louis had stopped supporting the Rams long before they moved. That “Dome” is one of the worst stadiums on sports. Sorry St. Looie you do not deserve another team…. ever

  3. GO Stan – St Louis doesn’t deserve any money or a team. They failed to support the team they had and the facility they ran that the team had to play in which was one of the worst in the league.

  4. St. Louis would be crazy to take an expansion team as part of any settlement. No reason to make life easy on the people who have already proven not to care about you. Take the money and invest it into the city/people.

  5. “….in respect of any costs,…” is a very broad qualifier and indicates that the Rams will pay, well, any costs…That’ll be $2,000.

  6. “It also means that the potential dangling of an expansion team for St. Louis becomes a viable approach”

    There are not currently enough good and great players to have 32 really good teams or anywhere near that number. Adding teams to a product that’s already being watered down by expanding the playoffs and adding to the regular season is going to make for that much worse of an overall product.

    No. Just no.

  7. His legal standing isn’t as strong as you claim. A reasonable person would expect one of the costs of a lawsuit to be a judgment or settlement. It’s a literal cost of doing business and most courts should see it that way. The lawyers did a poor job but it shouldn’t be too difficult to convince a judge that settlements are a type of litigation cost.

    It’s like buying a ticket to a football game and discovering all the seats have been removed, then being told that you didn’t technically buy a “seat” to the game. There’s a reasonable expectation of what the word “ticket” means as it relates to pro sports, just as there’s a reasonable expectation of what “cost” means as it relates to litigation.

  8. What perplexes me (among many other things, including but not limited to “women”) is that St. Louis took the Rams from L.A. in the first place. Not to mention the Chicago Cardinals.

  9. Excellent analysis. We could also use an article about how this case is playing out in an absolute kangaroo court where the judge is obviously and totally biased against the NFL. Consider the following:
    1. The case should have been referred to arbitration, based on the express language of the relocation guidelines that the City is relying on;
    2. The City is not a party to said guidelines, thus the case should have been dismissed for lack of standing;
    3. The NFL’s motion to change venue should have been granted. Any St. Louis juror has an inherent bias; and
    4. Discovery regarding the owners wealth should not have been allowed until there was a verdict allowing for punitive damages. Introducing evidence of the owners wealth during the liability phase of the trial is inherently prejudicial. The trial should be bifurcated with a liability phase first, then a damages determination if necessary.

  10. This may be above my reading level, but isn’t that indemnity agreement stating that Kroenke takes responsibility for the fees and costs of relocation since the indemnity agreement is holding the other owners not liable regardless? I don’t understand. The clause seems pretty straightforward with no interpretation based on what I read.

  11. I hope this all gets messy between Kroenke and Goodell/NFL just for the entertainment value. I have no idea if it will.

  12. As an aside, I’m surprised more otherwise conservative commenters here aren’t up in arms over the public/private socialized approach under which most of these stadiums exists. Why not insist these owners raise themselves up by the proverbial boot straps and fund their own stadiums and when they want to move to another market they just move. Why do they, and so many of you, advocate our public money be used on stadiums? St Louis, and everywhere else, should be in the business of the business of football or single use stadiums.

  13. Awesome that Kroenke is receiving free legal advice and a platform for his position. NFL is now eating itself alive.

  14. “Kroenke surely will argue that “costs” include “legal fees and other litigation expenses,” and not “judgments and settlements.”

    Oof, that is bad, it may be right.

  15. Maybe not bad lawyering, maybe Kroenke wouldn’t agree to the language about judgments or settlements.

  16. Strange interpretation that “costs” would not presumptively include ANY type of cost, including settlements or judgment. “Including” implicitly is read “without limitation” – and specifying the types of clerical costs that will fall into scope would not logically exclude the main cost of litigation, which of course is the judgment. Settlement is a different animal, I assume the NFL has discretion whether or not to accept a settlement. Though if all parties agree to the settlement I would not argue it is not a cost of the litigation.

