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.