Retired NFL stars reject settlement of their own licensing class action

March 25, 2013

In 2009, six retired pro football stars filed a class action against the National Football League in federal court in Minneapolis, claiming that the NFL misappropriated their names and images without their consent. The class action, led by (among others) former Houston Oiler Hall of Famer Elvin Bethea and former Los Angeles Ram All Pro and television star Fred Dryer, asserted that the NFL didn’t compensate its retired players when it used clips from old games to promote the league. In September 2011, the Dryer case was consolidated with two other similar class actions. Three firms, Zimmerman Reed, Hausfeld and Bob Stein, were named interim lead counsel.

Last week the NFL and the class filed a $50 million settlement with U.S. Senior District Judge Paul Magnuson. Two days later, Dryer, Bethea and the other four retired players who filed the original suit – and who are still the first six name plaintiffs in the case – objected to the settlement, arguing that it delivers no cash directly to class members and, as such, should be treated with the judicial skepticism that has lately greeted settlements involving no money for class members and millions for their lawyers. That argument may be familiar, but the circumstances of this objection are anything but. How often do you see six original name plaintiffs repudiate the settlement of their case? Aside from the widespread retailer discontent with the recent Visa and MasterCard interchange fee settlement, I can’t think of an example. Nor can I remember a case in which plaintiffs’ lawyers fought so nastily over settlement terms that the court had to appoint a lawyer outside of the lead counsel triumvirate to negotiate on behalf of the class. What a mess for Judge Magnuson to clean up.

Court-ordered settlement talks began before U.S. Magistrate Arthur Boylan last summer, after the class filed an amended complaint (adding more retired players as plaintiffs) and discovery got under way. But it turns out that a deep schism had developed between some of the players and their counsel Michael Hausfeld. (Hausfeld was actually the second lawyer for Dryer, Bethea and their fellow original name plaintiffs, who began the case with counsel from Charles Zimmerman of Zimmerman Reed.) Last November, former journeyman quarterback Dan Pastorini filed a notice in the Minnesota class action, informing the court that he had sued Hausfeld and his eponymous firm for malpractice in state court in Harris County, Texas. Pastorini said that he and many of Hausfeld’s other clients “do not support the present actions of defendants to attempt to settle their own class action case in a way that lines the pockets of defendants with legal fees, creates nonsensical entities orchestrated by defendants to obtain still more additional side benefits to them, but does nothing to effectively further the interest of plaintiff and the class members that he represents.”

It certainly didn’t advance comity in the case that Pastorini was (and is) represented in the malpractice suit byJon King, who was fired from the Hausfeld firm last October. King, as you may recall, subsequently filed his own all-encompassing complaint against Hausfeld in January, accusing Hausfeld of cutting ethical corners to keep the firm afloat. The firm, meanwhile, has said King’s claims are baseless allegations from an ousted employee.

In December, Judge Magnuson recognized that disagreements among plaintiffs’ lawyers had stalled negotiations to settle the retired players’ class action. On the same day that Hausfeld formally withdrew as counsel to the original six plaintiffs, Magnuson appointed Daniel Gustafson of Gustafson Gluek as settlement counsel for the class. It was Gustafson who signed last week’s brief requesting approval of a settlement that would establish a $42 million “common good” fund and an independent licensing agency to oversee future publicity rights of retired players. According to the settlement brief, the common fund is not intended to pay any individual class member for the misappropriation of his image, but would disburse money to third-party charities providing health, insurance and career transition services to retired NFL players. Plaintiffs’ lawyers would receive a total of $7.7 million under the proposed agreement.

The original name plaintiffs believe it’s a raw deal for the class. “The amounts paid under the settlement will go only to undefined charitable organizations, and not to class members in the form of direct benefits,” they wrote, citing courts that have recently rejected these so-called cy pres settlements. “The NFL has built its films library on the backs of retired players, but the proposed settlement does not guarantee the players any benefit from the complete release of their claims.” This class action isn’t a consumer case in which the class is hard to define, the objectors’ brief said. So there’s no reason to resort to a cy pres settlement that provides, at best, indirect benefits to class members.

The objecting plaintiffs are represented by King; Robins, Kaplan, Miller & Ciresi; Ward & Ward; and Bob Stein, who was one of the co-lead counsel in the case. Stein told me he couldn’t comment on the schism in negotiations, but said that Judge Magnuson held a hearing on the proposed settlement last Friday. The judge asked Gustafson and the other lawyers supporting settlement for additional briefing, Stein said, but did not indicate whether he would eventually approve the deal or not.

Gustafson didn’t return my call, nor did I immediately hear back from co-lead plaintiffs counsel Charles Zimmerman of Zimmerman Reed. Through a representative, Hausfeld declined to comment. The NFL is represented by Faegre Baker Daniels and Debevoise & Plimpton, which didn’t return a call requesting comment.

(Corrects name of law firm in last paragraph to Faegre Baker Daniels instead of Faegre Benson)


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