  17. Owners are united against the Players. They are united against each other, until they arent. It would be hilarious to watch NFL owners fight each other over money. Can you imagine the egos involved of 32 NFL owners and their attorneys against each other. Screw the popcorn, get out the Filets for that show

  18. It’s “an” argument. I’m not convinced that it’s a winning argument. The language used makes clear that the set of “costs” that are covered is larger than the examples specified. And “costs” could also be interpreted to include settlements/judgments. If you were Kroenke, you’d have to fall back on some canon of construction and hope the judge is a strict adherent to it.

  19. the business side of sports is beyond my comprehension.
    i like that the rams moved back to l.a. i wish the chargers would have stayed in s.d. but it was a business decision.

  20. I think the NFL is 10 years away from an implosion,” Cuban said according to ESPNDallas.com. “I’m just telling you, pigs get fat, hogs get slaughtered

    Said by Mark Cuban in 2014.

  21. JMHO… settlement becomes an riskier path for the NFL if this report is true, and indemnification hinges on what costs are. Usually it is a no brainer that the indemnifying party controls that decision – since it bears the risk and is choosing to mitigate its own eventual exposure via settlement. An indemnified party would not care, because it will be made whole regardless. All likelihood, this debate is just increasing odds the case is litigated, and someone winding up more out of pocket than they could have going the settlement route. If I’m the NFL, and feel I have a better costs argument with a verdict than a settlement I agreed to, I don’t agree to settlement.

  22. Ultimately the league may have to foot the bill for the new St Louis franchise and get that money back over time as the new ownership pays for it. It’s not like they’re going to cut a $1B check to St Louis and that’s the end of that money.

  23. Would be a good way for him to burn a couple dozen significant bridges at once. Parting a whole room full of billionaires from a large chunk of what they love most because he didn’t handle his business in STL would probably not be forgotten for a long time, if ever.

  24. Kroenke’s interpretation is that “judgments and settlements” are not a cost of litigation, since if you actually win the case, there aren’t any judgments or settlements to pay… there will always be legal fees involved. If he has a good legal team, he has a shot with this.

  25. It is funny that Goodell and Jeff Pash will be responsible for that mess.
    What goes around comes around

  26. loudfarter says:
    November 12, 2021 at 11:09 am
    His legal standing isn’t as strong as you claim. A reasonable person would expect one of the costs of a lawsuit to be a judgment or settlement. It’s a literal cost of doing business and most courts should see it that way. The lawyers did a poor job but it shouldn’t be too difficult to convince a judge that settlements are a type of litigation cost….there’s a reasonable expectation of what “cost” means as it relates to litigation.
    __________

    Reasonableness has nothing to do with what is or is not a cost. “Cost” is a well defined term with respect to litigation. Costs definitely does not include a judgment or settlement; never has, never will. Cost also does not include legal fees. The only reason that legal fees are in play here is that the language of the indemnity provision specifically refers to such fees.

  27. jimmarshallhof2022 says:
    What perplexes me (among many other things, including but not limited to “women”) is that St. Louis took the Rams from L.A. in the first place. Not to mention the Chicago Cardinals.
    —————————————————————————————-
    The football Cardinals were about go to bankrupt in Chicago and might have even faced contraction. They were moved to St. Louis to block an AFL expansion in St. Louis.

    St. Louis took the Rams because we built a stadium like the NFL requested and then didn’t give us an expansion team like they told us they were going to do. Meanwhile Los Angeles and Anaheim did almost nothing to keep the Rams in Southern California while a new stadium sat almost done in St. Louis. If LA had tried to keep the Rams in the 90’s they never would have left.

  28. Excellent analysis, Florio. Appreciate your knowledge and perspective on these matters. Could this be the undoing of Dictator of Hypocrisy Goodell and his minions? The level of hubris and arrogance here is really staggering. At some point it’s not sustainable and collapses on itself.

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